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New Challenges for the Balkan Economies in the Context of the European Union

Author(s): Romeo-Victor Ionescu / Language(s): English Issue: 4/2017

The paper deals with the idea that EU has to reformate as a result of the latest challenges,including the Brexit. A possible effect and opportunity from this can be a stronger position for the EU Balkan Member States. The analysis in the paper takes into consideration all Balkan economies,including candidate countries in order to obtain a general approach for the region. This approach is new because it puts together member and candidate members from a region, in the context of re-evaluating the EU, and leads to the idea of finding a regional leader able to generate regional progress and to support the region’s interests in the European Institutions. The analysis covers five representative economic indicators (GDP growth rate, gross fixed capital formation, unemployment rate, inflation rate and general government gross debt) and is realized on three levels: a comparative analyses, a cluster analysis, and a cumulative analysis as well. Moreover, regression is used in order to point out the economic disparities across the region. The main conclusion of the analysis is that the great regional economic disparities can be decrease using common regional policies. Moreover, the analysis identifies a regional economic leader able to coordinate common initiatives at least on short and medium terms. The analysis and the conclusions in the paper are supported by the latest official statistic data, pertinent tables and diagrams.

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The Endogeneity of Business Cycle Synchronisation in SADC: A GMM Approach

Author(s): Ntokozo Patrick Nzimande,Harold Ngalawa / Language(s): English Issue: 4/2017

Studies often conclude that in SADC would be disastrous and not optimal for all member countries. This is because of the observed low, and even negative correlation amongst member countries. However, Frankel and Rose (1998) demonstrate that the degree of synchronisation is not irrevocably fixed and is endogenous to other factors. Hence, this study is set out to investigate factors influencing business cycle synchronisation in the SADC region. More precisely, we use a generalised method of moments (GMM) to investigate the influence of trade integration, financial integration, fiscal policy convergence, monetary policy similarity and oil prices (a proxy for global common shocks) on the degree of business cycle synchronisation. To conduct our analysis, we data covering the period of 1980-2014, we use bilateral data due to unavailability of regional aggragates. We find trade, fiscal policy convergence and monetary policy similarity to have a sanguine impact on the degree of synchronisation. Moreover, owing to their procyclical behavior, financial flows lead to diverging business cycles. In addition, we find oil prices to exert a negative impact on business cycle co movement in the SADC region. Our results have far-reaching policy implications for the proposed SADC monetary union- by stimulating trade, ensuring coherence in macroeconomic policies SADC could move closer to becoming an optimal currency area.

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Foreign Direct Investments and the Real Convergence. An Approach for Romania and Bulgaria

Author(s): Vasile Cocriş,Ovidiu Stoica,Maria-Ramona Sârbu / Language(s): English Issue: 4/2017

This paper outlines the need for an analysis of the extent to which foreign direct investments(FDIs) affects real convergence expressed using the following selected macroeconomic indicators:Gross domestic product (GDP) per capita, the unemployment rate (UR), labour productivity (LP) per person employed and the minimum wage (MW). The purpose of this paper is to analyze the impact of foreign direct investment (FDI) on real convergence in Romania’s and Bulgaria’s economy during 2004-2014. The main results for both Romania and Bulgaria show that FDI can be considered important sources of growth for real convergence that have contributed to economic growth, increased labour productivity and increased the minimum wage except for the unemployment rate. The results confirmed our expectations because logically, foreign firms bring their own technology, appropriate for the work of the employees, in order for their employees to produce as much as possible and pay salaries relatively higher compared to companies with local capital, but they demand instead higher productivity.

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Oil Price Shocks and Economic Performance in Africa’s Oil Exporting Countries

Author(s): Mathew Ekundayo Rotimi,Harold Ngalawa / Language(s): English Issue: 5/2017

This study applied recently developed Panel Structural Vector Autoregressives (P-SVAR)estimating technique to empirically assess the transmission processes of oil price shocks and how it impacts economic performance within the monetary framework of the Africa’s net oil exporting economies. The study considered, among other variables; inflation, money supply, bank rate, exchange rate, gross domestic product, unemployment and oil price shocks which is treated a sexogenous while other variables as endogenous variables. The period of the study covered 1980-2015. The analysis of the data revealed that there were significant responses to oil price shocks during this period. The result of the study showed that oil price shocks have large impact on the economic performance of Africa’s oil exporting countries and also that transmission of oil price ensues monetary medium. Hence, the study suggests that strong monetary control measure should be put in place whenever positive shocks in oil is experienced.

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Europe 2020 Strategy vs Global Environment Protection’s Challenge

Author(s): Romeo-Victor Ionescu,Luminita Maria Filip / Language(s): English Issue: 5/2017

The paper deals with the analysis of the latest events related to the environment protection and clean energy. This analysis is built on two levels. The first one is the analysis of the Europe 2020 Strategy regarding the environment and energy across the EU and points out the great disparities between the Member States. The second level is focus on the environment and energy consumption in Romania. It is followed by forecasting procedures related to the greenhouse gas emissions, there newable energy in gross final energy consumption, the primary energy consumption and the final energy consumption. The main conclusion of the paper is that EU has to face to great challenges in this domain and the Strategy’s goals achieving in 2020 is not sure. On the other hand, Romania has good performance for two from the four above specific indicators. The analysis is based on long term statistical data, pertinent diagrams and is supported by IBM-SPSS software.

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The Relationship between Renewable and Nonrenewable Energy Consumption and Economic growth in G7 countries: Evidence from Bootstrap Panel Causality Test

Author(s): Uğur Korkut Pata,Harun Terzi / Language(s): English Issue: 5/2017

In this study, both renewable and nonrenewable energy consumption and economic growth relations were examined by the bootstrap panel Granger causality method covering the period 1996- 2014 for G7 countries. The findings show a unidirectional causality moving from renewable energy consumption to economic growth in Germany and Japan, and a bidirectional causality between these two variables in France, Italy and the United Kingdom. Regarding nonrenewable energy consumption, unidirectional causality moving from nonrenewable energy consumption to economic growth in Canada and the United States, and the causality in the opposite direction is valid in the United Kingdom and Germany. Also in Japan, there is a bidirectional causality relationship between these two variables. As a result, energy consumption is an important factor for G7 countries' economic growth.

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Cost Reduction Strategy and Firm Profitability during Recession Period: Nigerian Banking Industry Experience

Author(s): Patrick Amaechi Egbunike,Segun Idowu Adeniyi / Language(s): English Issue: 6/2017

Nigeria banks faced financial crisis due to financial meltdown and government treasury single account policy. This has forced banks to employed strategic cost management techniques like downsizing of employee and reduction of staff salary to survive and sustain their competitiveness in banking industry. This study examines the influence of downsizing of staff and reduction of staff salary on bank profitability. The specific objective is to ascertain the influence of downsizing of employee and reduction of staff salary on return on asset. Survey design was used for the study. Purposive sampling technique was used to select the sample frame from first generation of banks that are licensed with international authorization in Nigeria This study obtained secondary data from the Nigerian Stock Exchange Fact-book and Annual Report and Accounts of the sample population for the period 2006 to 2016. A linear regression analysis was used in estimating the parameter of the model. The study finds out that there is negative relationship between downsizing of employee, reduction of staff salary and profitability. It was discovered that the period after banks downsize their employee, bank performance was at its low ebb. We strongly recommend that banks can reduce their employee salary instead of laying them off. Then, salary increment can be done when the financial performance is improving.

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The Linkage between Emerging and Developed Markets: Implication for International Portfolio Diversification

Author(s): Oladapo Fapetu,Olufemi Adewale Aluko / Language(s): English Issue: 6/2017

This study is a holistic attempt to examine the linkage between emerging and developed markets between January 2012 and June 2016 using iShares MSCI Emerging Markets ETF and iShares MSCI World ETF to measure emerging and developed markets respectively. Employing the Johansen, Engle-Granger, and Philip-Ouliaris, cointegration testing approaches, this study reveals that there is no cointegration between emerging and developed markets, thus indicating that international portfolio diversification is feasible for investors holding financial assets in both markets. This finding implies that investors can reduce risk by constructing a portfolio consisting of assets in both emerging and developed markets.

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Harmonization of Corporate Income Tax (CIT) in the EU - Achievements and Challenges

Author(s): Fitore Morina,Bedri Peci / Language(s): English Issue: 6/2017

This paper provides a framework of the tax systems of CIT - Corporate Income Tax in theEU. This paper treats the concept of CIT according to the OECD, EU directives and Kosovo legislation. It aims to identify gaps in the current Kosovo legislaton and the tendency to increase the harmonization of the tax systems in EU, especially, in view of the direct taxes. The theory of international tax law counts some methods used in the case of the relocation of the source of income from countries with high tax rate in countries with the lower tax rate. However, determining the level of taxation in this area is the exclusive issue of Member States in harmony with the principle of subsidiarity. With the aim at securing sustainable economic development and growth in the EU, within the framework of their strategy some changes were proposed regarding the elimination of all legal and fiscal barriers that hinder the full integration of the national systems of member states into the common market. The CCCTB initiative is considered a major step towards aligning the EU tax systems. So, the purpose of this article is to demonstrate the level of harmonization of the tax systems in EU, using the comparativ, empirical, normativ and logical methods, to conclude the role of CIT in the tax systems.

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Relationship between China’s Economic Growth and South Africa’s Exports to China

Author(s): Bella Angomoko,Malefa Malefane / Language(s): English Issue: 1/2018

The rapid growth of China’s economy has increased China’s demand for imports required to meet the increased demand for raw materials in its industries. In 2006, China became the largest export destination for South Africa. This paper seeks to examine the relationship between China’s economic growth and South Africa’s exports to China. The paper aims to find out whether there is any significant relationship between China’s economic growth and South Africa’s exports to China. Using an import demand function for China, we employ an ARDL framework to analyze the research problem based on quarterly data covering the period 1992 to 2015. We find no evidence that there is a significant relationship between China’s economic growth and South Africa’s exports to China.However, the results do show that there is a positive long-run relationship between South Africa’s exports to China and the price of South Africa’s exports. The positive coefficient of South Africa’s export prices indicates lack of price sensitivity in terms of South Africa’s exports to China. Based on the results, we recommend that South Africa should find ways to enable its exports sector to benefit more from the high economic growth in China. Among other ways, this could be achieved through negotiating a free trade agreement (FTA) between South Africa and China.

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A Panel VECM Analysis of Competition, Access to Finance and Economic Growth in BRICS

Author(s): Farai Kwenda / Language(s): English Issue: 1/2018

This study examines the interplay between competition, access to finance and economic growth in Brazil, Russia, India, China and South Africa (BRICS). It adds to the ongoing debate on the interdependence that exists among competition, access to finance and economic growth by exploring their causal relationship using the panel Vector Error Correction Model. The results obtained suggest that there is a long run causality running from the access to finance (proxied by interest rate spread) and competition to economic growth. This is not surprising because it is generally expected that the interplay between competition and access to finance has some influence on the growth of any economy. The study did not find any evidence to support any long run causality running from economic growth and competition to access to finance. Neither was there any evidence showing any causal relationship between economic growth and access to finance and competition.

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Foreign Direct Investment Inflows and Oil Price Fluctuations in Developing Oil Exporting Countries: the Case of Nigeria

Author(s): Olawunmi Omitogun,Adedayo Emmanuel Longe,Kayode Daniel Ajulo / Language(s): English Issue: 2/2018

The study investigates the impact of oil price fluctuations on foreign direct investment inflows in developing oil exporting countries using Nigeria as a case study by ARDL method and VECM granger causality test to analyse the data spanning from 1970 to 2015. It was observed that oil price fluctuations do not favour foreign direct investment in Nigeria both in the long-run and shortrun. This implies that as oil price changes foreign direct investment inflows falls. VECM granger causality test revealed that there is no direction of causality between oil price fluctuations and foreign direct investment inflows in Nigeria. We therefore concluded that oil price is not an important determinant of foreign direct investment inflows. The study recommends that government should take the advantage of times of positive change in the oil price to fix the needs to attract foreign direct investment inflows in the economy.

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Government Policy, Foreign Direct Investment and Unemployment in Emerging Economies

Author(s): Abayomi T. Onanuga,Olaronke T. Onanuga / Language(s): English Issue: 2/2018

The broad objective of this study is to determine how government policy influences FDI as well as how FDI affects the level of unemployment as a proportion of labour force in emerging economies. The techniques of analysis are a descriptive statistic and panel regression based on Ordinary Least Squares Method. Evidence from the descriptive analysis affirms that the variables of the study for each country exhibit contradictory behaviour in 1991-2016. In the same period, the foremost beneficiaries of the net inflow FDI are not experiencing the lowest unemployment rate.Panel regression results (2000-2015) suggest that net inflow of FDI has a negative influence on unemployment while government policy has no significant effect on the net inflow of FDI. The study concludes that a continuous inflow of net foreign investment is a good source of creating jobs in emerging economies. Due to the lack of influence of government policy on the net inflow of FDI, the study recommends that emerging economies should revise the regulation on the freedom to trade internationally so as to enhance the continuous flow of foreign direct investment.

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Foreign Direct Investment in Nigeria: Its Role and Importance in Industrial Sector Growth

Author(s): Philip Ifeakachukwu Nwosa / Language(s): English Issue: 2/2018

This study examined the role of foreign direct investment in industrial sector growth in Nigeria for the period spanning 1970 to 2016. The study utilized the error correction modelling technique and the result of the study showed that foreign direct investment had negative and significant impact on industrialization in Nigeria. The study concluded that the role of foreign direct investment in the growth of the Nigerian industrial sector had been harmful rather than enhancing it.Thus, the study recommended the need for the Federal government to shift her focus and policy directives from the oil sector to the industrial sector as this will attract the attention of foreign investors into the industrial sector. Also, there is the need for improve strategies to enhance the competitiveness of Nigerian industrial sector in attracting foreign direct investment.

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The Role of Capital Requirements on the Stability of Kosovo Banking Sector

Author(s): Besnik Livoreka,Rrustem Asllanaj / Language(s): English Issue: 2/2018

After the failure of the Bretton Woods system, it was more than necessary to create a stable, acceptable and strong banking system. The way to achieve this was to form the Basel Committee on Banking Supervision. The committee has set a number of requirements that banks should fulfil in order to be a part of the banking sector. These rules have been adopted by many countries on an individual basis; one of the countries which has adopted the Basel regulations on banking supervision is Kosovo. Based on the committee’s regulation on capital adequacy, the Central Bank has created the Local Capital Regulation. The aim of this adoption is to completely integrate the Basel regulation in the near future. The major harmonisation was performed in 2012, when the new law on banking supervision was enforced. This paper provides us information on the impact of the new law requirements on capital adequacy ratios.

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Analysis of the Main Economic Indicators of the World

Author(s): Gina Ioan,Cătălin Angelo Ioan / Language(s): English Issue: 2/2018

The article analizes the main economic indicators of the World for each of the developing countries or regions of the world. A number of indicators are analyzed, such as: Expenses, Exports of goods and services, Imports of goods and services, GDP, Gross capital formation, Inflation, consumer prices, Revenue, excluding grants.

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Call for Innovation-Driven Development: A Grounded Theory Study of Thai Export-Oriented Garment Industry Facing Competitive Challenges in the Context of Industry 4.0 Era

Author(s): John Christopher Walsh,Zeng Yan / Language(s): English Issue: 3/2018

The importance of the export-oriented garment industry in the economy of Thailand is very high. Currently, this industry is facing great challenges with respect to its growth rate. Competition in international markets is high due to problems such as low productivity, the high cost of production due to better labour wages, limited capability for development, inefficient management structures,limitations in skills training and inefficient systems. To take advantage of global market opportunities in the context of the Industry 4.0 Era, actors in the sector should accurately identify all dimensions of competitive challenges facing them. This paper focuses on the analysis of the current situation of TEOG(Thai Export-Oriented Garment) industry with respect to its competitive challenges and attempts to develop a model for competitive challenges. It is useful for understanding the groupings of TEOG industry challenges and the related theoretical underpinning, which shows an interactive relationship between the various categories of competitive challenges that are encountered. Additionally,presentation is made of the possible innovation-driven approaches to be used by TEOG industry actor swhich are suggested for overcoming these competitive challenges.

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Exploring the Employment Effect of FDI in BRICS: Does Conditionalities Matter?

Author(s): Kunofiwa Tsaurai / Language(s): English Issue: 3/2018

The study investigated the conditions that should exist in the BRICS (Brazil, Russia, India, China, South Africa) countries in order to enhance FDI’s influence on employment creation using panel data analysis methods with data ranging from 1994 to 2014. Although literature shows that the positive influence of FDI on employment generation is in the majority, channels through which FDI affects employment is an area which has so far been completely ignored by empirical researchers. To the best of the author’s knowledge, this study is the first to investigate channels through which FDI influences employment. The findings according to both pooled ordinary least squares (OLS) and fixed effects shows that high levels of economic growth, human capital and financial development should be available in the BRICS countries in order for FDI’s positive influence on employment generation to be accelerated. The study therefore urges BRICS countries to implement policies that enhances financial development, economic growth and human capital development in order to realise employment creation benefits triggered by FDI inflows. Future studies should investigate if there are other conditions apart from these three which must exist in the BRICS countries in order to accelerate the realisation of FDI triggered employment generation advantages.

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Consequences of Money Laundering on Economic Growth – The Case of Kosovo and its Trade Partners

Author(s): Alban Hetemi,Safet Merovci,Ozan Gulhan / Language(s): English Issue: 3/2018

The main purpose of this paper is to explore the impact of money laundering phenomenon on economic growth level, respectively focusing on Republic of Kosovo and its trade partners’economic growth. In order to achieve this objective, the authors used a dynamic panel generalised methods of moments (GMM) technique. This paper provides results about measure of effect of money laundering on economic growth and the objective is to provide reasonable evidence that money laundering empirically impacts the macroeconomic indicators, respectively the economic growth of the country. When compare with past literature, similar results are found about negative effect of money laundering on economic growth. Through this paper, it is concluded that reductions in annual growth rates were associated with increases of variables related with money laundering. The key contribution of the paper is that it provides clear results about the effect of this phenomenon on economic growth which is very important for academics, researchers and universities. Moreover, the study is original and unique because puts Republic of Kosovo to the centre which is not studied in the past. As conclusion,through this paper is proved the hypothesis that money laundering has a significant effect on economic growth and this effect is negative.

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Re-examining Causal Relationship between Dividend Policies and Commercial Bank Performance: Evidence from 30 Sub-Saharan Africa Countries

Author(s): Odunayo Magret Olarewaju / Language(s): English Issue: 3/2018

This paper aims to test for causality between two dividend policies (dividend payout and dividend reinvestment plans) and return on equity as a measure of financial performance. Dividend policies issues have been continually debated around the world with mixed results, and yet to date, no definite conclusions have been reached. The study used 250 commercial banks from 30 SSA countries over the period between 2006 and 2015 to run long-run causality tests. The results from the block exogeneity Wald test from the panel vector error correction model, and the pairwise Granger causality test shows that there is a unidirectional causality between return on equity and dividend payout ratio.This implies no causality between dividend payout ratio and banks’ return on equity over the study period. Hence, we conclude that the widely adopted model for the payment of dividends in the SSA banking market is a win-lose game, as there is no causality between dividend payment and bank performance. As such, we recommend that other dividend policies that can minimize future financing costs, increase bank assets, and improve the future growth prospects of the region be explored.

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