The working paper series are intended to mirror the advancement of activities and projects of the Department of Economics, University of Ilorin, Nigeria.
Impact of Trade Policy Reforms on Manufacturing
Firms’ Performance in Nigeria
Ayodele Folorunso Oshodi Department of Economics, University of Ilorin, Ilorin, Nigeria
Ismail Aremu Muhammed Department of Economics, University of Lagos, Lagos, Nigeria
Abstract
The pivotal role of the manufacturing sector in guaranteeing a relatively sustainable growth and
generating employment has made both public and private actors take interest in factors that might
influence manufacturing performance; trade policy reforms inclusive. Consequently, policy
makers and the government has taken steps to influence manufacturing performance through trade
policy reforms, in form of tariff reduction. The paper examined the impact of trade policy reforms
on manufacturing firms’ performance in Nigeria. Panel data were collected for 57 quoted firms in
Nigeria across 15 manufacturing industries. The fixed and random effects models were examined,
while the Hausman specification test judged the random effects model to be the most appropriate.
Chow break-point test also suggested the existence of structural break, and hence, the break was
controlled for. The findings reveals that tariff has significant negative impact on manufacturing
firms value added (performance) in Nigeria. The negative impact of tariff is however, much
obvious in the printing and publishing and aluminium industries/ sub-sectors. We therefore,
recommend that selective imposition of tariff on different products at different time should be
implemented in conjunction with sector-specific reforms for enhanced manufacturing performance
in Nigeria.
The Nexus between Economic Institution and Unemployment: Evidence from Sub-Sahara Africa (SSA)
KILISHI, A. Abdulhakeem
ADEBOWALE, A. Hammed
OLADIPUPO, Sodiq Abiodun Department of Economics, University of Ilorin, Ilorin Nigeria
Abstract
This study examines the nexus between economic institutions and unemployment using an
unbalanced panel data for 37 Sub-Sahara African (SSA) countries between 1995 and 2018.
Panel cointegration regression techniques of the Dynamic Fixed Effects (DFE) and Pool
Mean Group (PMG) methods are used to gauge the models. The most consistent method is
chosen based on the Hausman specification test. Our empirical results reveal that
economic institutions have no significant impact on unemployment in the short run. We
however found significant and negative impact of economic institutions on total, male and
female unemployment in the long run. This suggests that it takes time for institutional
reform to impact on unemployment. Thus, to reduce unemployment in the long run, it is
imperative to improve on economic institutions that would grantee more free economy.
Free economy encourages and protects private enterprises, promotes free movement of
capital, labour and goods as well as maintains effective government and stable
macroeconomic.
The Effect of Fiscal Deficit on Investment in Nigeria
Kasali Nurudeen Olanipekun Department of Economics, University of Ilorin, Ilorin, Kwara State.
Abstract
Investment has been identified as a major factor in the economic growth and development, and
by extension, contributes to high rate of employment, productivity, capital formation, improved
technology and poverty reduction. However, the effect of fiscal deficit on investment has been a
controversial issue in Nigeria. For this reason, this study generally investigates the effect of
fiscal deficit on investment in Nigeria, and specifically, to determine the effect of fiscal deficit on
private domestic investment, the effect of fiscal deficit on foreign direct investment and to
determine the relationship between private domestic investment and public investment in Nigeria
between the periods 1980-2015. The study adopts neoclassical theory of investment of Dale
Jorgenson’s approach, using macroeconomic data from 1980-2015. It employs Dickey Fuller
Generalized Least Square (DFGLS) and Ng-Perron unit root tests, and ARDL Bounds testing
approach to cointegration for the estimation techniques. The econometric evidence indicates
that fiscal deficit has a negative effect on private domestic investment in the short. However,
fiscal deficit has positive effect on foreign direct investment in the long run. Public investment
and private domestic investment are autonomous in Nigeria. Following the findings, the study
recommends that federal government should finance budget deficit through money creation.
Interfuel substitution, hydroelectricity consumption and CO2 emissions mitigation in Malaysia: Evidence from a transcendental logarithm (trans-log) cost function framework
Mufutau Opeyemi Bello Department of Economics, Faculty of Social Sciences, Univerrsity of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Sakiru Adebola Solarin Faculty of Business, Multimedia University, 75450 Melaka, Malaysia.
Yuen Yee Yen Faculty of Business, Multimedia University, 75450 Melaka, Malaysia.
Abstract
The main objective of this paper is to estimate the interfuel substitution elasticities between hydropower and the fossil fuels of coal and natural gas used in the generation of electricity for Malaysia. Due to the violation of the OLS method on account of the correlated error terms in the system of equations, the econometrics techniques of seemingly unrelated regression (SUR) was adopted to obtain the parameter estimates using dataset that covers the period 1988 to 2016. The main finding is that there exists substantial substitution possibility between hydropower and fossil fuels in the generation of electricity for Malaysia. CO2 emissions mitigation scenarios were also conducted to explore the possible effects of substituting fossil fuels for hydropower to generate electricity. The results show that switching from high carbon emitting fuels to renewable energy such as hydropower will substantially reduce CO2 emission and assist the country towards achieving the carbon emissions reduction targets. Policy recommendations are offered in the body of the manuscript.
Budget Transparency and Fiscal Performance:Lessons for Nigeria and Sri Lanka
Kilishi, A. Abdulhakeem Department of Economics, Faculty of Social Sciences, Univerrsity of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
A transparent budget process is expected to promote better fiscal performance in terms of
sound primary balance and debt profile. However, there is no consensus on the relationship
between budget transparency and fiscal performance. This paper contributes to the literature
by examining the relationship between budget transparency as well as primary balance, and
debt and provision of key infrastructure. Data were collected for countries in South Asia and
West Africa. The analysis shows relatively strong positive relationship between budget
transparency and primary balance. A weak positive relationship between transparency with
debt and moderately positive relationship with infrastructure is observed. It is also observed
that budget transparency is limited across the countries in South Asia and West Africa,
particularly in Nigeria and Sri Lanka. The paper therefore recommended that Nigeria and Sri
Lanka should practice a more transparent budget process by: (i) making information in budget
documents more comprehensive; (ii) publishing all budget documents at the right time; and
(iii) allowing public participation at all stages of the budget process.
Assessing the Adequacy of Budgetary Institutions in Nigeria
Kilishi, A. Abdulhakeem Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
In many developing countries including Nigeria budget process is faced with different
challenges such that the budget could not meet the socio-economic needs of the people.
Therefore, budgetary reforms were carried out to improve fiscal performance, despite that
there has not been significant change in budget outcomes. This paper examines the adequacy
of existing institutions in Nigeria, which is the aftermath of various fiscal reforms in the
country. Content analysis of the two main sources of budget institutions (the Fiscal
Responsibility Act and the 1999 Constitution) is carried out. The analysis shows: (i) a lack of
comprehensive fiscal calendar stating the timeline for budget activities in a sequential order;
(ii) a fragmented central budget power and responsibility which creates coordination
problem; and (iii) unrestricted legislative power to amend budget. The paper concludes that
there is need to review and amend relevant sections of the Fiscal Responsibility Act and the
1999 Constitution so as to resolve these inadequacies. The paper suggests that some level of
hierarchical rules should be introduced such that there is a single central budget authority to
coordinate, monitor and evaluate budget performance as well as enforce compliance to the
fiscal rules.
The Effects of Currency Devaluation on Output Growth in Developing Economies with Currency Crises
Ojuolape Adebayo Mohammed, Yusuf H. Agboola, Alabi K. Moshood and Oladipupo O. Abdullah Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
Currency devaluation is an important topic in the history of international
economics and finance. It has proved to impact positively on some economies’ growth and
negatively on others. This study focuses on the real effects of devaluing the currency in
short and long run using panel data analysis. Seven countries were examined, these are;
Ghana, Mexico, Malaysia, Pakistan, Philippines, Singapore and South Africa. These
countries devalued their currencies within the same period under consideration. The long
run effects and relationships were determined by testing for co-integration using different
co-integration methods, and the short run effect was determined using the Fully Modified
OLS (FMOLS) and the Error Correction Model. A panel data covering the period between
1981- 2010, was used in the analysis.The empirical results show the existence of no significant
relationship between currency devaluation and output growth in the short run and a negative
relationship between currency devaluation and economic growth in the long run.
Fiscal Policy and the Business Cycle in the West African Monetary Zone
M. K. Alabi and K. Amirthalingam Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Department of Economics, University of Colombo, Sri Lanka.
Abstract
The Economic Community of West African States has come up with a new single currency to be used for its proposed West African
monetary union. It is called eco. Among the West African states are
a group of countries collectively referred to as the West African
Monetary Zone. For the smooth running of a monetary union, fiscal
policy should be sustainable and countercyclical. Main objectives of
this study are to assess the relationship between fiscal policy and the
business cycle and the role of institutions. Panel data of six countries
for the period 2001-2018 were used. A fiscal reaction model was
estimated. The cyclical component of real general government
expenditure was used to represent fiscal policy while the cyclical
component of real Gross Domestic Product (GDP) was used as a
proxy for the business cycle. Results showed that West African
Monetary Zone member countries exhibit pro-cyclical fiscal policy
and weak fiscal sustainability. Also, the quality of institutions has the
capability of making fiscal policy less procyclical. The policy
implication of this study’s finding is that these countries may not
perform well if they go ahead with the single currency union. These
countries must make concerted efforts to improve the quality of
institutions and implement countercyclical fiscal policies.
Meanwhile the proposed monetary union should be suspended.
Explaining Academic Performance of First–Year Undergraduate Students in Economics
Kilishi A. Abdulhakeem Department of Economics,
University of Ilorin,
P.M.Box 1515
Ilorin, Nigeria
Abstract
This paper examines the impact of a set of academic performance predictors on first-year
undergraduate students of Economics. The academic performance predictors are grouped into preuniversity school characteristics, prior academic achievement, entrance requirements, university
and social factors. Stepwise regression technique was employed in the analysis. The results show
that performance in O’level Economics and University and Tertiary Matriculation Examination
(UTME) consistently have significant positive influence on students’ academic performance.
Attendance of tutorial in the university has important influence students’ performance. It is evident
that male academic performance is on the average, lower than female performance. However, there
is weak evidence that time students spend on social media negatively affect their academic
performance. This paper therefore, recommends that admission authority should put more
emphasis on O’level grade in Economics and UTME score when considering candidates to study
economics; and that tutorial should be well organized by the Department rather than arbitrarily as
being organized currently.
Creating the Institutional Foundation for Development in Nigeria: Lessons from Rwanda
Kilishi A. Abdulhakeem Department of Economics,
University of Ilorin,
P.M.Box 1515
Ilorin, Nigeria
Abstract
There is general consensus that institutions matter for economic performance. However, little is
known about how countries with weak institution can build strong institutions. This paper
examines one of the success stories in Africa, Rwanda, while drawing lessons for Nigeria. The
analysis shows that there are many areas in which Nigeria must make significant improvement so
as to experience positive change. It was identified that decentralization is central to Rwanda
success. The decentralization did not only transfer administrative power and resources to the subnational government but also transfer political power to elect and remove politicians to the citizens.
The main lesson is that decentralization of political power that allow citizens to participate in
government decision and policymaking is a necessary condition to building strong, efficient and
effective institutions that will ensure inclusive growth in Nigeria.
Impact of Trade Policy Reforms on Manufacturing Firms’ Performance in Nigeria
Ayodele Folorunso Oshodi
Department of Economics, University of Ilorin, Ilorin, Nigeria
Ismail Aremu Muhammed
Department of Economics, University of Lagos, Lagos, Nigeria
Abstract
The pivotal role of the manufacturing sector in guaranteeing a relatively sustainable growth and generating employment has made both public and private actors take interest in factors that might influence manufacturing performance; trade policy reforms inclusive. Consequently, policy makers and the government has taken steps to influence manufacturing performance through trade policy reforms, in form of tariff reduction. The paper examined the impact of trade policy reforms on manufacturing firms’ performance in Nigeria. Panel data were collected for 57 quoted firms in Nigeria across 15 manufacturing industries. The fixed and random effects models were examined, while the Hausman specification test judged the random effects model to be the most appropriate. Chow break-point test also suggested the existence of structural break, and hence, the break was controlled for. The findings reveals that tariff has significant negative impact on manufacturing firms value added (performance) in Nigeria. The negative impact of tariff is however, much obvious in the printing and publishing and aluminium industries/ sub-sectors. We therefore, recommend that selective imposition of tariff on different products at different time should be implemented in conjunction with sector-specific reforms for enhanced manufacturing performance in Nigeria.
The Nexus between Economic Institution and Unemployment: Evidence from Sub-Sahara Africa (SSA)
KILISHI, A. Abdulhakeem
ADEBOWALE, A. Hammed
OLADIPUPO, Sodiq Abiodun
Department of Economics, University of Ilorin, Ilorin Nigeria
Abstract
This study examines the nexus between economic institutions and unemployment using an unbalanced panel data for 37 Sub-Sahara African (SSA) countries between 1995 and 2018. Panel cointegration regression techniques of the Dynamic Fixed Effects (DFE) and Pool Mean Group (PMG) methods are used to gauge the models. The most consistent method is chosen based on the Hausman specification test. Our empirical results reveal that economic institutions have no significant impact on unemployment in the short run. We however found significant and negative impact of economic institutions on total, male and female unemployment in the long run. This suggests that it takes time for institutional reform to impact on unemployment. Thus, to reduce unemployment in the long run, it is imperative to improve on economic institutions that would grantee more free economy. Free economy encourages and protects private enterprises, promotes free movement of capital, labour and goods as well as maintains effective government and stable macroeconomic.
The Effect of Fiscal Deficit on Investment in Nigeria
Kasali Nurudeen Olanipekun
Department of Economics, University of Ilorin, Ilorin, Kwara State.
Abstract
Investment has been identified as a major factor in the economic growth and development, and by extension, contributes to high rate of employment, productivity, capital formation, improved technology and poverty reduction. However, the effect of fiscal deficit on investment has been a controversial issue in Nigeria. For this reason, this study generally investigates the effect of fiscal deficit on investment in Nigeria, and specifically, to determine the effect of fiscal deficit on private domestic investment, the effect of fiscal deficit on foreign direct investment and to determine the relationship between private domestic investment and public investment in Nigeria between the periods 1980-2015. The study adopts neoclassical theory of investment of Dale Jorgenson’s approach, using macroeconomic data from 1980-2015. It employs Dickey Fuller Generalized Least Square (DFGLS) and Ng-Perron unit root tests, and ARDL Bounds testing approach to cointegration for the estimation techniques. The econometric evidence indicates that fiscal deficit has a negative effect on private domestic investment in the short. However, fiscal deficit has positive effect on foreign direct investment in the long run. Public investment and private domestic investment are autonomous in Nigeria. Following the findings, the study recommends that federal government should finance budget deficit through money creation.
Interfuel substitution, hydroelectricity consumption and CO2 emissions mitigation in Malaysia: Evidence from a transcendental logarithm (trans-log) cost function framework
Mufutau Opeyemi Bello
Department of Economics, Faculty of Social Sciences, Univerrsity of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Sakiru Adebola Solarin
Faculty of Business, Multimedia University, 75450 Melaka, Malaysia.
Yuen Yee Yen
Faculty of Business, Multimedia University, 75450 Melaka, Malaysia.
Abstract
The main objective of this paper is to estimate the interfuel substitution elasticities between hydropower and the fossil fuels of coal and natural gas used in the generation of electricity for Malaysia. Due to the violation of the OLS method on account of the correlated error terms in the system of equations, the econometrics techniques of seemingly unrelated regression (SUR) was adopted to obtain the parameter estimates using dataset that covers the period 1988 to 2016. The main finding is that there exists substantial substitution possibility between hydropower and fossil fuels in the generation of electricity for Malaysia. CO2 emissions mitigation scenarios were also conducted to explore the possible effects of substituting fossil fuels for hydropower to generate electricity. The results show that switching from high carbon emitting fuels to renewable energy such as hydropower will substantially reduce CO2 emission and assist the country towards achieving the carbon emissions reduction targets. Policy recommendations are offered in the body of the manuscript.
Budget Transparency and Fiscal Performance:Lessons for Nigeria and Sri Lanka
Kilishi, A. Abdulhakeem
Department of Economics, Faculty of Social Sciences, Univerrsity of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
A transparent budget process is expected to promote better fiscal performance in terms of sound primary balance and debt profile. However, there is no consensus on the relationship between budget transparency and fiscal performance. This paper contributes to the literature by examining the relationship between budget transparency as well as primary balance, and debt and provision of key infrastructure. Data were collected for countries in South Asia and West Africa. The analysis shows relatively strong positive relationship between budget transparency and primary balance. A weak positive relationship between transparency with debt and moderately positive relationship with infrastructure is observed. It is also observed that budget transparency is limited across the countries in South Asia and West Africa, particularly in Nigeria and Sri Lanka. The paper therefore recommended that Nigeria and Sri Lanka should practice a more transparent budget process by: (i) making information in budget documents more comprehensive; (ii) publishing all budget documents at the right time; and (iii) allowing public participation at all stages of the budget process.
Assessing the Adequacy of Budgetary Institutions in Nigeria
Kilishi, A. Abdulhakeem
Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
In many developing countries including Nigeria budget process is faced with different challenges such that the budget could not meet the socio-economic needs of the people. Therefore, budgetary reforms were carried out to improve fiscal performance, despite that there has not been significant change in budget outcomes. This paper examines the adequacy of existing institutions in Nigeria, which is the aftermath of various fiscal reforms in the country. Content analysis of the two main sources of budget institutions (the Fiscal Responsibility Act and the 1999 Constitution) is carried out. The analysis shows: (i) a lack of comprehensive fiscal calendar stating the timeline for budget activities in a sequential order; (ii) a fragmented central budget power and responsibility which creates coordination problem; and (iii) unrestricted legislative power to amend budget. The paper concludes that there is need to review and amend relevant sections of the Fiscal Responsibility Act and the 1999 Constitution so as to resolve these inadequacies. The paper suggests that some level of hierarchical rules should be introduced such that there is a single central budget authority to coordinate, monitor and evaluate budget performance as well as enforce compliance to the fiscal rules.
The Effects of Currency Devaluation on Output Growth in Developing Economies with Currency Crises
Ojuolape Adebayo Mohammed, Yusuf H. Agboola, Alabi K. Moshood and Oladipupo O. Abdullah
Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Abstract
Currency devaluation is an important topic in the history of international economics and finance. It has proved to impact positively on some economies’ growth and negatively on others. This study focuses on the real effects of devaluing the currency in short and long run using panel data analysis. Seven countries were examined, these are; Ghana, Mexico, Malaysia, Pakistan, Philippines, Singapore and South Africa. These countries devalued their currencies within the same period under consideration. The long run effects and relationships were determined by testing for co-integration using different co-integration methods, and the short run effect was determined using the Fully Modified OLS (FMOLS) and the Error Correction Model. A panel data covering the period between 1981- 2010, was used in the analysis.The empirical results show the existence of no significant relationship between currency devaluation and output growth in the short run and a negative relationship between currency devaluation and economic growth in the long run.
Fiscal Policy and the Business Cycle in the West African Monetary Zone
M. K. Alabi and K. Amirthalingam
Department of Economics, Faculty of Social Sciences, University of Ilorin, P.M.B 1515, Ilorin, Nigeria.
Department of Economics, University of Colombo, Sri Lanka.
Abstract
The Economic Community of West African States has come up with a new single currency to be used for its proposed West African monetary union. It is called eco. Among the West African states are a group of countries collectively referred to as the West African Monetary Zone. For the smooth running of a monetary union, fiscal policy should be sustainable and countercyclical. Main objectives of this study are to assess the relationship between fiscal policy and the business cycle and the role of institutions. Panel data of six countries for the period 2001-2018 were used. A fiscal reaction model was estimated. The cyclical component of real general government expenditure was used to represent fiscal policy while the cyclical component of real Gross Domestic Product (GDP) was used as a proxy for the business cycle. Results showed that West African Monetary Zone member countries exhibit pro-cyclical fiscal policy and weak fiscal sustainability. Also, the quality of institutions has the capability of making fiscal policy less procyclical. The policy implication of this study’s finding is that these countries may not perform well if they go ahead with the single currency union. These countries must make concerted efforts to improve the quality of institutions and implement countercyclical fiscal policies. Meanwhile the proposed monetary union should be suspended.
Explaining Academic Performance of First–Year Undergraduate Students in Economics
Kilishi A. Abdulhakeem
Department of Economics, University of Ilorin, P.M.Box 1515 Ilorin, Nigeria
Abstract
This paper examines the impact of a set of academic performance predictors on first-year undergraduate students of Economics. The academic performance predictors are grouped into preuniversity school characteristics, prior academic achievement, entrance requirements, university and social factors. Stepwise regression technique was employed in the analysis. The results show that performance in O’level Economics and University and Tertiary Matriculation Examination (UTME) consistently have significant positive influence on students’ academic performance. Attendance of tutorial in the university has important influence students’ performance. It is evident that male academic performance is on the average, lower than female performance. However, there is weak evidence that time students spend on social media negatively affect their academic performance. This paper therefore, recommends that admission authority should put more emphasis on O’level grade in Economics and UTME score when considering candidates to study economics; and that tutorial should be well organized by the Department rather than arbitrarily as being organized currently.
Creating the Institutional Foundation for Development in Nigeria: Lessons from Rwanda
Kilishi A. Abdulhakeem
Department of Economics, University of Ilorin, P.M.Box 1515 Ilorin, Nigeria
Abstract
There is general consensus that institutions matter for economic performance. However, little is known about how countries with weak institution can build strong institutions. This paper examines one of the success stories in Africa, Rwanda, while drawing lessons for Nigeria. The analysis shows that there are many areas in which Nigeria must make significant improvement so as to experience positive change. It was identified that decentralization is central to Rwanda success. The decentralization did not only transfer administrative power and resources to the subnational government but also transfer political power to elect and remove politicians to the citizens. The main lesson is that decentralization of political power that allow citizens to participate in government decision and policymaking is a necessary condition to building strong, efficient and effective institutions that will ensure inclusive growth in Nigeria.