The study focuses on economic growth in SADC by examining the role of institutional variables; determining the key drivers and finding out the strength of the marginal effects of institutional quality. The study used a GMM estimator by Arellano and Bond (1991) and annual country data covering the period 1996-2010. Good quality institutions have an indirect impact on growth by working through trade openness, gross fixed capital formation, financial openness, human capital and savings ratio. Government stability, improved government effectiveness and absence of conflicts have direct effect on economic growth. High inflows of foreign direct investment are beneficial in the presence of low levels of political violence. The generic determinants of economic growth are necessary but not sufficient in explaining economic growth. Thus any reforms meant to enhance economic growth in SADC should give priority to putting in place good quality institutions which are a vital precondition.
The President of Kenya, in January 2014, announced that infrastructure development would be used as the major drive to achieve economic growth during the tenure of his presidency. A notable part of the statement by the President is the requirement that the policy would involve very significant public expenditure on infrastructure. In that context, this study undertook a causality analysis between infrastructure expenditure and economic growth and labor was introduced into the framework as a control variable. The study also undertook to establish if innovations in one variable would influence the future behavior of another. Annual data used in this study was obtained from World Development Indicators for the period 1980 to 2013. Using Granger Causality approach the study reveals that: there is bidirectional flow of causality between economic growth and infrastructure, shocks in economic growth explained the behavior of infrastructure even beyond eight years, and that infrastructure expenditure is explained by innovations in the previous period. The findings suggest that the government should commit more funds towards developing infrastructure in the short term. This should be complemented by improving the quality of institutions and an improvement in the level of regulation to enhance sustainable growth.
Economic challenges in Zimbabwe have resulted in firms being pushed out of their optimal leverage. Firms are faced with the need to move back to the optimal level of financing to improve their value. They tend to adjust quickly to the optimal level whenever failing to do so is costlier. This study employs a dynamic capital structure model to examine the determinants of optimal leverage and the speed of adjustment under a hyperinflation and dollarization period (2000–2016). The study shows that firms have an optimal leverage and there are costs of adjusting to this level of capital. Findings are consistent with theoretical predictions of the static trade-off theory (STT) and agency theory. The adjustment factors for all the models were found to be at least 0.475 and are higher under hyperinflation than under dollarization. Both firm and macroeconomic factors explain the optimal capital structure while the former also explains the speed of adjustment. Policies focusing on improving access to and reducing costs for finance will assist firms to maximize value as they adjust to the desired financing mix. The policies adopted may vary in response to the economic environment.
The need to diversify the economy so as to ensure sustainable economic growth has been of great concern. Accelerating productivity in agriculture is seen as one of the alternatives to support the diversification initiatives by the government and drive growth in Botswana. This study discusses the factors contributing to increased long term agricultural productivity and hence its subsequent impact on growth in the short. The study employs the vector error correction model and annual data to explain the connection between key variables. This paper concludes that there is unidirectional causality from agricultural productivity to growth. This study shows that economic growth can be improved in the short term by improvements in agricultural productivity. Agricultural productivity can be enhanced by providing adequate infrastructure, additional farming machinery per hectare of arable land and having a targeted approach in the provision of funding towards agricultural oriented initiatives.Contribution/ Originality: This study's primary contribution is the finding that the agricultural led growth hypothesis applies to Botswana. The study is one of the few that use the vector error correction model to analyze the determinants of long term agricultural productivity. BACKGROUND TO THE STUDYThe Sustainable Development Goals (SDGs) aim to end extreme hunger and all forms of poverty, achieve food security improve nutrition and promote sustainable agriculture by 2030. This is enhanced by promoting sustainable agriculture and supporting small farmers. SDGs also seek to promote sustained, inclusive growth, full and productive employment and decent work for all [1,2]. Agriculture enhances sustainable development, poverty reduction and inclusive growth. However the changing weather patterns due to climate change has resulted in severe droughts particularly in Sub Saharan Africa (SSA). The impact of climate change on rainfall patterns has threatened food security especially in agro-based economies. The demand for agricultural produce is increasing and putting immense pressure on governments to increase productivity levels. Increased productivity by farmers has potential to eliminate poverty among the rural populace and to guarantee enough food supplies on a sustainable
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