Journal of Economics and Behavioral Studies

1-8

Authors: Brian Tavonga Mazorodze

This paper quantifies the threshold effect of external debt on economic growth in Zimbabwe between 1980 and 2016. Results from the Fully Modified Ordinary Least Squares (FMOLS) technique confirm that external debt (up to 57% of GDP) raises economic growth. Beyond the 57% of GDP threshold, external debt lowers growth. A separate analysis of variance shows that the mean GDP per capita is lower by 11% when external debt exceeds 57%. From the sample average, the 57% of GDP threshold suggests that debt stock above 4.7 billion USD can be detrimental to the country’s long-run growth prospects. Currently, Zimbabwe’s external debt is standing at over 11 billion USD which is way above the estimated threshold level. Therefore, the policy implication arising from this paper is that the country’s Finance Minister needs to pursue debt-reduction strategies given that the country’s stock of external debt is already sitting in the growth-reducing territory.

17-26

Authors: Egwakhe, A. J., Falana, R. B., Asikhia, O. O., Magaji, N.

The authors argued from business strategies perspective to understand competitive advantage among homogenous producers. The population consisted of top and functional managers of flour mill companies in Lagos State, Nigeria. Cross sectional survey research design was adopted and primary data were collated and used. The research instrument was an adapted questionnaire. Its validity and reliability were statistically determined. Six hundred and twenty copies of the questionnaire were administered and 605 retrieved. Econometric equation was formulated and multiple regression analysis was employed for data analysis. Business strategies were found to have significantly affected competitive advantage. The study recommended product differentiation and portfolio diversification in order to achieve competitive advantage.

34-56

Authors: Pabai Fofanah

The regression and the vector autoregressive VAR models are employed in this analysis. I use the auto-distributed lag regression model to estimate both the short and long-run impacts. In the VAR model, orthogonalized impulse response functions are employed to estimate the short-run. The regression result shows that while the depreciation of the real exchange rate RER increases aggregate cocoa and coffee exports AGX in the current year, this variable is not significant in determining AGX in Sierra Leone. This is because AGX has a long gestation period and until this period is over; suppliers cannot raise their output and hence exports. The negative effect of the one-period lag of the RER variable on AGX can be attributed to the fact that in the long run, depreciation in the nominal exchange rate leads to real exchange rate depreciation. This will lead to an increase in the cost of imported farming inputs in domestic currency terms. The reduction in imports that follows decreases the output and hence cocoa and coffee exports. However, this variable is not significant in determining AGX in Sierra Leone. An increase in the orthogonalized shock to the first difference of the RER causes a short series of increases in the first differences of AGX followed by a decrease, followed by an increase that dies out after four periods. The null hypothesis that the lag of the first difference of RER does not Granger-cause the lag of the first difference of AGX cannot be rejected. The paper concludes that in the short and long term, the government should not use the depreciation of the real exchange rate as a policy tool to promote the total export of cocoa and coffee products.