Economies

16 pages, 342 KiB

Open AccessArticle

Peruvian Agro-Exports’ Competitiveness: An Assessment of the Export Development of Its Main Products

by Jose Carlos Montes Ninaquispe, Alberto Luis Pantaleón Santa María, Diego Alejandro Ludeña Jugo, William Teófilo Castro Muñoz, Juan Cesar Farias Rodriguez, Billy Heinrich Maco Elera and Kelly Cristina Vasquez Huatay

Economies 2024, 12(6), 156; https://doi.org/10.3390/economies12060156 - 20 Jun 2024

Viewed by 1210

Abstract

This study analyzed the competitiveness of Peru’s exports of grapes, blueberries, avocados, and asparagus from 2019 to 2023. Data were obtained from the customs declarations of all exporting companies of the analyzed products, along with data from the International Trade Center. Competitiveness was [...] Read more.

This study analyzed the competitiveness of Peru’s exports of grapes, blueberries, avocados, and asparagus from 2019 to 2023. Data were obtained from the customs declarations of all exporting companies of the analyzed products, along with data from the International Trade Center. Competitiveness was measured using the absolute revealed comparative advantage (RCA) index. The results indicate notable growth in the exports of grapes and blueberries, while asparagus and avocados face challenges in market and exporter diversification. The RCA index suggests a strong and stable specialization in these products. This study concludes with specific recommendations for institutions such as Ministerio de Desarrollo Agrario y Riego (MIDAGRI), Comisión de Promoción del Perú para la Exportación y el Turismo (PROMPERÚ), Asociación de Exportadores (ADEX), and Instituto Nacional de Innovación Agraria (INIA), aimed at enhancing competitiveness through market diversification. Full article

(This article belongs to the Special Issue Economic Development in the Digital Economy Era)

21 pages, 619 KiB

Open AccessArticle

Impacts of Regional Integration and Market Liberalization on Bilateral Trade Balances of Selected East African Countries: Potential Implications of the African Continental Free Trade Area

by Perez Onono, Francis Omondi and Alice Mwangangi

Economies 2024, 12(6), 155; https://doi.org/10.3390/economies12060155 - 19 Jun 2024

Viewed by 662

Abstract

This study examined the effect of free trade on intra-African bilateral trade balances for Kenya, Rwanda, Uganda, and Tanzania to assess the potential implications of the African Continental Free Trade area. The four countries have experienced persistent trade deficits. Whether free trade within [...] Read more.

This study examined the effect of free trade on intra-African bilateral trade balances for Kenya, Rwanda, Uganda, and Tanzania to assess the potential implications of the African Continental Free Trade area. The four countries have experienced persistent trade deficits. Whether free trade within Africa can improve the national trade balances, and the drivers of bilateral trade balances are important questions for policy and strategic programmes for the countries to make the most gains from free trade area. The econometric model estimated for each country is an extension of the standard Keynesian model of trade balance to include determinants of bilateral trade flows from the gravity model. Quantitative analysis using panel regression was augmented with qualitative data from interviews with trade policy experts and trade officials from various African countries and focus group discussions with small-scale cross-border traders at the Busia and Namanga border posts in East Africa. Findings show that complete tariff elimination on intra–African trade may not impact the bilateral trade balances of Kenya, Rwanda, and Tanzania but could improve bilateral trade balances for Uganda by 6 percent. Within the free trade areas, Uganda’s bilateral trade balances were higher within the Common Market for Eastern and Southern Africa but lower within the East African Community, than outside these areas. Kenya’s trade balances were lower in the Common Market for Eastern and Southern Africa, than otherwise. On the contrary, no significant difference in trade balances is established for the membership of Kenya, Rwanda, and Tanzania in the East African Community; Rwanda in the Common Market for Eastern and Southern Africa; and Tanzania in the Southern African Development Community, when compared to trade balances with non-members. The importance of macroeconomic factors is demonstrated by the increase in bilateral trade balances with higher relative price levels of trade partners; the reduction with increase in relative production and expenditure capacities of trade partners; and improvements following a depreciation of home currency for Tanzania and Uganda, yet a worsening of trade balances in Kenya. A lack of harmony in documents required for cross-border movements within the free trade areas is reported as counterproductive. All African countries should therefore fully implement protocols and cooperate in the harmonization of trade procedures for the free movement of people and goods across borders. Country policies and trade programmes should pursue increased productivity in the leading intra-African export sectors and diversify exports via foreign direct investment in strategic sectors to substitute imports from outside Africa; reduce costs of production; increase the quality of products; and improve transport infrastructure. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy 2.0)

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17 pages, 638 KiB

Open AccessArticle

Examining Monetary Policy Measures and Their Impacts during and after the COVID Era: OECD Perspectives

by Imalka Wasana Rathnayaka, Rasheda Khanam and Mohammad Mafizur Rahman

Economies 2024, 12(6), 154; https://doi.org/10.3390/economies12060154 - 18 Jun 2024

Viewed by 665

Abstract

Governments worldwide implemented various fiscal and monetary measures to address the adverse impacts of COVID-19 on their economies. The paper aims to examine the changes in the monetary policy measures due to COVID-19 and their impact on macroeconomic variables. To explore this relationship, [...] Read more.

Governments worldwide implemented various fiscal and monetary measures to address the adverse impacts of COVID-19 on their economies. The paper aims to examine the changes in the monetary policy measures due to COVID-19 and their impact on macroeconomic variables. To explore this relationship, this study utilizes fortnightly data from 2020 to 2023 on the OECD (Organisation for Economic Co-operation and Development) countries. The study employs a Panel Autoregressive Distributed Lag (ARDL) model to analyze the effects of the monetary policy responses of the OECD governments, and the obtained results reveal that within OECD countries, the prevailing trend of lower interest rate policies emerged during the pandemic. This policy approach yielded a dual effect: lowering both output growth and inflation rates, while concurrently exacerbating unemployment rates throughout the COVID-19 period. Consequently, it is clear that monetary policies have played a pivotal role in facilitating the recovery from a profound economic shock such as the COVID-19 pandemic. Given the significant economic repercussions of a pandemic and the crucial role that monetary policy plays in sustaining economic stability, the apparent lack of attention underscores the urgent necessity for additional discourse on this vital subject. Full article

(This article belongs to the Special Issue Economics after the COVID-19)

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18 pages, 993 KiB

Open AccessArticle

Urbanization and Health Expenditure: An Empirical Investigation from Households in Vietnam

by Hang Thu Nguyen-Phung and Hai Le

Economies 2024, 12(6), 153; https://doi.org/10.3390/economies12060153 - 16 Jun 2024

Viewed by 809

Abstract

This study examines the effects of urbanization on household health expenditure. Using a unique bi-annually household-level dataset from 2012–2016 from Vietnam, we obtain key findings as follows. To mitigate possible endogeneity concerns, we utilize a two-stage least squares regression (2SLS) approach, employing the [...] Read more.

This study examines the effects of urbanization on household health expenditure. Using a unique bi-annually household-level dataset from 2012–2016 from Vietnam, we obtain key findings as follows. To mitigate possible endogeneity concerns, we utilize a two-stage least squares regression (2SLS) approach, employing the development of information and communication (ICT) infrastructure at the province level as an instrumental variable (IV). The key findings can be summarized as follows. First, urbanization significantly reduces Vietnamese households’ inpatient and outpatient health expenses. Second, the self-treatment expenses of households increase as the process of urbanization advances. In addition, we perform various robustness checks, encompassing different measures of urbanization, the use of lag of urbanization as an additional IV, and the plausible exogenous IV. The outcomes derived from these rigorous sensitivity analyses substantiate the reliability and consistency of our key results. Finally, we propose different ways to explain these results, including health insurance expenses and household income. Full article

(This article belongs to the Special Issue Regional Development: Opportunities and Constraints)

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19 pages, 285 KiB

Open AccessArticle

The Relationship between Credit Rating and Environmental, Social, and Governance Score in Banking

by Dimitrios Vortelinos, Angeliki N. Menegaki and Spyros Alexiou

Economies 2024, 12(6), 152; https://doi.org/10.3390/economies12060152 - 15 Jun 2024

Viewed by 1024

Abstract

The present paper investigates the relationship between stock prices, credit ratings, and ESG scores for banks internationally. First, it describes stock prices and ESG scores at an annual frequency, as well as stock price and credit risk at a daily frequency. The relationships [...] Read more.

The present paper investigates the relationship between stock prices, credit ratings, and ESG scores for banks internationally. First, it describes stock prices and ESG scores at an annual frequency, as well as stock price and credit risk at a daily frequency. The relationships between (a) stock price and credit rating returns with ESG score returns and (b) among ESG scores are examined by pairwise annual correlation, and daily correlations are examined between price and credit rating returns. Furthermore, Granger causality is used to examine the relationships between the following: (a) price and ESG score annual returns; (b) price and credit rating daily returns; and (c) total and pillar annual ESG scores. This study makes a significant contribution to the literature by providing a detailed temporal analysis using both annual and daily data frequencies, which is relatively rare in the field. There is evidence of statistically and empirically important relations in the form of pairwise correlations. The regressions reveal a low significance of few ESG score changes in explaining credit rating changes. A unique aspect of this paper is the comprehensive analysis of 16 granular ESG scores, including overall scores, pillar scores, and sub-scores, allowing for a multi-faceted understanding of how specific ESG factors impact financial metrics. We found evidence of the significance of COVID-19 in all research questions. Additionally, this paper highlights the impact of the COVID-19 pandemic on the relationships between ESG scores, credit ratings, and stock prices, offering timely insights into the heightened importance and volatility of ESG factors during crisis periods. Future research needs to shed more light on this relationship, however. Full article

(This article belongs to the Special Issue Economic Analysis and Policy before, during and after a Public Debt Crisis, a Pandemic and an Inflationary Outburst)

15 pages, 3315 KiB

Open AccessArticle

Spatial Aspect of Global Value Chain in East Asia: How Ports and Airports Shape Industrial Clusters in East Asia

by Satoru Kumagai

Economies 2024, 12(6), 151; https://doi.org/10.3390/economies12060151 - 14 Jun 2024

Viewed by 590

Abstract

This paper examines how geography matters for the location of industries in East Asia, employing regression analyses on a novel and comprehensive regional GDP dataset. This study examines how geography affects industrial location patterns, particularly the role of infrastructure, such as ports and [...] Read more.

This paper examines how geography matters for the location of industries in East Asia, employing regression analyses on a novel and comprehensive regional GDP dataset. This study examines how geography affects industrial location patterns, particularly the role of infrastructure, such as ports and airports. This paper analyzes the current economic geography of East Asia using the novel dataset. The regression analyses utilize location quotients as the dependent variable and incorporate explanatory variables, such as domestic/foreign market access, per capita income, population density, and distance-based dummies for ports and airports. The findings reveal that the determinants of industrial location differ significantly across industries. The relative importance of domestic versus foreign market access and proximity to ports and airports varies across sectors. The results imply that countries/regions cannot easily host industries of their choice, as different industries require distinct locational characteristics. Full article

(This article belongs to the Special Issue Industrial Clusters, Agglomeration and Economic Development)

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19 pages, 3456 KiB

Open AccessReview

The Von Neumann–Morgenstern Curve and Bank Capital Adequacy Penalties—An Empirical Analysis

by Thomas Draper and Stefano Cavagnetto

Economies 2024, 12(6), 150; https://doi.org/10.3390/economies12060150 - 13 Jun 2024

Viewed by 456

Abstract

The risk of lending money collected from savers is that it leaves banks liable to default with depositors if events (and hence repayment demands) become ‘abnormal’. Even though international and national regulation has been introduced to ensure that a certain level of capital [...] Read more.

The risk of lending money collected from savers is that it leaves banks liable to default with depositors if events (and hence repayment demands) become ‘abnormal’. Even though international and national regulation has been introduced to ensure that a certain level of capital is retained by banks, such regulation can be subverted. The current system of international regulation based on the Basel III agreements does not stipulate a standardised approach for inspection frequency or penalty magnitude. This leaves the potential for regulatory arbitrage. The scientific value of an analysis to optimise regulatory efficiency and reduce such arbitrage is therefore considerable. This work therefore assesses the results of the empirical testing of a model based on the Von Neumann–Morgenstern utility function and consequently proposes that this model be used as a basis for standardising capital adequacy limit infraction penalties on an international level to prevent regulatory arbitrage. A survey is undertaken in order to test the responses of participants on the level of penalty which would deter them from regulatory transgression under different theorised levels of profit and probability of discovery. Based on the responses of two distinct subject groups (‘bankers’ and ‘non-bankers’) in different scenarios of hypothetical capital adequacy violation, the Von Neumann–Morgenstern utility function is reviewed against empirical results and revealed to show a semi-strong correlation. Lastly, the analysis reveals the striking similarities of the two groups’ responses, posing regulatory implications for the industry. Full article

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20 pages, 657 KiB

Open AccessArticle

Identifying the Frequency and Connectivity Dynamics of the US Economy

by Mathias Schneid Tessmann, Marcelo De Oliveira Passos, Omar Barroso Khodr, Alexandre Vasconcelos Lima and Pedro Henrique Pontes Fontana

Economies 2024, 12(6), 149; https://doi.org/10.3390/economies12060149 - 12 Jun 2024

Viewed by 802

Abstract

This paper seeks to investigate the connectivity of the US economy through the dynamics of the transmission of volatility in sectoral indices. For this, we use daily asset data and two methodologies. The first creates a spillover index that measures market connectivity and [...] Read more.

This paper seeks to investigate the connectivity of the US economy through the dynamics of the transmission of volatility in sectoral indices. For this, we use daily asset data and two methodologies. The first creates a spillover index that measures market connectivity and the second partitions this index into different frequency bands that denote periods. We found results that show significant transmissions of volatility among the 64 analyzed assets. Notably, the DJIA, Wilshire 5000, and S&P 500 showed significant volatility and were the main drivers of volatility for the other sectors and indices. Results also indicated that sectors that transferred volatility were influenced by three key factors: periods of economic uncertainty, socioeconomic circumstances resulting from post-crisis events, and the impact of economic and financial news on market sentiment. Additionally, we found that global returns and price changes in market indices sent considerable volatility into commodity assets. Our results are potentially useful for investors, portfolio managers, financial economists, financial advisors, financial market regulators, and policymakers. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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19 pages, 313 KiB

Open AccessArticle

The Role of Public Incentives in Promoting Innovation: An Analysis of Recurrently Supported Companies

by Cátia Rosário, Celeste Varum and Anabela Botelho

Economies 2024, 12(6), 148; https://doi.org/10.3390/economies12060148 - 12 Jun 2024

Viewed by 476

Abstract

This study delves into the intricate relationship between corporate innovation and public support, underscoring innovation’s vital role in driving economic growth and competitiveness. Recognizing the multifaceted nature of innovation, from product and process improvements to organizational and marketing innovations, we examine how specific [...] Read more.

This study delves into the intricate relationship between corporate innovation and public support, underscoring innovation’s vital role in driving economic growth and competitiveness. Recognizing the multifaceted nature of innovation, from product and process improvements to organizational and marketing innovations, we examine how specific business characteristics and sectoral specificities condition access to public research and development (R&D) support, both nationally and at the European level. We analyze data from five Community Innovation Survey (CIS) reports spanning from 2008 to 2018 using ordered logit models. This approach evaluates the likelihood of companies receiving recurring public support for R&D based on internal R&D investments, interinstitutional collaboration, employee qualifications, and sectoral attributes. The findings reveal that internal R&D investments and collaboration with other entities significantly increase the likelihood of a company receiving recurrent public support. Furthermore, companies in high-tech sectors are more prone to receive public assistance. However, the analysis of European support shows no widespread statistical significance of the considered variables, suggesting the influence of evolving funding policies and an imbalanced dependent variable distribution. We conclude that the ability to secure public R&D support is influenced by a mix of company-internal and -external factors, highlighting the need for comprehensive and adaptable innovation policies. This study’s limitations, including potential sample non-representativeness and the dynamics of funding policies, underscore the importance of further, more encompassing research. Full article

26 pages, 1381 KiB

Open AccessArticle

An Assessment of the Effectiveness and Scale of Tax Expenditures to Support Investments and Priority Sectors in G20 Countries

by Svetlana Demidova, Yuliya Tyurina, Anastasia Kulachinskaya, Olga Buzdalina, Igor V. Ilin, Victoriya Razletovskaia and Chulpan A. Misbakhova

Economies 2024, 12(6), 147; https://doi.org/10.3390/economies12060147 - 12 Jun 2024

Viewed by 559

Abstract

Tax expenditure management is one of the tools for conducting responsible fiscal policy. Unlike direct expenditures, tax expenditures do not consume resources, but allow the achievement of certain social and economic goals. The purpose of this study is to test the hypothesis of [...] Read more.

Tax expenditure management is one of the tools for conducting responsible fiscal policy. Unlike direct expenditures, tax expenditures do not consume resources, but allow the achievement of certain social and economic goals. The purpose of this study is to test the hypothesis of the expediency of using the mechanism of tax expenditures to influence investment activities and the development of priority sectors of the economy. The object of this study was a sample of nine countries of the G-20 group, whose reports provided data on the share of tax expenditures related to investment support and stimulating the development of priority sectors of the economy. The practice of generating reports on tax expenditures is quite common in developed countries, but there are several limitations for cross-country comparison: national characteristics of fiscal elements, and the level of openness and transparency of data on tax expenditures. The scale of using tax expenditures is determined by the multidimensional average method; countries are rated according to the value of the integral indicator. The scale of tax breaks determines the position in the ranking. The effectiveness of using tax breaks is assessed through the coefficient of increase in investment and the coefficient of increase in industrial production. The assessment results show whether economic indicators are outpacing the growth rate of tax benefits and preferences. A study of panel data revealed the average degree of influence of the total amount of tax expenditures on the dynamics of capital investments. The allocation of a target group of tax expenditures related to investment support showed a weak degree of influence on the dynamics of capital investment volumes. The results obtained can be explained by the fact that the allocation of a target group of tax expenditures may not reflect the full range of tax benefits provided to support investments, which is due to the peculiarities of the system of accounting and assessment of tax expenditures in a particular country. In addition, the contribution of tax expenditures may be insignificant if direct forms of support prevail. Full article

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19 pages, 643 KiB

Open AccessArticle

The Opportunity Cost of COVID-19 Deaths in the USA

by Tuyen Pham, Anirudh V. S. Ruhil and G. Jason Jolley

Economies 2024, 12(6), 146; https://doi.org/10.3390/economies12060146 - 12 Jun 2024

Viewed by 572

Abstract

The U.S. is currently the country with the highest number of COVID-19 deaths. By the second week of October 2021, over 700,000 people in the U.S. had died after contracting the virus. When estimating the cost and benefit of a COVID-19 prevention measure, [...] Read more.

The U.S. is currently the country with the highest number of COVID-19 deaths. By the second week of October 2021, over 700,000 people in the U.S. had died after contracting the virus. When estimating the cost and benefit of a COVID-19 prevention measure, the value of a statistical life (VSL) has been widely used as an approximation for the value of a lost life. However, VSL arguably overstates the costs of deaths caused by COVID-19 because VSL captures the private individual’s benefit, and it is the same for everyone regardless of where they live, their productivity, their age, and their gender. In this study, rather than looking at the cost of life loss due to COVID-19, we focus on the opportunity costs of COVID-19 deaths to society. The opportunity cost of COVID-19 deaths is defined as the combination of direct medical costs and the costs of lost potential lifetime earnings. Our analysis focuses on the period from March 2020 to October 2021. We then quantify the average opportunity cost of COVID-19 deaths across the U.S. and by state level. Full article

(This article belongs to the Special Issue Economics after the COVID-19)

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20 pages, 528 KiB

Open AccessArticle

Should Monetary Policy in South Africa Lean against the Wind by Targeting the Financial Cycle?

by Malibongwe Cyprian Nyati

Economies 2024, 12(6), 145; https://doi.org/10.3390/economies12060145 - 11 Jun 2024

Viewed by 611

Abstract

Recently, several studies have argued about the interactions of the real economy and financial system, as well as the importance of financial cycles in business cycle fluctuations. To date, there exists near consensus among central bankers, economists, and other scholars that the financial [...] Read more.

Recently, several studies have argued about the interactions of the real economy and financial system, as well as the importance of financial cycles in business cycle fluctuations. To date, there exists near consensus among central bankers, economists, and other scholars that the financial cycle is an important source of business cycle fluctuations. This has raised the question of whether monetary policy should respond to financial instability and/or imbalances. As a result, we asked the following questions: Should monetary policy lean against the wind by targeting the aggregate financial cycle in South Africa? And what is the role of monetary policy in minimizing financial imbalances and instabilities in South Africa? The present article aims to provide answers to the above-mentioned question. Through the adoption of a multiple-equation generalized method of moments and structural vector autoregressive approaches, this article simultaneously estimates and compares both the finance-augmented and the conventional Taylor rules. It is shown that the South African Reserve Bank has considered developments in the aggregate financial cycle in setting its policy rate. Overall, there is clear evidence to conclude that the South African Reserve Bank can lean against the wind by targeting the aggregate financial cycle, but only as a genuine augmentation not as a fully flagged objective. This article adds new evidence to the South African literature on the prevailing debate of whether monetary policy should respond to developments in the financial system. Full article

(This article belongs to the Special Issue Monetary and Fiscal Economics in the Context of Macroeconomic Stability)

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17 pages, 1056 KiB

Open AccessArticle

Institutional Quality and Internationalization: Empirical Evidence from Manufacturing SMEs in Vietnam

by Bao Dinh Ho and Tung Nguyen

Economies 2024, 12(6), 144; https://doi.org/10.3390/economies12060144 - 11 Jun 2024

Viewed by 606

Abstract

This paper assesses how the local institutional environment affects the internationalization of manufacturing small- and medium-sized enterprises (SMEs) in Vietnam, exploiting a multi-dimensional institutional index and large-scale enterprise data. The authors find that the internationalization of manufacturing SMEs was influenced by several institutional [...] Read more.

This paper assesses how the local institutional environment affects the internationalization of manufacturing small- and medium-sized enterprises (SMEs) in Vietnam, exploiting a multi-dimensional institutional index and large-scale enterprise data. The authors find that the internationalization of manufacturing SMEs was influenced by several institutional aspects, such as the transparency of local authorities, access to land, informal charges, and local labor policies. Improvements in these institutional aspects can substantially enhance participation in international trade and its magnitude. This pattern diverges from their large and foreign counterparts, whose trade participation is primarily affected by land access and the transparency of local authorities. Additionally, the authors find heterogeneous effects of the institutional environment on SMEs in different manufacturing industries. Heavy industries rely more on the costs of entry and time costs, while land access is crucial for SMEs in manufacturing industries that require large-sized factories. Our findings suggest that the government should provide a supportive institutional environment to SMEs, which will lead to higher international participation and boost domestic economic growth. Full article

(This article belongs to the Special Issue The Relationship between Macroeconomics and Small and Medium Enterprises)

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24 pages, 4924 KiB

Open AccessArticle

Assessing the Effective Lower Bound in the Context of Introducing the Digital Euro

by Michael Pirgmann and Petr Wawrosz

Economies 2024, 12(6), 143; https://doi.org/10.3390/economies12060143 - 7 Jun 2024

Viewed by 713

Abstract

This study investigates the impact of central bank digital currencies (CBDCs) on monetary policy flexibility, the effective lower bound (ELB), and negative interest rate policies (NIRPs), specifically in the case of the digital euro (DE). Through a combination of theoretical modeling and empirical [...] Read more.

This study investigates the impact of central bank digital currencies (CBDCs) on monetary policy flexibility, the effective lower bound (ELB), and negative interest rate policies (NIRPs), specifically in the case of the digital euro (DE). Through a combination of theoretical modeling and empirical analysis, including two extensive surveys among EU participants, we explore whether CBDCs can change the ELB and affect consumer preferences in favor of the digital euro over physical cash. Our findings indicate that the introduction of the DE could potentially move the ELB from its current value of around −1.30% by approximately 0.25%. If agents had the possibility to move their deposits into both cash and DE, they would convert approximately 52% of the converted amount into cash and the rest into CBDCs. However, over a 10 year period, the situation would shift in favor of the DE, with a share of 63%. Both findings show that NIRPs will be more limited in the case of the introduction of CBDCs (DE). These facts must be considered both when deciding whether to introduce a CBDC (DE) and after its eventual introduction in the case of NIRP application. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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23 pages, 1837 KiB

Open AccessArticle

The Effects of External Debt and Foreign Direct Investment on Economic Growth in Nigeria

by Gbenga Wilfred Akinola and Abieyuwa Ohonba

Economies 2024, 12(6), 142; https://doi.org/10.3390/economies12060142 - 6 Jun 2024

Viewed by 1130

Abstract

Economic theory argues that foreign direct investment (FDI) and external debt are expected to enhance economic growth in any given economy. Consequently, this study (i) investigated the relationship between foreign direct investment, external debt servicing, and economic growth in Nigeria; (ii) investigated how [...] Read more.

Economic theory argues that foreign direct investment (FDI) and external debt are expected to enhance economic growth in any given economy. Consequently, this study (i) investigated the relationship between foreign direct investment, external debt servicing, and economic growth in Nigeria; (ii) investigated how foreign direct investment and external debt impact Nigeria’s economic growth; and (iii) analyzed the direction of causality among the three macroeconomic variables. Descriptive statistics, time series autoregressive distributive lag, and robust Granger causality tests were adopted as the estimating techniques. The results showed that from 2011 to 2022, Nigeria’s FDI continued to decline, Nigeria’s external debt servicing continued to grow on an upward trajectory, and the growth of the GDP has been meandering. ARDL analysis results confirmed that the lag of FDI and current exchange rate exert positive effects on current economic growth in Nigeria, with a 1% increase in FDI, current external debt, and current exchange rate increasing growth by 1.49%, 1.58%, and 0.02%, respectively. Results from the Granger causality showed that FDI and external debt do Granger cause GDP in Nigeria. Policymakers should focus on prudent debt management practices and strive to reduce domestic debt levels. Full article

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23 pages, 1666 KiB

Open AccessArticle

Do Free Trade Agreements Facilitate FDI Spillover Effects on Domestic Firms? Empirical Evidence from Oman

by Ashraf Mishrif and Asharul Khan

Economies 2024, 12(6), 141; https://doi.org/10.3390/economies12060141 - 6 Jun 2024

Cited by 1 | Viewed by 718

Abstract

This paper underlines the significance of free trade agreements in attracting foreign direct investment and their impact on the operational capacities of local firms in host countries. It argues that free trade agreements do not only eliminate barriers to trade, but they also [...] Read more.

This paper underlines the significance of free trade agreements in attracting foreign direct investment and their impact on the operational capacities of local firms in host countries. It argues that free trade agreements do not only eliminate barriers to trade, but they also increase the size of the regional market and improve the business environment, making it more attractive to foreign direct investment, along with all the attributes and spillover effects associated with it. While determining the type of spillover effects of foreign direct investment associated with Oman’s trade agreements, this paper uses the Kruskal–Wallis H-test and 438 samples from companies surveyed between 1 August and 31 October 2023 to assess the impact of spillovers on the performance of the surveyed companies. The results reveal that technology transfer, knowledge transfer, labour productivity, product efficiency, capital investments, and job creation have positive effects on the firms’ operational capacities, with technology transfer having the highest impact (27%), followed by labour productivity and job creation (18%). The spillover effects are almost the same for company size and percentage of ownership. They also identified manufacturing and tourism as priority sectors and the availability of a skilled workforce as a major challenge. These findings make original contribution to the field as this is probably the first study to produce a firm-level analysis of spillover effects of foreign direct investment and trade agreements in the context of Oman and the wider Gulf region. The paper concludes with practical implications for policy makers when negotiating trade agreements and designing investment policies to optimize spillover effects on the performance of their domestic firms. Full article

(This article belongs to the Special Issue Foreign Direct Investments and Economic Development)

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24 pages, 860 KiB

Open AccessArticle

Oil Volatility Uncertainty: Impact on Fundamental Macroeconomics and the Stock Index

by Jassim Aladwani

Economies 2024, 12(6), 140; https://doi.org/10.3390/economies12060140 - 4 Jun 2024

Viewed by 583

Abstract

This study utilized both single-regime GARCH and double-regime GARCH models to investigate oil price volatility, Spanish macroeconomic factors, and stock prices during major crises such as geopolitical conflicts, the global financial crisis (GFC), and COVID-19, covering the period from Q2-1995 to Q4-2023. Additionally, [...] Read more.

This study utilized both single-regime GARCH and double-regime GARCH models to investigate oil price volatility, Spanish macroeconomic factors, and stock prices during major crises such as geopolitical conflicts, the global financial crisis (GFC), and COVID-19, covering the period from Q2-1995 to Q4-2023. Additionally, the impact of crude oil price volatility on these factors was examined. The empirical results confirmed the presence of the leverage effect and identified multiple volatility switches associated with remarkable events like the GFC, the European debt crisis, the COVID-19 pandemic, and the Russian war. ARDL model analysis revealed a statistically significant positive relationship between oil prices and both unemployment and inflation rates in the long term, while other factors showed a negative correlation. Full article

(This article belongs to the Section Growth, and Natural Resources (Environment + Agriculture))

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40 pages, 11472 KiB

Open AccessReview

Greece’s Economic Odyssey: Persistent Challenges and Pathways Forward

by Evmorfia (Fay) Makantasi and Helias Valentis

Economies 2024, 12(6), 139; https://doi.org/10.3390/economies12060139 - 4 Jun 2024

Viewed by 834

Abstract

Two years after the COVID-19 pandemic, the Greek economy seems to have overcome the turmoil of the pandemic crisis as well as that of the following energy crisis. Nevertheless, it would be wrong to assume that the Greek economy has returned to a [...] Read more.

Two years after the COVID-19 pandemic, the Greek economy seems to have overcome the turmoil of the pandemic crisis as well as that of the following energy crisis. Nevertheless, it would be wrong to assume that the Greek economy has returned to a sound state, since this was not really the case even before the pandemic. Furthermore, the anemic growth rates of the pre-pandemic period were followed by an equally weak average growth rate (including the impact of the pandemic), as some of the significant fundamental weaknesses of the Greek economy, which had accumulated over time and constituted the real origin of the Greek crisis, have not been properly addressed yet. This paper attempts a complete mapping of the current state of the Greek economy, offering an insight into the external and internal determinants affecting it. Full article

(This article belongs to the Special Issue Economic Analysis and Policy before, during and after a Public Debt Crisis, a Pandemic and an Inflationary Outburst)

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16 pages, 307 KiB

Open AccessArticle

The Impact of Production Digitalization Investments on European Companies’ Financial Performance

by Aiste Lastauskaite and Rytis Krusinskas

Economies 2024, 12(6), 138; https://doi.org/10.3390/economies12060138 - 3 Jun 2024

Cited by 1 | Viewed by 442

Abstract

Businesses investing in production digitalization equipment are supposed to benefit from increased productivity, enhanced efficiency, and revenue growth. Despite the increasing use of digital technologies in business, many companies still struggle to measure and maximize their returns from production digitalization investments. This research [...] Read more.

Businesses investing in production digitalization equipment are supposed to benefit from increased productivity, enhanced efficiency, and revenue growth. Despite the increasing use of digital technologies in business, many companies still struggle to measure and maximize their returns from production digitalization investments. This research assesses the impact of production digitalization investments on companies’ financial performance (operating revenue) for European businesses in the period of 2013 to 2021. To achieve this target, we performed a Fixed Effects Panel Regression analysis, using a sample size of 5706 records from the Orbis database for 30 countries, covering 634 business units. The production digitalization investment in this research is expressed by a calculated variable value, measured as the annual change in a company’s Plant and Machinery value, adjusted with corresponding an annual depreciation value for the assets. The regression output was analyzed by considering the characteristics of the company size and business location. The results suggest that companies in Eastern Europe benefit more from production digitalization than those in Western Europe. The analysis highlights the tendency for the company costs of the employee and intangible fixed asset value to increase as production digitalization investments grow. Additionally, it shows that large companies tend to gain more from such investments than smaller ones. The analysis provides support and guidance for businesses’ production digitalization investment strategic decision-making processes. Full article

15 pages, 2397 KiB

Open AccessArticle

Unlocking Local and Regional Development through Nature-Based Tourism: Exploring the Potential of Agroforestry and Regenerative Livestock Farming in Mexico

by Daniel Alfredo Revollo-Fernández, Debora Lithgow, Juan José Von Thaden, María del Pilar Salazar-Vargas and Aram Rodríguez de los Santos

Economies 2024, 12(6), 137; https://doi.org/10.3390/economies12060137 - 31 May 2024

Viewed by 473

Abstract

Nature-based tourism offers several positive effects, including bringing tourists closer to nature and increasing environmental awareness among them, creating new sources of employment, diversifying local and regional economies, promoting the conservation of local ecosystems, and protecting biodiversity. A pilot exercise based on choice [...] Read more.

Nature-based tourism offers several positive effects, including bringing tourists closer to nature and increasing environmental awareness among them, creating new sources of employment, diversifying local and regional economies, promoting the conservation of local ecosystems, and protecting biodiversity. A pilot exercise based on choice experiments is presented to estimate the monetary value per year of nature-based tourism (NbT). The exercise was applied in the Jamapa watershed in Mexico, and the results showed that NbT would amount to USD 7.7 million, with tourism activities linked to agroforestry and USD 5.5 million around regenerative cattle ranching. These results provide input for decision makers in developing public policies to benefit society, nature, and sustainable development. Full article

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21 pages, 4049 KiB

Open AccessArticle

Exploring the Nexus between Employment and Economic Contribution: A Study of the Travel and Tourism Industry in the Context of COVID-19

by Petra Vašaničová and Katarína Bartók

Economies 2024, 12(6), 136; https://doi.org/10.3390/economies12060136 - 30 May 2024

Viewed by 425

Abstract

The travel and tourism industry plays a crucial role in economies around the world. The impact of the COVID-19 pandemic on the tourism industry has been very pronounced. This paper aims to study the relationship between the country’s T&T industry Share of Employment [...] Read more.

The travel and tourism industry plays a crucial role in economies around the world. The impact of the COVID-19 pandemic on the tourism industry has been very pronounced. This paper aims to study the relationship between the country’s T&T industry Share of Employment (TTEMPL) and the country’s T&T industry Share of Gross Domestic Product (TTGDP). This study is specific because we do not focus on the development of indicators over time; instead, we propose the models for 117 countries using the quantile regression (QR) while comparing models in the context of COVID-19 (between 2019 and 2021). The results of the QR determined that individual percentiles of the TTGDP are more affected by the TTEMPL than other percentiles of the TTGDP, which is then reflected in the changes in regression coefficients. In addition, we compare analyzed indicators among countries according to region and income group. The study reveals that the tourism downturn caused by COVID-19 has adverse effects on the TTEMPL and the TTGDP. In addition, the results show that the impact of COVID-19 on the tourism industry appears to be varied among countries, regions, and income groups. Full article

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17 pages, 2374 KiB

Open AccessArticle

The Timing and Strength of Inequality Concerns in the UK Public Debate: Google Trends, Elections and the Macroeconomy

by Knut Lehre Seip and Frode Eika Sandnes

Economies 2024, 12(6), 135; https://doi.org/10.3390/economies12060135 - 30 May 2024

Viewed by 529

Abstract

Inequality among people has several unwanted effects, in humanistic, social and economic contexts. Several studies address distributional preferences among groups, but little is known about when inequality issues are focused and when and why inequality abatement measures are brought on the political agenda. [...] Read more.

Inequality among people has several unwanted effects, in humanistic, social and economic contexts. Several studies address distributional preferences among groups, but little is known about when inequality issues are focused and when and why inequality abatement measures are brought on the political agenda. We show that during the period 2004 to 2023, inequality issues were focused during elections to the EU and UK parliament and with greatest strength during the elections to the EU parliament in May 2004 and to the UK parliament in May 2015. Periods with high unemployment and inflation cause the discussion on inequality to be followed by discussions on inequality measures. However, when the discussion of inequality is followed very closely by the discussions of abatement measures, inequality aversion becomes more strongly associated with the macroeconomic variables inflation and GDP (recessions) than with unemployment and more strongly associated with the concerns for fairness than concerns with war and crime. The results were obtained examining Google Trends and scholarly studies. Full article

(This article belongs to the Special Issue Income Distribution, Inequality and Poverty: Evidence, Explanations and Policies)

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16 pages, 785 KiB

Open AccessArticle

Understanding the Impact of the COVID-19 Pandemic on Indian Migrant Workers in the United Arab Emirates: Perceptions, Challenges, and Psychological Effects

by Md Imran Khan and Majed Alharthi

Economies 2024, 12(6), 134; https://doi.org/10.3390/economies12060134 - 29 May 2024

Viewed by 676

Abstract

The United Arab Emirates (UAE) is often regarded as a preferred employment location for Indian migrant workers seeking improved financial stability and enhanced career opportunities. The spread of COVID-19 has led to a decline in international migration rates and an increase in the [...] Read more.

The United Arab Emirates (UAE) is often regarded as a preferred employment location for Indian migrant workers seeking improved financial stability and enhanced career opportunities. The spread of COVID-19 has led to a decline in international migration rates and an increase in the number of individuals returning to their home countries. Therefore, it is imperative to analyze the challenges and perspectives of migrant labour. The assessment was based on a sample size of 416 Indian migrant workers who were present in the UAE during the lockdown period of the pandemic. Statistical techniques were employed to assess the research objective and examine the formulated hypothesis. The study confirms that the employment status of the migrant population has transformed, leading to a decline in both income and remittance flows. There is a significant difference in remittances by Indian migrant workers in the United Arab Emirates before and during the COVID-19 pandemic. The statistical analysis reveals a significant finding in the chi-square test regarding the perception of migrants towards health facilities and other amenities offered by the Government of the UAE. The facilities provided by the Government of the UAE were perceived to be considerably more favourable in comparison to those offered by the Government of India. The favourable view of the UAE authorities led to the choice of several migrant workers to remain there rather than return to India throughout the pandemic. The logistic regression analysis reveals that demographic information such as age, duration of stay, level of education, sources of income, and earnings were the significant determinants of fear of COVID-19. The report also encompasses a few constraints and offers policy recommendations. Full article

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12 pages, 232 KiB

Open AccessArticle

Investigating How Exchange Rates Impact Japan’s Machinery Exports since 1990

by Willem Thorbecke

Economies 2024, 12(6), 133; https://doi.org/10.3390/economies12060133 - 28 May 2024

Viewed by 592

Abstract

Japan exports sophisticated capital goods. Since the Global Financial Crisis (GFC), Japanese companies have offshored the production of lower-end goods and parts and components to Asian countries. Because of this, several researchers argued that a weaker yen no longer stimulates machinery exports much [...] Read more.

Japan exports sophisticated capital goods. Since the Global Financial Crisis (GFC), Japanese companies have offshored the production of lower-end goods and parts and components to Asian countries. Because of this, several researchers argued that a weaker yen no longer stimulates machinery exports much because an increase in Japanese exports increases parts and components imports from overseas Asian subsidiaries. This paper finds that, after the GFC, a weaker yen no longer increases Japanese machinery exports to Asia but continues to stimulate exports outside of Asia. Thus, the weaker yen since 2020 does not help Asian firms to import vital Japanese capital goods but does increase the profitability of Japanese manufacturers and their exports to non-Asian countries. Full article

(This article belongs to the Special Issue Exchange Rates: Drivers, Dynamics, Impacts, and Policies)

18 pages, 321 KiB

Open AccessArticle

Intangible and Tangible Investments and Future Earnings Volatility

by Taoufik Elkemali

Economies 2024, 12(6), 132; https://doi.org/10.3390/economies12060132 - 27 May 2024

Cited by 2 | Viewed by 491

Abstract

This study delves into the impact of intangible and tangible investments on future earnings volatility within the European financial market context. Drawing from International Accounting Standards (IAS) 16 and 38, we examine the intricate relationship between fixed assets, expenses, and the uncertainty surrounding [...] Read more.

This study delves into the impact of intangible and tangible investments on future earnings volatility within the European financial market context. Drawing from International Accounting Standards (IAS) 16 and 38, we examine the intricate relationship between fixed assets, expenses, and the uncertainty surrounding forthcoming earnings. Our analysis reveals that intangible assets, often associated with heightened uncertainty and risk, contribute to increased earnings volatility compared to capital expenditures. Furthermore, we find that capitalizing intangible assets serves to alleviate uncertainty, resulting in lower earnings volatility compared to expensing them. Our exploration of industries’ effects further reinforce these findings, with the effect of intangible and tangible investments on earnings volatility being more pronounced in high-tech industries than in low-tech industries. Additionally, our robustness test, utilizing goodwill as a proxy for intangible assets and property, plant, and equipment as a proxy for tangible assets, yields consistent results, further bolstering our findings. Full article

(This article belongs to the Special Issue The Effects of Uncertainty Shocks in Booms and Busts)

15 pages, 505 KiB

Open AccessArticle

Modeling Tax Revenue Determinants: The Case of Visegrad Group Countries

by Jadranka Đurović Todorović, Marina Đorđević, Vera Mirović, Branimir Kalaš and Nataša Pavlović

Economies 2024, 12(6), 131; https://doi.org/10.3390/economies12060131 - 25 May 2024

Viewed by 728

Abstract

This article provides panel data estimations of the tax revenue determinants in VG (Visegrad Group) countries (the Czech Republic, Hungary, Poland, and Slovakia) for the period 1994–2023. The aim of this research was to determine how the macroeconomic determinants affect the tax revenues [...] Read more.

This article provides panel data estimations of the tax revenue determinants in VG (Visegrad Group) countries (the Czech Republic, Hungary, Poland, and Slovakia) for the period 1994–2023. The aim of this research was to determine how the macroeconomic determinants affect the tax revenues in the selected countries. Within the static models, the Hausman test showed that the FE (fixed effects) model is appropriate and reflects the significant effects of the gross domestic product, population, inflation, unemployment, import, government revenue, government expenditure, and EU enlargement on the tax revenue. The PMG (Pooled Mean Group) model is an adequate model among the dynamic models and manifests the significant effect of the lagged value of the tax revenue. In the short term, growth of the gross domestic product and population by 1% causes higher changes in the tax revenue of 0.14% and 2.93%. Likewise, growth of the inflation rate by 1% decreases the tax revenue by 0.037%, which is higher than in the long term. Further, the results show that EU enlargement is significant for tax revenue in the short term, as well as in the long term. In the long term, unemployment has a greater significant effect on tax revenue, where 1% growth decreases the tax revenue by 0.15%. In contrast, government revenue is significant for tax revenue only in the long term, where 1% growth increases the tax revenue by 0.77%. Full article

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20 pages, 373 KiB

Open AccessReview

The (Political) Economics of Bilateral Investment Treaties—The Unique Trajectory of Brazil

by Christian Bellak and Markus Leibrecht

Economies 2024, 12(6), 130; https://doi.org/10.3390/economies12060130 - 24 May 2024

Viewed by 647

Abstract

Brazil, after signing several traditional Bilateral Investment Treaties without ratifying them, recently shifted towards a different type of bilateral investment agreement, i.e., Investment Cooperation and Facilitation Agreements. Two claims have been made in the literature regarding the transition from traditional Bilateral Investment Treaties [...] Read more.

Brazil, after signing several traditional Bilateral Investment Treaties without ratifying them, recently shifted towards a different type of bilateral investment agreement, i.e., Investment Cooperation and Facilitation Agreements. Two claims have been made in the literature regarding the transition from traditional Bilateral Investment Treaties to Investment Cooperation and Facilitation Agreements—Claim #1: The non-ratification of the traditional BITs has not harmed Foreign Direct Investment into Brazil, a claim which puts into question the purpose of Bilateral Investment Treaties. Claim #2: While Investment Cooperation and Facilitation Agreements avoid some of the problems of traditional Bilateral Investment Treaties, on balance they are less effective than traditional Bilateral Investment Treaties would have been. We examine the two claims from an empirical economic point of view. We build on the literature about Brazil’s position vis-à-vis Bilateral Investment Treaties, which must be viewed by an amalgamation of (i) a historical legacy; (ii) domestic initiatives, and (iii) a particular U-turn in the political debate. Using empirical evidence on Foreign Direct Investment effects of Bilateral Investment Treaties, the following conclusions emerge: With regard to claim #1, empirical evidence in general as well as specific to Brazil suggests that Brazil has forgone Foreign Direct Investment by not ratifying traditional Bilateral Investment Treaties. Concerning claim #2, while Investment Cooperation and Facilitation Agreements include alternative dispute settlement mechanisms, which aim at a better compliance of states with the Investment Cooperation and Facilitation Agreements’ rules, rather than the compensation of foreign investors, the lower stringency of the State–State dispute settlement mechanism compared to Investor–State dispute settlement mechanism makes Investment Cooperation and Facilitation Agreements less effective. Yet, this weakening effect must be weighed against the effects on Foreign Direct Investment from innovative clauses in Investment Cooperation and Facilitation Agreements, which are absent in many traditional Bilateral Investment Treaties. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy 2.0)

23 pages, 325 KiB

Open AccessArticle

Public Health Expenditure and Sustainable Health Outcomes in 45 Sub-Saharan African Countries: Does Government Effectiveness Matter?

by Augustine Arize, Ebere Ume Kalu, Greg Lubiani and Ndubuisi N. Udemezue

Economies 2024, 12(6), 129; https://doi.org/10.3390/economies12060129 - 22 May 2024

Viewed by 631

Abstract

This paper examines the interaction between health expenditure and health outcomes with due consideration for government effectiveness across developing African economies. The rich data for this study draw from forty-five Sub-Saharan African (SSA) countries covering the period 1960 to 2022. The analysis follows [...] Read more.

This paper examines the interaction between health expenditure and health outcomes with due consideration for government effectiveness across developing African economies. The rich data for this study draw from forty-five Sub-Saharan African (SSA) countries covering the period 1960 to 2022. The analysis follows a country-specific comparative manner using the Autoregressive Distributed Lag (ARDL) model as the major estimation technique. The results indicate that poor health outcomes are not due to inadequate budgetary allocations alone. Specifically, this study found a cointegrating relationship and strong adjustment of health outcomes deriving from the shocks and dynamics of not just health expenditures, but also government effectiveness. It is therefore recommended that strong institutions and safety nets be created to guard against corruption and leakages that derail the beneficial impact of public health spending. Also, government expenditures should be focused more on cottage and primary health dimensions to better mitigate adverse health conditions in SSA countries. Full article

20 pages, 3010 KiB

Open AccessArticle

Investigating the Efficiency of Insurance Companies in a Developing Country: A Data Envelopment Analysis Perspective

by Katerina Fotova Čiković, Violeta Cvetkoska and Mila Mitreva

Economies 2024, 12(6), 128; https://doi.org/10.3390/economies12060128 - 22 May 2024

Viewed by 631

Abstract

Insurance companies play a pivotal role in the financial systems of developing countries, wielding substantial influence on systemic financial stability. Thus, understanding their efficiency, performance, and sustainability is paramount for policymakers and stakeholders alike. The aim of this paper is to evaluate the [...] Read more.

Insurance companies play a pivotal role in the financial systems of developing countries, wielding substantial influence on systemic financial stability. Thus, understanding their efficiency, performance, and sustainability is paramount for policymakers and stakeholders alike. The aim of this paper is to evaluate the relative efficiency of insurance companies within the North Macedonian market spanning the years 2018 to 2022. Employing the input-oriented BCC DEA model, the study integrates capital and labour as inputs, while assessing risk-pooling/bearing services and intermediate function as outputs. Our findings underscore the fluctuating efficiency levels within North Macedonia’s insurance sector. Notably, the sector exhibited its peak efficiency in 2018 at 83.62%, dipping to its lowest point of 73.81% in 2020. Moreover, discerning between life and non-life insurers, we observe an average relative efficiency of 0.8067 for non-life insurers, contrasted with a higher average efficiency score of 0.9011 for life insurance companies over the examined period. This study contributes significantly on multiple fronts. Firstly, it pioneers empirical investigation of the efficiency on the North Macedonian insurance market, encompassing pre- and post-COVID efficiency metrics. This fills a notable gap in the literature, particularly within the context of emerging European markets. Secondly, our comprehensive approach facilitates a holistic evaluation of the insurance sector’s performance across a five-year span, offering insights into its overarching dynamics and efficacy. Thirdly, the implications of our findings extend to policymakers, regulators, and insurance company management, aiding in informed decision-making and strategic planning. Full article

(This article belongs to the Special Issue Financial Market Volatility under Uncertainty)

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16 pages, 1033 KiB

Open AccessArticle

Sustainable Financing for Renewable Energy: Examining the Impact of Sectoral Economy on Renewable Energy Consumption

by Edosa Getachew, Zoltan Lakner, Goshu Desalegn, Anita Tangl and Anita Boros

Economies 2024, 12(6), 127; https://doi.org/10.3390/economies12060127 - 21 May 2024

Viewed by 852

Abstract

This study examines the effect of international financial flows, including investments and development assistance, on the expansion of renewable energy technologies. It also seeks to investigate the impact of the sectoral economy on the proportion of renewable energy consumption in Ethiopia. This study [...] Read more.

This study examines the effect of international financial flows, including investments and development assistance, on the expansion of renewable energy technologies. It also seeks to investigate the impact of the sectoral economy on the proportion of renewable energy consumption in Ethiopia. This study used an explanatory research design and a quantitative research approach. An autoregressive distributed lag model was applied to explore the long and short-term relationship among variables. A time series of data aggregated and disaggregated ranging from 2000 to 2022 was used. According to this study, sustainable finance programs are essential for advancing and aiding renewable energy projects in the long and short term. Ethiopia’s use of renewable energy will increase as sustainable finance rises. The main economic sectors determining Ethiopia’s consumption of renewable energy in the long and short term include the manufacturing, mining and service industries. This study’s findings imply that policies focusing on providing continuous financial support and fostering international cooperation to promote the development of the manufacturing sector are needed. This could include incentives for adopting renewable energy technologies and investing in renewable energy infrastructure. On the other hand, since the service and mining industries negatively impact renewable energy use, there is a need to diversify renewable energy sources beyond these sectors. This could involve promoting renewable energy projects in other sectors, such as manufacturing, agriculture, construction and trade. Based on the findings of this study, it is suggested that policymakers carefully consider the consequences within each economic sector when formulating decisions related to renewable energy. This study is novel in presenting empirical evidence linking renewable energy use to long- and short-term economic growth. Full article

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Economies, Volume 12, Issue 6 (June 2024) – 32 articles

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