Essay: Causal relationship of exports on economic growth in Nigeria and Ghana

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  • Subject area(s): Geography essays
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  • Published on: July 28, 2019
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In line to fathom the true causal relationship of exports on economic growth in Nigeria and Ghana, I undertake a sequence of different ELG and GLE tests for each country. This will be the core memory empiric contribution of the export, which is to stipulate a more in-profoundness analysis of the relationship between exports and output augmentation than has been beforehand covenant. To keep the analysis adaptable, the study center on the relationship between export and growth. The research do intercept a wider numerous of potential strong variables in many of this design, but incorporate them as counteract variables in arrangement to reform recognize the exact relationship between export and production.

While our liking would be to prospect the internal prepare of possible relationships between all inputs to the effect preserver in-deepness, this is not likely disposed the data effectual. The study adapts in lieu to prioritization robustness and utility else variables to serve spill light on the export-augmentation relationship. It is serious to need that this hindrance the sweep of the econometric analysis it does not furnish any more insights into the import of institutions or arrangement, for warning. This is why the qualitative analysis of former correct condition such a significant setting and firm to the event of this analysis. The configuration of this correct is as chase. After present the data to be custom in the analysis, this study then scatter the methodology and outline the specifying trial employed.

Data

In system to keep the analyses as comparable as likely, cotter data for both countries appear primarily from one fountain the International Monetary Fund’s (IMF) International Financial Statistics (IFS) database management system. This database management system is a criterion ascent of international stats, kept and defend by the IMF’s Statistics Department.
It embodies opportunity sequence data on inconstant keystone stinting and fiscal series for most countries, including some as far back as 1955. For the most part, these stats are drawn instantly from the governments and statistical agencies of the obedient countries themselves, and this is the plight for both Nigeria and Ghana. The cotter order that figure the basis of the following criterion product, export and metropolis all arrive from this dataset, and the following descriptions of these list betake to both countries. Discussion of why each unsteady is confined will be sinister for the methodology diagram.

Output

The variable used to measure output and economic growth is gross domestic product (GDP). Although authors like Fitoussi, Stieglitz, and Sen (2010) argue that often this does not adequately capture living standards or welfare as such excluding, for instance any measure of greater freedom or equality the discussion in previous chapters has demonstrated that in these two cases economic growth and development were in fact highly correlated. For Nigeria, GDP is measured as the aggregate money value of all final goods and services produced within the country, before any provision for the consumption of fixed capital. Likewise, for Ghana GDP is measured as the aggregate money value of final consumption plus gross capital formation and net exports (the expenditure approach).

Exports

In line to view exports, i use an aggregate measure of the exports of both goods and services. This measure includes commodities such as food or manufactured products, but also items such as international tourism. According to definition used by the IMF, this goes with the basic concept of goods and service exports followed in national accounts and includes all transactions in goods and services between residents and non-residents (regardless of where they are living at the time).

Methodology

In line to fathom the true causal relationship of exports on economic growth in Nigeria and Ghana, I undertake a sequence of different ELG and GLE tests for each country. This will be the core memory empiric contribution of the export, which is to stipulate a more in-profoundness analysis of the relationship between exports and output augmentation than has been beforehand covenant. To keep the analysis adaptable, the study center on the relationship between export and growth. The research do intercept a wider numerous of potential strong variables in many of this design, but incorporate them as counteract variables in arrangement to reform recognize the exact relationship between export and production.

While our liking would be to prospect the internal prepare of possible relationships between all inputs to the effect preserver in-deepness, this is not likely disposed the data effectual. The study adapts in lieu to prioritization robustness and utility else variables to serve spill light on the export-augmentation relationship. It is serious to need that this hindrance the sweep of the econometric analysis it does not furnish any more insights into the import of institutions or arrangement, for warning. This is why the qualitative analysis of former correct condition such a significant setting and firm to the event of this analysis. The configuration of this correct is as chase. After present the data to be custom in the analysis, this study then scatter the methodology and outline the specifying trial employed.

Final conclusions will not be supported in one discrimination alone; they will take into description the everywhere image that this frequent of criterion each with their own shortcomings describe by testing economic growth and export and other way round export and economics growth of each country. The result is brighter, hopefully and sure even. All estimation is promise worn the econometric pay bill using Eview in managing to design the relationship between our variables, this study mate the usage of vector auto regression (VAR). This is ordinary and has the advantages to bestow each fickle to have a simultaneous impingement on the other variables in the system. This method was pioneered by Sims (1980), who argued that VAR means shun the often needless complications of a subjacent constitutive pattern and the excessive restrictions that such example requires for identification. The fundamental VAR example allot for the restriction of any contain of variables, which are regressed on a decided scalar of long- delayed of each variable in the system.
The universal VAR in spreadsheet formality is as follow;
Yt = A+ ∑_(i=1)^p▒B_i Y_i+ ε_t

Where: Yt is a k x 1 random vector (containing k variables)
A is a k x 1 vector of constant terms
B_i is a k x k matrix of coefficients
ε_t is a k x 1 vector of white noise error terms
P is the order of the VAR (the lag length)

If we expand out this general form and apply it to the simple bivariate case with one lag, our VAR consists of the following balanced system of k=2 equations:

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