Open Access Original Research Article

Econometric Modelling of Income-consumption Relationship: Evidence from Nigeria

R. K. Ayeni, K. F. Akeju

Journal of Economics, Management and Trade, Page 1-15
DOI: 10.9734/BJEMT/2017/26967

This paper seeks to empirically verify the dynamic relationship between consumption expenditure and income in Nigeria by experimenting with two major income hypotheses, the habit persistence and permanent income hypotheses. The major research question centred on which of the consumption theories best describe the relationship between consumption and income in Nigeria? Time series data on per capita personal consumption expenditure (PPCE) and per capita disposable income (PPDI) in Nigeria for the period 1980 – 2014 were used. The result of the AR(p) time series estimation showed the weak existence of habit formation by Nigerian consumers. The speed of the short-run adjustment of consumption expenditure to changes in disposable income is 0.5569, which is averagely high; an indication that consumption habits are quickly adjusted to changes in disposable income. Due to the high level of poverty, unemployment and low standard of living, consumers in Nigeria find it difficult to form a consumption habit for long. Modelling consumption along the assumptions of Permanent income hypothesis; the results of the ARDL bound testing cointegration showed that the long-run multiplier effect of marginal propensity to consume out of permanent income is 0.2953; an indication that consumers save more than spend.  This also implies that Nigerians on the average have a low permanent income and a higher transitory income which does not affect consumption according to the assumption of Permanent Income of hypothesis. The study therefore recommends that policies towards reducing the rate of unemployment and alleviate poverty in the Nigeria economy should be put in place to encourage good consumption habits.

 

Open Access Original Research Article

Monetary Policy Shocks and Industrial Output in Nigeria

Eko Eko Omini, Ehigocho Peace Ogbeba, Okoiarikpo B. Okoi

Journal of Economics, Management and Trade, Page 1-13
DOI: 10.9734/BJEMT/2017/30459

This study investigated the impact of monetary policy shocks on industrial output in Nigeria using restricted VAR (VECM) model and Granger causality test for the period 1970 to 2015. In doing this, data on the manufacturing and solid minerals subsectors was used for the analysis. Results show that contribution of manufacturing subsector to GDP responded positively to shocks in monetary policy, commercial bank credit to industrial sector and exchange rates, while contribution of solid minerals subsector to GDP responded positively to shocks in commercial bank credit to the industrial sector and exchange rate after the first year. On the other hand, the causality test result indicated a unidirectional causality running from monetary policy rate and exchange rate to the contribution of manufacturing sector to GDP on the one hand, and commercial bank credit to the industrial sector and exchange rate to the contribution of solid mineral sector to GDP on the other. Recommendations included; proper evaluation by the central bank of Nigeria of the possible responses of the different subsectors of the industrial sector in its decision regarding choice of monetary policy channel; the need for extreme caution to be taken in the management of exchange rate, and the need for CBN to do more to encourage commercial banks to allocate more of their loans to small scale investors in the manufacturing sector.

Open Access Short Research Articles

Proactive Communication Mode (PMC) of Zappos: The Success of Consumer Engagement

Abdullah Alhidari

Journal of Economics, Management and Trade, Page 1-9
DOI: 10.9734/BJEMT/2017/31247

The internet is filled with successful stories that inspire others to work hard. Zappos build a strong brand based on proactive communication. Zappos is a success story not just because of the financial gain, but also because the proactive communication model (PMC) the company used. The proactive communication model refers to the degree of which employees anticipate the consumers' needs and desires. We emphasize the importance of consumer engagement on that communication model and how this model helped the brand to success. The brand starts the communication process from the time when the company chooses the employees. We propose the flow of the PCM at the end. For the current study, the critics of the brand strategy, conclusions, and implications will be under discussion.

 

Open Access Short Research Articles

Prospects for Worlds & Ukraine’s Information Economy in Creating and Improving Supercomputers Based of NBIC-Technologies

Igor Matyushenko, Olga Bilovska, Iuliia Makhanova, Volodimir Vovk

Journal of Economics, Management and Trade, Page 1-12
DOI: 10.9734/BJEMT/2017/30613

Aims: The aim of the article is to analyze the modern prospects of creating supercomputers for information economy in the World and improving supercomputers of SCIT family in Ukraine basing on NBIC-technologies.

Study Design: The reviews were carried out in the period 2009–14 on the basis of studying the world countries supercomputers development trends as well as on the basis of the research results obtained by Ukrainian academic institutions.

Place and Duration of Study: Department of International Economic Relations and Tourism Business of VN Karazin Kharkiv National University conducted the research between June 2016 and November 2016.

Methodology: Content analysis has been use as the main method of research, which allowed making a meaningful analysis of classic papers and researches of modern economists practitioners devoted to the peculiarities of the modern prospects of supercomputers creating for information economics in the World and Ukraine with using of NBIC-technologies. We also apply the methods of dialectic cognition, structural analysis and logic principles that provide for making authentic conclusions as regards the investigated topic.

Results: The article reviews modern trends in the World information economy development based on supercomputers with principally new schemes (e.g., cluster structure). This paper demonstrates that in the result of implementing comprehensive scientific-technical programs to develop supercomputers during 2009–2014 in Ukraine will create a multi-national grid network elements from a centralized management based supercomputers with cluster SCIT-structure that will allow to take into account sectoral and regional interests and ensure its integration into European and global IT-infrastructure.

Conclusion: The authors developed the modern prospects of creating supercomputers based on NBIC-technologies for information economics in Ukraine namely:

General many times growth of SCIT supercomputers productivity increase would ensure solving benchmark scientific-technical problems and public administration problems;

Qualitatively new level of parallel development of applications for graphic accelerators and flow-data architecture processors would be supported. Furthermore, tooling would be developed to be tested in the adaptation to hybrid clusters of the available intellectual IT and in developing the new intellectual IT; New intellectual IT to analyze and substantiate management decisions for economy and social sphere using knowledge bases and data bases would be developed and created.

 

Open Access Short Research Articles

Value Chain Assessment Study of Groundnut in Northwestern Ethiopia

Addisu Getahun, Erimias Tefera

Journal of Economics, Management and Trade, Page 1-15
DOI: 10.9734/BJEMT/2017/28238

This value chain analysis and assessment research study has been carried out to identify the main casts and their key activities in the product flow of groundnut commodity. In Ethiopia about 40,000 ha of arable land is covered by groundnut per annum and about 70,000 tons of yields have been harvested, but the national average yield was nearly 0.8 ton/ha, still its productivity was very low. Metekel zone is one of the most groundnut growing areas in Ethiopia. In Metekel zone, the main groundnut value chain players/actors were producers (farmers and investors), traders/grain merchants, unions, truck owners, drivers and input suppliers. Service providers of groundnut value chains were Research Centers, Bureau of Agriculture (BoA), Commercial Bank of Ethiopia (CBE), Nongovernmental organizations (NGO’s), Unions, Rural saving and credit institutes and other governmental offices. This field research work has been conducted by arranged one-day focus group discussion (FGD) program venue at Pawe town. The FGD program has been comprised fifteen stakeholders brought together from three districts in Metekel zone. Before, the focus group discussion program we have interviewed respected respondents from four rural districts; Pawe, Dangure, Mandura and Dibatie by prepared checklists to assess the capacity of local organizations and the roles of groundnut value chain actors at producers and traders level. In our assessment study, results revealed that in Metekel zone 2011, 2012 and 2013 main cropping season 243.805, 308.765 and 458.640tons of groundnut yield was harvested respectively, among those products more than 76% was produced for market to get cash. The major challenges of groundnut value chain in our study areas; were productivity declining, high amount of rainfall or weather fluctuation, high weed, diseases and insect pest infestation, unavailability of production and post-harvest technologies, price slump down or market inconsistency, lack of infrastructures and so on.  During our assessment study, the linkage of groundnut value chain actors was not well organized even the products flow only in one dimension without supporting forces.

 

Open Access Review Article

The Effect of Foreign Direct Investment on Economic Growth of Developing Countries: The Case of Zambia

Juliet Libanda, Daka Marshall, Linda Nyasa

Journal of Economics, Management and Trade, Page 1-15
DOI: 10.9734/BJEMT/2017/30175

Generally speaking, Foreign Direct Investment is undeniably necessary in almost all economies and can add to a country’s GDP when it is injected into an economy with a deeper view of the current economic situation as well as the assessment of appropriate variables of the economy in question. When dealing with developing countries like Zambia, careful measures should particularly be taken as the benefits of FDI can be illusionary. It is important to ensure that FDI is employed into a developing economy at the right time, with the right conditions, appropriate institutions and for the right reasons. Foreign Direct Investment, just like any other type of cash inflow, is said to add to a nation’s economic growth. In spite of the known numerous advantages that FDI brings to the host country, the level to which FDI benefits its recipients or the quality of benefits it brings into the host country is questionable in the case where the host country is a developing economy. It is vital to realize that the benefits that FDI brings to host countries can take many other forms and should be carefully examined before considering its injection into an economy. From another perspective, the flexibility that Foreign Direct Investment has during financial crises of an economy makes it to be considered as a private capital inflow of choice by multitudes. This study proves that FDI has similarities with other better capital flow approaches which are injected more indirectly into another nation’s economy (developing nation in this case) by using instruments and are more beneficial and less owner biased. Because Zambia and many more developing countries are more promising, have abundant minerals and have good, flexible institutions and policies, capital inflow to Zambia in the recent past has become increasingly dominated by FDI. Should Zambia encourage FDI while demoting other forms of cash flows? This research seeks to investigate the downside effects of FDI on aspects of the economy like employment sector and to analyze whether it is the best alternative of capital inflow for Zambia as a developing nation and if it can be replaced by better forms of capital inflow. This paper further answers the questions: “does FDI generally benefit a developing country like Zambia?” “To what extent does FDI actually benefit developing economies?” “Are there any other forms of capital inflows that can replace FDI in a developing economy like Zambia?”

 

Open Access Method Articles

The Enigma of the Income Tax

M. M. Khoshyaran

Journal of Economics, Management and Trade, Page 1-16
DOI: 10.9734/BJEMT/2017/30686

The objective of this paper is to propose an alternative formulation of income tax that is based on simultaneous utility maximization of both the taxpayer and the government. This method is different from both the fixed income tax method which applies a fixed rate irrespective of the income level, and the graduated income tax formulation which is based on incremental tax rates. Welfare properties of the simultaneous utility maximization income tax formulation such as Pareto optimality, majority voting, social optimality, and unproductive taxation are studied. It is proven that the utility based taxation satisfies all welfare properties.