The effect of fixed capital formation rate on gross domestic product in Iraq
-
Author(s)Sameer Siham DawoodLink to ORCID Index: https://orcid.org/0000-0003-4152-0152
,
Bilal Kadhim Haidar
,
Mohammad Ghazi Nussaif Jasim
-
DOIhttp://dx.doi.org/10.21511/pmf.13(2).2024.06
-
Article InfoVolume 13 2024, Issue #2, pp. 56-67
- 45 Views
-
8 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The total fixed capital formation is one of the main and influential determinants of production function through its impact on production costs, competitiveness, and profits. The Iraqi gross domestic product depends on one sector (the oil sector) in financing the government budget, which may lead to crises in case of oil price collapse. Therefore, the study aims to clarify the imbalance in the production function and the real output of the Iraqi economy and to indicate the role of the total fixed capital formation in this imbalance. The econometric methods were used to measure the degree of influence of the total fixed capital formation (independent variable) on the gross domestic product (dependent variable) from 2004 to 2020. The results showed a robust relationship between fixed capital formation and gross domestic product, where the independent variable affects the dependent variable by 4.5%, while the oil sector dominated the total value added by its acquisition of the total fixed capital formation by 47.45%, and the productive sectors of agriculture and industry achieved value added of 3.8%. The study concluded that the distribution of total capital formation by sector has an impact on the gross domestic product. Therefore, it is necessary to distribute the total fixed capital formation to the productive and production-supporting sectors to achieve economic growth and diversify the structure of the gross domestic product.
- Keywords
-
JEL Classification (Paper profile tab)H50, O11, G31, F62
-
References31
-
Tables9
-
Figures3
-
- Figure 1. Q-Stat statistics values for self-association and partial correlation of the residual
- Figure 2. Stat statistics values for self-association and squared correlation of the residual
- Figure 3. Normal distribution of the condom according to the Jarque-Bera test
-
- Table 1. Development of gross domestic product at current prices in Iraq, and gross fixed capital formation for the period 2004–2020, one million Iraqi dinars
- Table 2. Relationship between GDP and capital accumulation (K)
- Table 3. The estimated regression of GDP and K
- Table 4. Ramsy test
- Table 5. Serial correlation LM test
- Table 6. Heteroskedasticity test
- Table 7. The average percentage of the contribution of the sectors in the gross domestic product for the period 2003–2020
- Table 8. The development of the fixed capital formation structure according to the economic sectors, the average for the period 2004–2020
- Table 9. The percentage of added value achieved in the economic sectors in Iraq for the period 2017–2020
-
- Adekunle, A. K. (2019). The effect of capital formation on economic growth in Nigeria. A 17th annual national conference of the school of business studies, Federal Polytechnic, Ede Osun state.
- Al-Fawwaz, F. (2016). The impact of government expenditures on economic growth in Jordan (1980–2013). International Business Research, 9(1).
- Ali, G. (2017). Gross fixed capital formation & economic growth of Pakistan. IMPACT. Journal of Modern Developments in Social Sciences Research (IMPACT: JMDSSR), 1(2), 25-34.
- Allahham, M. M. (2021). The impact of fixed capital formation on economic growth in Palestine for the period 2011–2019. Journal of Economic and Financial Research, 7(2), 369-389.
- Alshammary, M. D., Khalid, N., Abdul Karim, Z., & Ahmad, R. (2022). Government expenditures and economic growth in the MENA region: A dynamic heterogeneous panel estimation. International Journal of Finance & Economic, 27(3), 3287-3299.
- An, Z., Kangur, A., & Papageorgiou, C. (2019). On the substitution of private and public capital in production. European Economic Review, 118, 296-311.
- Bahal, G., Raissi, M., & Tulin, V. (2018). Crowding-out or crowding-in? Public and private investment in India.World Development, 109, 323-333.
- Barlas, A. W. (2020). The impact of government expenditure on economic growth in Afghanistan. Economics and Business Quarterly Reviews, 3(2), 729-733.
- Berg, A., Buffie, E. F., Pattillo, C., Portillo, R., Presbitero, A. F., & Zanna, L. (2018). Some misconceptions about public investment efficiency and growth. Economia, 86(342), 409-430.
- Central Bank of Iraq (CBI). (2018). Annual report 2018. Central Bank of Iraq Statistics & Research Department.
- Das, S., & Tulin, V. (2017). Financial frictions, underinvestment, and investment composition: Evidence from Indian corporates. IMF Working Papers 2017(134).
- David, P. A., & Lopez, J. G. G. (2014). Knowledge, capabilities and human capital formation in economic growth (New Zealand Treasury Working Paper No. 01/13).
- Erden, L., & Holcombe, R. G. (2005). The effects of public investment on private investment in developing economies. Public Finance Review, 33(5), 575-602.
- Espinoza, R. (2021). The fiscal multiplier of European structural investment funds: Aggregate and sectoral effects with an application to Slovenia.IMF Working Papers, 2021(118).
- Gbohoui, W. (2021). Uncertainty and public investment multipliers: The role of economic confidence.IMF Working Papers, 2021(272).
- Hua, S., Tavares, M. M., & Xu, X. C. (2022). Greece’s investment gap. IMF Working Papers, 2022(013).
- Hyslop, D., Mare, D. C., & Timmins, J. (2003). Qualifications, employment and the value of human capital, 1986–2001 (New Zealand Treasury Working Paper No. WP/03/35).
- Khan, U., Mohammad Khan, A., & Siddiqi, N. A. (2022). Economic growth and its relationship with the macroeconomic factors: An analysis of Oman. Problems and Perspectives in Management, 20(4), 356-364.
- Kozmenko, S., & Korneyev, M. (2017). Formalization of the impact of imbalances in the movement of financial resources on economic growth of countries in Central and Eastern Europe. Accounting and Financial Control, 1(1), 48-58.
- Luciani, G., & Moerenhout, T. (2021). When Can Oil Economies Be Deemed Sustainable? Palgrave Macmillan, Singapore.
- Lupu, D., Petrisor, M., Bercu, A., & Tofan, M. (2018). The impact of public expenditures on economic growth: A case study of Central and Eastern European countries. Emerging Markets Finance and Trade, 54(3), 552-570.
- Maune, A., & Matanda, E. (2022). The nexus between gross capital formation and economic growth: Evidence from Zimbabwe. Journal of Accounting and Management, 12(2), 45-58.
- Meyer, D. F., & Sanusi, K. A. (2019). A causality analysis of the relationships between gross fixed capital formation, economic growth and employment in South Africa. Studia Universitatis Babes-Bolyai Oeconomica.64(1), 33-44.
- Moreno-Dodson, B., & Bayraktar, N. (2015). Public spending and growth in an economic and monetary union: The case of West Africa (English) (MFM Discussion Paper No. 6). World Bank Group.
- Mukherjee, P., & Ahuja, K. (2017). Gross fixed capital formation suffices as a determinant for gross domestic product in India. Proceedings of WRFER International Conference (pp. 55-59).
- Ntamwiza, J. M. V., & Masengesho, F. (2022). Impact of Gross Capital Formation and Foreign Direct In- vestment on Economic Growth in Rwanda (1990-2017). Current Urban Studies, 10, 1-13.
- Onwiodiokit, E. A., & Otolorin, G. E. (2021). Capital formation and economic growth in Nigeria: An empirical re-examination. Bullion, 45(2), 58-72.
- Poku, K., Opoku, E., & Ennin, P. A. (2022). The influence of government expenditure on economic growth in Ghana: An Ardl approach. Cogent Economics & Finance, 10(1), Article 2160036.
- Soi, N. C., Koskei, I., Buigut, K. K., & Kibet, J. (2013). Impact of openness, foreign direct investment, gross capital formation on economic growth in Kenya. Journal of Economics and Sustainable Development, 4(14), 130-135.
- Turan, T., Yanıkkaya, H., & Özer, H. A. (2021). Economic growth effects of public and private investment: Evidence from dynamic panel estimation for developed and developing countries. Prague Economic Papers, 30(5), 613-631.
- Ugochukwu, U. S., & Chinyere, U. P. (2013). The impact of capital formation on the growth of Nigerian economy. Research Journal of Finance and Accounting,4(9), 36-43.
-
Impact on poverty and income inequality in Malaysia’s economic growth
Rabiul Islam 
,
Ahmad Bashawir Abdul Ghani ,
Irwanshah Zainal Abidin ,
Jeya Malar Rayaiappan
doi: http://dx.doi.org/10.21511/ppm.15(1).2017.05
Problems and Perspectives in Management Volume 15, 2017 Issue #1 pp. 55-62 Views: 11918 Downloads: 5693 TO CITE АНОТАЦІЯPoverty and income inequality are extreme issues that still exist in Malaysia. Any rise in poverty and income inequality definitely affect economic growth. There are many great efforts taken by the government of Malaysia to eradicate poverty and to reduce the gap of income inequality which occurs since 1970’s. The incidence of poverty and income inequality is higher in rural areas compared to urban areas. This paper is mainly to study the level of poverty and income inequality in Malaysia together with government intervention to develop Malaysia’s economic growth. The research is focused among the working people at Ipoh, Perak. In this paper, questionnaire forms are being distributed to get information regarding the issue of poverty and income inequality. It also looks into the strategies taken by the government of Malaysia to eradicate poverty and income inequality. Few recommendations are given in terms of education policy, financial aid and assistance from government and non-government organization (NGO) to upgrade the standard and quality of living among the poor and lower-income group of people.
-
Impact of inflation on economic growth: evidence from Nigeria
Anthony Olugbenga Adaramola ,
Oluwabunmi Dada
doi: http://dx.doi.org/10.21511/imfi.17(2).2020.01
Investment Management and Financial Innovations Volume 17, 2020 Issue #2 pp. 1-13 Views: 9142 Downloads: 5471 TO CITE АНОТАЦІЯIn an attempt to examine the influence of inflation on the growth prospects of the Nigerian economy, the study employs the autoregressive distributed lag on the selected variables, i.e. real gross domestic product (GDP), inflation rate, interest rate, exchange rate, degree of economy`s openness, money supply, and government consumption expenditures for the period 1980–2018. The study findings indicate that inflation and real exchange rate exert a significant negative impact on economic growth, while interest rate and money supply indicate a positive and significant impact on economic growth. Other variables in the model depict no influence on the economic growth of Nigeria. The causality result shows the unidirectional relationships between interest rate, exchange rate, government consumption expenditures and gross domestic product. However, inflation and the degree of openness show no causal relationship with gross domestic product. As a result, the study recommends that a more pragmatic effort is needed by the monetary authorities to target the inflation vigorously to prevent its adverse effect by ensuring a tolerable rate that would stimulate the economic growth of Nigeria.
-
Formalization of the impact of imbalances in the movement of financial resources on economic growth of countries in Central and Eastern Europe
Serhiy Kozmenko ,
Maxim Korneyev
doi: http://dx.doi.org/10.21511/afc.01(1).2017.06
Accounting and Financial Control Volume 1, 2017 Issue #1 pp. 48-58 Views: 7876 Downloads: 1375 TO CITEThe article deals with the impact of financialization on economic growth in countries of Central and Eastern Europe. It determinesthe impact of imbalances in the movement of financial resources caused by financialization on economic growth of these countries. It proves that the implementation of measures aimed at increasing the openness of the economy and maintaining solvent demand have a positive impact on economic growth of the surveyed countries in the long run. It also proves the importance of developing a set of measures of strategic nature regulating imbalances in the movement of financial resources caused by financialization.
