Does Terms of Trade Matter for Economic Growth? A Focus on Natural Resource-Rich Sub-Saharan African Countries

The contention that deteriorating terms of trade exists in countries that rely heavily on the exploitation and export of natural resources motivated us in this study. We therefore sought to investigate the impact of terms of trade on economic growth in natural resource-rich sub-Saharan African countries. We carried out the study using annual series that span a period of 1990-2019 under the framework of panel Random and Fixed effects. Our findings indicate that a long run relationship exists between GDP and the explanatory variables used in the study. Results also show that, while cross-section random effects indicates that terms of trade positively impacts on GDP, period fixed effects shows that terms of trade negatively impacts on GDP even though it is not significant. Results of our study also show that in all the models, labour force total and FDI have positive impact on GDP, while trade openness impacts on GDP negatively. We therefore recommend that the SSA natural resource-rich countries should diversify their economies away from the traditional natural resources base. Also human capital should be improved through sound education and training, while all the bottlenecks that constrain the inflow of foreign direct investment should be dismantled

Shocks to Monetary Policy Instruments: Does Credit to the Private Sector Respond in a Similar Manner to Public Sector Credit in Nigeria? A Vector Autoregressive Approach

This paper aims to investigate the response of private and public sector credit to shocks in monetary policy instruments with a view to ascertaining if the responses differ. The study utilized the vector autoregressive (VAR) model with monthly data covering the period from 2010M1 to 2021M8. Findings show that credit to private sector responds positively to shocks in money supply and monetary policy rate (MPR) in all periods. However, the response to cash reserve requirement (CRR) was negative beginning from period five, and it also responded negatively to foreign interest rate shock. On the other hand, credit to government was found to respond positively to shocks in money supply up to period two and CRR in all the periods, but it responded negatively to MPR starting from period three. The results of the variance decomposition show that other than shocks to itself, which was 100% in the first period, shocks to other variables influence private sector credit. Also, other than shocks to itself, which was 99.89% in the first period, shocks to other variables lead to shocks to credit to government. We therefore recommend that policies used to influence financial intermediation should factor in the sensitivity of both public and private sectors to these policy instruments and the impact of exogenous shocks should be factored into policy formulation

Regulatory Quality, Rule of Law and Foreign Direct Investment Inflows: Evidence from the Economic Community of West African States

In literature, the role of institutions in stimulating FDI inflows has been documented. This study examined the contributions of two institutional-quality variables, regulatory quality and the rule of law, in attracting FDI in the Economic Community of West African States (ECOWAS). The study used an annual series covering the period from 2000 to 2020 using three different estimation techniques: the panel ARDL, the panel FMOLS, and the panel DOLS. Findings reveal that while the rule of law had a negative and significant impact on FDI inflows under the panel ARDL and FMOLS, the impact of regulatory quality was negative and significant under the panel ARDL and DOLS. The short-run ARDL results revealed that only the population growth rate positively and significantly impacted FDI inflows. However, in the long run, findings showed that while the population growth rate had a positive and significant impact on FDI inflows under the ARDL, the impact of GDP was positive and significant in all the models. The exchange rate was also found to negatively and significantly impact FDI inflows in all the models. The study consequently recommends building strong institutions through collaboration among the member countries while improving human capital and economic growth

Regulatory Quality, Rule of Law and Foreign Direct Investment Inflows: Evidence from the Economic Community of West African States

In literature, the role of institutions in stimulating FDI inflows has been documented. This study examined the contributions of two institutional-quality variables, regulatory quality and the rule of law, in attracting FDI in the Economic Community of West African States (ECOWAS). The study used an annual series covering the period from 2000 to 2020 using three different estimation techniques: the panel ARDL, the panel FMOLS, and the panel DOLS. Findings reveal that while the rule of law had a negative and significant impact on FDI inflows under the panel ARDL and FMOLS, the impact of regulatory quality was negative and significant under the panel ARDL and DOLS. The short-run ARDL results revealed that only the population growth rate positively and significantly impacted FDI inflows. However, in the long run, findings showed that while the population growth rate had a positive and significant impact on FDI inflows under the ARDL, the impact of GDP was positive and significant in all the models. The exchange rate was also found to negatively and significantly impact FDI inflows in all the models. The study consequently recommends building strong institutions through collaboration among the member countries while improving human capital and economic growth