The Effect of Exchange Rate Fluctuation on the Performance of Manufacturing Firms: An Empirical Evidence from Ghana

Buabeng, Emmanuel; Ayesu, Enock Kojo; Adabor, Opoku

doi:10.22440/elit.1.2.4

Cited by 9 publications

(5 citation statements)

References 14 publications

(26 reference statements)

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“…The study followed previous studies (Adabor & Buabeng, 2020;Adabor et al, 2020;Buabeng et al, 2019aBuabeng et al, , 2019bCantah & Asmah, 2015) and specify the effect of natural resource (oil and gas resource rent specifically) on economic growth in a functional form as follows:…”

Section: Model Specificationmentioning

confidence: 99%

Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

Adabor

Buabeng

2021

Cogent Economics & Finance

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We investigate the asymmetric effect of oil and gas resource rent on economic growth of Ghana for the period 2010 to 2019, dwelling on the hypothesis that natural resources extraction has double-edge effect on economic growth. Using Nonlinear Autoregressive Distributed Lag (NARDL) model as estimation strategy, we find that oil and gas resource rent affect economic growth asymmetrically. Specifically, our NARDL estimates suggest that oil resource rent promotes economic growth significantly, providing empirical evidence in support of the resource blessing hypothesis. However, gas resource rent exerts a significant adverse effect on economic growth, providing empirical evidence to support the resource curse hypothesis. Our findings point to the need for policies that promote the expansion of oil resources firms than gas resource firms in the short run while long term policies should target setting up both oil and gas resource firms in developing countries, especially countries with similar socioeconomic and demographic setting like Ghana. Finally, government and monetary authorities should ABOUT THE AUTHORS Opoku Adabor holds B.A and Master's in economics from Kwame Nkrumah University of Science. He is currently a PhD student at RMIT University, Australia. He has worked as graduate research assistant at KNUST. His research interest includes macroeconomics, international, monetary economics and economic policy analysis.

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Section: Model Specificationmentioning

confidence: 99%

Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

Adabor

Buabeng

2021

Cogent Economics & Finance

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“…The study examined the causal link between economic growth and oil revenue by following previous empirical studies (Adabor and Buabeng, 2020; Buabeng et al , 2019; Adabor et al , 2020) to specify a general model as shown below: …”

Section: Introductionmentioning

confidence: 99%

The causative relationship between natural resource rent and economic growth: evidence from Ghana’s crude oil resource extraction

Adabor

Buabeng

Dunyo

2022

IJESM

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Purpose While the relationship between natural resource rent and economic growth is well documented in the literature, not much robust analysis has been done to estimate the causative relationship between oil resource rent and economic growth in Ghana. This might be due to the fact that commercial production of crude oil started not long ago in Ghana. This paper aims to examine the causal relationship between oil resource rent and economic growth for the period of 2011 to 2020 in Ghana. Design/methodology/approach The study incorporates economic growth as a function of oil resource rent, non-oil revenue, foreign direct investment, capital and interest rate in a Cobb–Douglass production function/model. The study used four different estimation strategies including the autoregressive distributed lags model, Toda–Yamamoto test approach, nonlinear autoregressive distributed lags model and nonlinear Granger causality. Findings The main finding revealed that 1% increase in oil resource rent generates 0.84% increase in economic growth of Ghana in the long run. Contrary, the authors find an insignificant positive effect of oil resource rent on economic growth of Ghana in the short run for the period under study. The result from the Toda–Yamamoto test approach also showed a unidirectional causality running from oil resource rent to economic growth of Ghana, providing evidence in support of the resource blessing hypothesis in Ghana. The results are robust to two different alternative estimation strategies. Originality/value The causal relationship between crude oil resource rent and economic growth is examined.

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“…The study applies the autoregressive distributed lag (ARDL) as the estimation technique and the study found that the performance of manufacturing firms is positively related with exchange rate significantly. In a related study Boateng (2019) investigated the effect of exchange rate on the financial performance of manufacturing firms in Ghana using return on asset and equity as the dependent variable for the period 2009 to 2017. The study used imports, foreign direct investment and nominal interest rate as control variables and applies the panel regression as the estimation.…”

Section: Empirical Literaturementioning

confidence: 99%

Exchange Rate and Manufacturing Sector Performance in Nigeria

Orji,

Ezeanyaeji

2023

LJE

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This study examined the impact of exchange rates on the performance of the manufacturing sector in Nigeria between 1990 and 2020. Using canonical cointegrating regression (CCR) framework, the result obtained showed that exchange rate devaluation constrains manufacturing sector while exchange rate fluctuation hampers manufacturing output. The study indicated that price increase leads to decline in the manufacturing sector, the study recommends among other things the need to formulate policies that align with the exchange rate to the actual needs of the manufacturing sector. The study further suggests that change in exchange rate management strategy should be allowed to run a reasonable course of time. Jettisoning strategies at will and on frequent basis has implication for exchange rate and obvious consequence for a sector that depends on foreign inputs

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The Effect of Exchange Rate Fluctuation on the Performance of Manufacturing Firms: An Empirical Evidence from Ghana

Cited by 9 publications

References 14 publications

Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

The causative relationship between natural resource rent and economic growth: evidence from Ghana’s crude oil resource extraction

Exchange Rate and Manufacturing Sector Performance in Nigeria

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