Economic growth and its relationship with the macroeconomic factors: An analysis of Oman
-
DOIhttp://dx.doi.org/10.21511/ppm.20(4).2022.27
-
Article InfoVolume 20 2022, Issue #4, pp. 356-364
- Cited by
- 336 Views
-
101 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study determines Oman’s most important macroeconomic factors between 1990 and 2019. The ARDL bound test findings for co-integration show that both long and short runs exist. The error-correcting mechanism further states that when the divergence from long-run equilibrium is rectified at an adaptation speed of 78.9%, it signals an inversion to a long-run stable state. In response to a change in the previous year’s economic growth, the final consumption expenditure indicates a rise of 0.472; the gross fixed capital formation and export indicate hikes of 0.149 and 0.358 at a 1% significance level. Additionally, the findings of co-integration regression using fully modified ordinary least square (FMOLS), dynamic ordinary least square (DOLS), and canonical co-integration regression (CCR) were used to strengthen and validate the results that export ranks first in Oman, followed by final consumption spending. Therefore, export, gross fixed capital formation, and final consumption expenditure are vital macroeconomic elements supporting Oman’s economic development.
- Keywords
-
JEL Classification (Paper profile tab)C51, O11, O53
-
References26
-
Tables6
-
Figures1
-
- Figure 1. CUSUM stability
-
- Table 1. Descriptive statistics and Pearson correlation analysis
- Table 2. Unit root results
- Table 3. Co-integration test results
- Table 4. ARDL ECM results
- Table 5. Co-integration regression results
- Table 6. Diagnostic test
-
- Adegboyega, B., & Odusanya, I. (2014). Empirical analysis of trade openness, capital formation, FDI and economic growth: Nigeria experience. The international journal of social science and humanities, 1(1), 36-50.
- Akaike, H. (1987). Factor analysis and AIC. Psychometrika, 52, 317-332.
- Ali, G. (2017). Fixed capital formation and economic growth of Pakistan. Journal of Modern Developments in Social Sciences Research, 1(2).
- Al-Mawali, N., Hasim, H. M., & Al-Busaidi, K. (2016). Modelling the Impact of the Oil Sector on the Economy of the Sultanate of Oman. International Journal of Energy Economics and Policy, 6(1), 120-127.
- Altaee, H. H. A., Al-Jafari, M. K., & Khalid, M. A. (2016). Determinants of Economic Growth in the Kingdom of Saudi Arabia: An Application of Autoregressive Distributed Lag Model. Applied Economics and Finance, 3(1).
- Bakare, A. (2011). A theoretical analysis of capital formation and growth in Nigeria. Journal of psychology and business, 3(1), 11-24.
- Bakari, S., & Mabrouki, M. (2017). Impact of Exports and Imports on Economic Growth, New Evidence from Panama. Journal of Smart Economic Growth, 2(1).
- Boamah, J., Adongo, F. A., Essieku, R., & Lewis, J. A. Jr. (2018). Financial depth, gross fixed capital formation and economic growth, empirical analysis of 18 Asian economies. International Journal of Science Education Research, 2(04), 120-130.
- Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427-431.
- Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrics, 49(4), 1057-1072.
- Kalaitzi, A. S., & Chamberlain, T. W. (2020). Exports and Economic Growth, Some Evidence from the GCC. International Advances in Economic Research, 26, 203-205.
- Kanu, I. S. (2014). Capital Formation and Economic Growth in Nigeria. Global Journal of Human-Social Science Research, 14.
- Khan, A. M., & Khan, U. (2021). The Stimulus of export and import performance on the economic growth of Oman. Montenegrin Journal of Economics, 17(3), 71-86.
- Khan, U., Khan, A. M., Alam, M. S., & Alkatheery, N. (2022). Causation Between Consumption, Export, Import and Economic Growth of Oman. Journal of Etikonomi, 21(1).
- Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationary against the alternative of a unit root. Journal of Econometrics, 54, 159-178.
- Li, X., Wu, L., & Yang, X. (2018). Exploring the impact of social economic variables on traffic safety performance in Hong Kong: A time series analysis. Safety Science, 109, 67-75.
- Masoud, Md. A., & Suleiman, N. N. (2016). The Relationship among Export, Import, Capital Formation and Economic Growth in Malaysia. Journal of Global Economics, 4(2).
- Nkalu, C. N., & Edeme, R. K. (2019). Environmental hazards and life expectancy in Africa: evidence from GARCH Model. SAGE Open, 9(1).
- Pesaran, M. H., & Shin, Y. (1999). An autoregressive distributed-lag modelling approach to co-integration analysis. In S. Strom (Ed.), Econometrics and Economic Theory in the Twentieth Century: The Ragnar-Frisch Centennial Symposium (pp. 371-413). Cambridge, UK: Cambridge University Press.
- Pesaran, M. H., Shin, Y., & Smith, R. P. (2001). Bounds testing approaches to the analysis of the level relationship. Journal of Applied Econometrics, 16(3), 289-326.
- Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrica, 75(2), 335-346.
- Rafindadi, A. A. (2014). Econometric prediction on the effects of financial development and trade openness on the German energy consumption: A startling revelation from the data set. International Journal of Energy Economics and Policy, 5(1), 182-196.
- Shuaib, M., & Dania, E. (2015). Capital formation: Impact on the economic development of Nigeria 1960-2013. European journal of business economics and accountancy, 3(3).
- Siddiqui, A. A., & Abhishek, A. (2020). Impact of oil exports on the growth of the economy of Oman. International Journal of Indian Culture and Business Management (IJICBM), 20(4).
- Topcu, E., Altinoz, B., & Aslan, A. (2020). Global evidence from the link between economic growth, natural resources, energy consumption, and gross capital formation. Resources Policy, 66, 101622.
- Ugochukwu, S. U., & Chinyere, U. P. (2013). The impact of capital formation on the growth of Nigerian economy. Research Journal of Finance and Accounting, 4(9).