Macroeconomics Dynamics

It is not yet clear in economics literature what is the direction of Granger-Causality between energy and economic growth. The Paris Climate conference of 2015 set stage for global commitments to reduce use of environmentally harmful energy resources. Given the varied Granger-Causality results across countries, such energy conservation policies are expected to affect economies differently like exporter/importers of non-renewable energy. This research seeks to answer this question for a developing net importer of non-renewables Tanzania, using annual data from 1970 – 2014, Granger-Causality between electricity production and key growth contributors is analysed. The investigation is done using Autoregressive Distributed Lag (ARDL) to check for co-integration; the Vector Error Correction (VEC) and Vector Autoregressive (VAR) models for co-integrated and non-co-integrated variables respectively. The sectors investigated are agricultural and manufacturing value addition while also including labour and capital stock as inputs beside electricity. The results show that electricity production does not significantly Granger-Cause manufacturing value addition in both short and the long run. It is observed however to significantly Granger-Cause agricultural value addition and capital formation in the long run. There is also significant two-way sectoral causality between agricultural and manufacturing value added in the short run. The results of this study suggest unidirectional flows from electricity to one of the growth supporting sectors and capital formation, this indicates energy dependency of this economy’s traditional sector and its stock of accumulated input. Therefore, in Tanzania the agricultural sector seems to be the main driver of this energy led growth hypothesis.

In the pursuit of economic growth and sustainable development, government worldwide has adopted various alternative measures to provide and finance new economic and social infrastructure either by privatisation, deregulation, and commercialisation of all public services. As a result of the global financial crisis in 2008, private sector financing through Public and Private Partnerships (PPPs) has become increasingly popular in maintaining, procuring, and renewing public sector infrastructure in all sectors. Nigeria is a low-middle income country with an expanding manufacturing, agriculture, financial, service, manufacturing, and communications and entertainment sectors. She's is the largest economy in Africa and ranked as the world's thirty largest economy in the world with a nominal GDP of $510bn. Over the decades, Nigeria has constantly been faced with large infrastructural deficits as a result of large gaps in the demand and supply of basic essential socioeconomic infrastructures. Public Private Partnership is an answer to the high demand for infrastructure which is at an all-time high which is not being currently met by traditional contracting methods. Private companies in conjunction with the Public sector have therefore introduced this solution which provide a more integrated financial design construction, maintenance and operational solution to infrastructure projects.

This paper is intended to study the impact of various macroeconomic variables on Indian stock market. Based on the Arbitrage Pricing Theory (APT) propounded by Ross in 1976 and various other studies, a number of macroeconomic variables including, inflation, industrial production, exchange rate, money supply, interest rate, and oil price have been identified to have a significant impact on the stock market. We have applied the multivariate extension of the classical linear regression model computed on Ordinary Least Squares method and Granger Causality test to re-establish the relationship between macroeconomic variables and stock returns over a period of 10 years from 2005 to 2015 using monthly observations. The results of this study show that only exchange rate has a significant negative impact on stock returns. The other macroeconomic variables are not significantly affecting stock returns; however, their impact is in accordance with the economic theory. The Granger Causality test reveals absence of any causal relationship between stock returns and macroeconomic variables, except in case of oil prices, where we find a unidirectional causal relationship running from stock returns to oil prices. However, the Granger Causality results should not be taken in the conventional meaning of causality, but results merely identifying precedence

تهدف الدراسة إلى صياغة مفهوم ودور جديد للتوقعات في تحليل منحنى Philips واستعراض الجدل القائم حول تفسير العلاقة القائمة بين التضخم والبطالة . المنهج الكينزي يركز على المقايضة مابين المتغيرين المذكورين في أعلاه، والنقود يون يستندون الى معدل البطالة الطبيعي ومفهوم NAIRU ونظرية التوقعات العقلانية تنحو منحى مغاير وتربط العلاقة بالناتج .
وخلصت الدراسات التطبيقية التي اختبرت العلاقة القائمة ، إلى صحة فرضية التوقعات العقلانية في تحليل منحنى (Phillips)

In the past, little or no attention was directed to the informal sector in the development agenda in Sierra Leone. The inability of the formal sector to absorb all the available resources in the country has led to the rapid growth of the neglected informal sector. The aim of this research is to assess and evaluate the role played by the National Cooperative Development Bank as a Non-Bank Financial microfinance Institution in providing financial services to class of economically poor people in the Western Area whom hitherto were been neglected by the formal sector. A sample of 30 “Barrays” with each constituting 5 members totaling to 150 respondents were thoroughly investigated since 2001 to 2005.The Ordinary Least Squares econometrics estimation technique was used to analyse the data employing a Probit Regression model. The result reveals that the probability of access to credit is increased if the individual is a; trader, self employed, widow and with increases in the initial amount deposited which was used as a proxy variable for cash collateral. However, the probability of access to credit is reduced if the individual’s education is primary. The Probability value of the Wald Test(chi^2=0.0991) also indicates that the overall regression is significant at 10%.The research has proven that NCDB is vital and this understanding is important for academics and policy makers in shaping the future performance of the Non-Bank Financial Institutions.

The first section of the paper gives a synoptic view of the evolution of macroeconomic policies from the time of the the Great Depression and the current thinking in stabilizing business cycles and financial markets. The second section gives an overview of of the policy response to the recent Global Financial Crisis. The third section analyses the adjustments made in the global economy in the wake of of the Global Financial Crisis. In the fourth section the paper analyses what adjustments have been made in financial markets. In the fifth and concluding section the paper discusses the current prospects of the global economy, and the risks that possibly lie ahead.

This study applied the Index of Institutional Quality (IQ) methodology to measure the level of independence of the Reserve Bank of Malawi (central bank) and examine its impact on inflation. The IQ methodology assesses independence of central banks based on their actual practices. The methodology is suitable for developing countries whose practices do not fully conform to the laws of Banks that are in place. The study finds that the average independence index of the Reserve Bank of Malawi (RBM) is 15.1, which is more than half below the total index value of 36. This clearly shows that the RBM is not convincingly independent. Although the results show an above-average value for index of monetary policy independence, indications are that the RBM is not free from political pressures as evidenced by below-average values for indices of political and fiscal independence. Using Ordinary Least Square (OLS), the results further show that the low degree of independence by the RBM has contributed to high inflation in Malawi.

En este libro se analizan tópicos esenciales de Política Económica a través de modelos macroeconómicos que son estudiados desde una perspectiva cuantitativa y desde un enfoque cualitativo utilizando retratos de fase. Los modelos le permiten al lector hacer un uso adecuado de las herramientas del álgebra lineal, del cálculo diferencial e integral, de los sistemas de Ecuaciones Diferenciales Ordinarias (EDOs) y de Ecuaciones en Diferencias Ordinarias (EEDOs), de la optimización intertemporal óptima o de los modelos de Equilibrio General Dinámico y Estocástico.                                                                                                               
                                                                                                                                                         
https://fondoeditorial.usil.edu.pe/publicacion/modelos-de-macroeconomia-dinamica/

Nigeria's vulnerability to crude oil price fluctuations is a phenomenon which has become reoccurring effects and there was the need for emphasis on the need to establish the relationship effects of crude oil price on the Nigeria government revenue. This study, therefore, examined the impacts of oil price shock on government revenue in Nigeria, and, also analyzed its trend within the period under study (1983 – 2016). This study employed Vector Autoregressive (VAR) model to examine the short and long-run effects of crude oil price distortions on revenue in Nigeria. The impulse response analysis was carried out, the trend analysis was demonstrated and the time series properties of the data were tested by ADF unit root. The study found that government revenue was characterized with trended swing movements in same directions as the world oil price. The government revenue was negatively and significantly impacted by the world oil price in the first period and second period (-9.59006 and-9.82006 respectively). However both in the short run and long run, government revenue declined as a result of the impact of the world oil price shock. Consequently, the study suggested that the policy makers should focus on policy that will strengthen and stabilize the macroeconomic structure of the Nigerian economy with specific focus on alternative sources of government revenue (reduction of dependence on oil proceeds and diversify) and ensure fiscal discipline in governance.

In this study, we examine the impact of credit facilitation on economic misery in case of Pakistan over the period 1973-2013. Credit facilitation, foreign direct investment, domestic savings, domestic credit, workers remittances and population density are selected variables for empirical analysis. This employed different econometric techniques and tests like ADF and PP unit root test to estimate the stationary of the variables of the model. The ARDL bound testing approach is used to examine the co-integration among the variables of the model. The results of the study show that FDI has a positive and significant on economic misery. Worker remittances have a significant and positive relationship with economic misery in case of Pakistan. Domestic saving has a positive, but an insignificant impact on economic misery. Domestic credit to the private sector has a significant, but negative relation with economic misery.

Agent-based computational economics (ACE) has been used for tackling major research questions in macroeconomics for at least two decades. This growing field positions itself as an alternative to dynamic stochastic general equilibrium (DSGE) models. In this paper we first review the arguments raised against DSGE in the ACE literature. We then review existing ACE models, and their empirical performance. We then turn to a literature on behavioural New Keynesian models that attempts to synthesise these two approaches to macroeconomic modelling by incorporating some of the insights of ACE into DSGE modelling. We highlight the individually rational New Keynesian model following Deak et al. (2015) and discuss how this line of research can progress.

A lot of studies have been conducted in the Nigerian economy on deficit financing but there exist contrasting views as to whether deficit financing stimulate economic growth or not. This study employed the ordinary least square technique (OLS) to examine the effectiveness of deficit financing in stimulating economic growth in Nigeria and also tested for causality using the granger causality pair wise test. The variables employed were real GDP as the dependent variable while deficit financing, the current account balance, foreign private investments, and savings were the explanatory variables. The granger causality test result indicates a unidirectional causality flow from GDP to deficit financing, to current account balance, foreign private investment and savings. The empirical findings also revealed that deficit financing has a positive but not significant impact on real GDP, which is in line with the Ricardian Equivalence Theory. Therefore, deficit financing had no impact on economic growth in Nigeria for the period under review. The study recommends that deficit financing, should only be adopted for financing long-term capital project. Foreign private investment should be promoted and policies aimed at savings mobilization should be enacted by the government.

This article for the christmas edition of PARON (24-26/12/2021) refers to the thoughts, hopes and fears of important mostly mainstream economists for 2022. The reason I wrote it was that I was impressed by two things. First, that economists are far more concerned about the future compared to politicians. Second, there is a huge diversity in the views of economists about the factors that will make a difference in 2022. It is amazing that people trained under the same scientific paradigm place the emphasis on so different factors and events. In my view this is an indication that the paradigm has failed to provide answers for the first crisis of the 21st century.

The debate of environmental issues and their analysis is of vital interest for economic policies. Institutions are engaged in identifying and estimating the extent of environmental impact of determinants controllable via policy measures. Annual data from the on Carbon Dioxide emission, economic growth, consumption of energy, openness for foreign trade, urbanization, industrial growth and agriculture growth on Pakistan is used for 1971 to 2007. Augmented Vector Autoregression technique and cointegration analysis is implemented to test Granger causality. Gross domestic product significantly Granger causes emission of Carbon Dioxide and energy consumption. On the other hand emissions of CO2 affect economic growth, agriculture and industrial growth in the long run. It is also evident that energy consumption unidirectional Granger causes emission of Carbon Dioxide. Industrialization and urbanization bidirectional Granger causes each other. The results indicate the more careful industrial...

This study investigated the impact of COVID-19 pandemic uncertainty shock on the macroeconomic stability in Ethiopia in the short run period. The World Pandemic Uncertainty Index (WPUI) was used a proxy variable to measure COVID-19 Uncertainty shock effect. The pandemic effect on core macroeconomic variables like investment, employment, prices (both food & non-food prices), import, export and fiscal policy indicators was estimated and forecasted using Dynamic Stochastic General Equilibrium (DSGE) Model. The role of fiscal policy in mitigating the shock effect of coronavirus pandemic on macroeconomic stability is also investigated.

The finding of the study reveals that the COVID-19 impact lasts at least three years to shake the economy of Ethiopia. Given that the Ethiopian economy heavily relies on import to supply the bulk of its consumption and investment goods, COVID-19 uncertainty effect starts as supply chain shock, whose effect transmitted into the domestic economy via international trade channel. The pandemic uncertainty shock effect is also expected to quickly transcend to destabilize the economy via aggregate demand, food & non-food prices, investment, employment and export shocks.

The VAR estimate indicates that COVID-19 uncertainty shock results a massive rise in import in the six months following the outbreak of the pandemic. The finding in this regard is expected, as the pandemic triggers massive demand in food and pharmaceuticals, for which Ethiopia is import dependent on both items. In the next two years, however, the import bill of Ethiopia shows a decline. Reduction in aggregate demand (both consumption & investment expenditures) is one explanation for decline in import size in 2013 and 2014 E.C.

The price dynamics as forecasted in the upcoming three years in Ethiopia tells the direction of impacts of COVID-19 uncertainty shock to shake the macroeconomic order. The findings in this regard revealed the structural breakups of Ethiopian economy, characterized by its inability to withstand shocks. As signaled in forecasted price dynamics on both food and non-food price indices, COVID-19 was a supply shock in its first time impact, but quickly trans-passes to demand shock. And in the next few years the demand shock outweighs the supply shock.

The results of estimations indicate that food prices to sky rocketed at least until the end of 2014 E.C (2021/22 E.F.Y). On the other hand, except communication & hotel & restaurant prices, other components of non-food price indices show a slump. The decline in non-food price level is a clear showcase of under-consumption characterizes the economic order in Ethiopia in the coming three years.
COVID-19 uncertainty shock puts huge loss in the investment sector in Ethiopia at least in the coming two years 2013 and 2014 E.C (2020/21-2021/22). In this regard, the pandemic effect transmitted to shake investment expenditure via the length of the pandemic period itself and export performances, both of which are exogenous shocks.

The study identified that general under consumption features the Ethiopian economy in the next couple of years. Therefore, the government is expected to enact incentives/policy directions which can boost business confidence. A managed expansionary fiscal policy is found to be key to promote investment, employment and to stabilize food & non-food prices.

A particular role of fiscal policy was identified to stabilizing food, transport and communication prices. More importantly, price stabilization policies of the government can have spillover effects in boosting aggregate demand by spurring investments (and widening employment opportunities) in transport/logistics, hotel & restaurant, culture & tourism and export sectors in particular.

The objective of the study is to investigate the factors affecting export diversification in the ECOWAS sub-region. To achieve the objective, fixed effect, random effect (feasible generalized least squares) and panel FMOLS estimators are employed for estimation of panel regression model using dataset that span the period from 1995 to 2015. The empirical evidence indicates that export diversification in the sub-region is affected by real GDP per capita, gross fixed capital formation, financial institutions' credit to the private sector and inflation. Specifically, increase in real GDP per capita and increase in gross capital formation reduce export concentration (or enhance export diversification), while increase in credit to the private sector adversely affects export diversification and encourage export concentration. This is attributed to the lending behavior of the lending institutions which tend to favour the extractive sector in allocation or extension of credits. Thus their credit tends to be concentrated in the extractive sector, and this in turn tends to exacerbate export concentration. Inflation is found to attenuate export concentration, suggesting existence of a threshold level of inflation for export diversification. The paper recommends for policy consideration, efforts by government of countries in the sub-region to take measures to enhance the growth of their economies and increase the rate of capital formation therein. Additionally, there is need to strengthen the regulatory apparatus of the financial systems to ensure efficient allocation of credits to various sectors of the economy so as to stymie concentration of credits in a single or few sectors.

Appropriate policy initiatives to sustain the reversal of the downturn recently experienced in Nigeria, and proactive measures capable of forestalling future re-occurrence require hindsight knowledge of time series values of real gross domestic product as a basis for projecting the possible output growth of the country in the years ahead. This paper has presented forecast values of real gross domestic product of Nigeria from 2017 to 2030, using univariate autoregressive moving average (ARMA) model. Based on real gross domestic product series for 1981-2016 period, the forecasts showed the possibility of attaining sustained increases in real gross domestic product in the years ahead, given appropriate policies and commensurate macroeconomic environment.

Comments are welcome Abstract Sudan faces yet another economic challenge in the form of currency shortage and free-falling out of the exchange rate. While a host of reasons are being provided to explain the cash crunch, many factors have contributed very significantly to the shortage of currency. Financial repression adopted by the government to curb inflation and free fall of the Sudanese pound can play an important role in exchange rate management at the expense of the growth. However, supporting policies are needed to have short and long-term policy dividend. Among those policies, for example, the premium for parallel exchange rate defines the risk of whether the dividend of depositing money by to the banking system will make economic sense to the economic agents. This review aims to identify the determinants of the liquidity and cash crisis that has hit Sudan recently. The paper gives special attention to the likelihood of hyperinflation and cash shortages as well as the possible implications of the financial repression measures announced by both Central Bank and Ministry of Finance to tackle the crisis. An attempt will be made to forecast how well the monetary policy measures are likely to perform given the nature and magnitude of the problems it is meant to address. The current cash shortages in Sudan as a mere symptom of a more significant economic structural problem. The study surveyed the relevant literature, fact findings and comparative analysis to sort out the findings. To address the current liquidity crisis, the government should focus on addressing public and investor confidence, country risk, illicit financial flows, externalization of funds and net export performance which the study identifies to be the very underlying drivers behind the crises. The main finding of this paper is that the direct effects of the ongoing financial repression in Sudan will be very negative and quite substantial if not followed by structural key policies which require high intellectual debate and in-depth analysis of the outcome of each policy. Our contention here is that most of the announced measures are administrative measures that lack the incentives to push the real sector into growth. The paper also argues that there is no longer enough confidence in the banking sector and policy measures that have been announced are based on conventional and traditional approach to deal with the crisis and might solve the immediate problem challemges without dealing with envisioning and enriching the real economy. Continued printing of money (Quantitative Easing) or adding a new banknote will exacerbate the situation and fully informalize the financial sector. Printing 100 SDG note will make the currency a preferred store for both hoarding and holding money outside the banking sector by both households and investors. The ongoing financial repression needs supporting policies. Otherwise, the impact will not only result in stagnated and/or negative growth but also in overall macroeconomic instability. Innovative solutions must guide the set of the policy package including taking the crisis as an opportunity to innovate the financial sector. The crisis offers rare opportunity to push for cashless economy. As such, we believe, it is possible to push for cashless economy and other mobile telephony platforms policies like using the mobile numbers as a banking tool for broader outreach and financial inclusion. Some other lessons were drawn from similar cases including, former Soviet Union, Zimbabwe and India. The most challenging factor is to pursue a serious reform agenda with strong buy-in. Other conclusions are reported, and policy implications are drawn.

This paper is intended to study the impact of various macroeconomic variables on Indian stock market. Based on the Arbitrage Pricing Theory (APT) propounded by Ross in 1976 and various other studies, a number of macroeconomic variables including, inflation, industrial production, exchange rate, money supply, interest rate, and oil price have been identified to have a significant impact on the stock market. We have applied the multivariate extension of the classical linear regression model computed on Ordinary Least Squares method and Granger Causality test to re-establish the relationship between macroeconomic variables and stock returns over a period of 10 years from 2005 to 2015 using monthly observations. The results of this study show that only exchange rate has a significant negative impact on stock returns. The other macroeconomic variables are not significantly affecting stock returns; however, their impact is in accordance with the economic theory. The Granger Causality test reveals absence of any causal relationship between stock returns and macroeconomic variables, except in case of oil prices, where we find a unidirectional causal relationship running from stock returns to oil prices. However, the Granger Causality results should not be taken in the conventional meaning of causality, but results merely identifying precedence.

The study investigates the relationship of macroeconomic determinants (Exchange rate, Index of industrial production, Inflation and Broad money supply) on Indian Stock Exchange (BSE Sensex) by using monthly data over the period of April 2012 to August 2019. The research analysis is based on the following time series analysis techniques i.e. unit root test, cointegration analysis, impulse response function, variance decomposition analysis and granger causality test. The Augmented Dickey-Fuller unit root test has been applied to transform data series into stationary property while the Johansens cointegration technique has been applied which confirms the presence of long run relationship among the variables. The result of Impulse response function show that Exchange rate, Inflation and Money supply does not have any significant impact on stock market index while Index of industrial production shows positive impact on stock market index in India in both short run and long run. The result also confirms that maximum shock in stock market is due to their fluctuation. The result of the Variance decomposition result shows that highest influence on stock market is recorded by Index of industrial production is 10.21 % in long run time period while the other macroeconomic determinants has very less influence on stock market in India. The result of the granger causality test further validate the result of Impulse response function and Variance decomposition analysis that Index of industrial production affect stock market index while Exchange Rate, Inflation & Money Supply does not affect Stock Market index. Thus the outcome of the study indicates that all these macroeconomic determinants have certain effect on stock market index in both short run and long run but Index of industrial production affects largely to Stock market index in India.

This study attempts to examine the role of the inflow of resources on the economic growth of Nepal incorporating annual time-series data sets of 45 years from 1975 to 2019. The autoregressive distributed lag approach to cointegration is used to identify the long-run as well as the short-run relationship between the variables. The empirical finding indicates that there is a positive relationship between the inflow of resources and economic growth. Quantitatively, gross national saving, domestic loans, foreign loans, and export earnings have a positive impact on the economic growth in both the long-run as well as short-run for the Nepalese economy. Policies encouraging private sector participation, enlarging efficiency, and effectiveness of public sector projects, and expanding export base must be implemented.

Complex systems inspired analysis suggests a hypothesis that financial meltdowns are abrupt critical transitions that occur when the system reaches a tipping point. Theoretical and empirical studies on climatic and ecological dynamical systems have shown that approach to tipping points is preceded by a generic phenomenon called critical slowing down, i.e. an increasingly slow response of the system to perturbations. Therefore, it has been suggested that critical slowing down may be used as an early warning signal of imminent critical transitions. Whether financial markets exhibit critical slowing down prior to meltdowns remains unclear. Here, our analysis reveals that three major US (Dow Jones Index, S&P 500 and NASDAQ) and two European markets (DAX and FTSE) did not exhibit critical slowing down prior to major financial crashes over the last century. However, all markets showed strong trends of rising variability, quantified by time series variance and spectral function at low freq...

Teaching Dynamic Macroeconomics at undergraduate courses relies exclusively on intuitive prose and graphics depicting behaviours and steady states of the main markets of the economy. But when the case of forward-looking agents and the macroeconomic implications of their actions are discussed, intuitions and graphical representations offered to students may lead to unsupported conclusions. This happens even if the teacher and students use the chapter upon a dynamic macroeconomic model of one of the most didactic and ordered texts ever published: Williamson (2014). In this paper we try to sustain this assertion.

Based on Blanchard and Perotti, Perotti, and Biau and Girard's approaches, this paper evaluates the fiscal policy’s effectiveness in Tunisia using Structural VAR model. The results show the short-run macroeconomic efficiency of a structural increase in public spending in Tunisia with a fiscal multiplier close to 1,806, in line with Keynesian’s models. However, the estimated effect of a structural increase in tax revenues on activity is non-Keynesian. This is explained by the presence of a voracity effect in the case of the Tunisian economy.

: The study provides new evidence on the effect of financial openness on
FDI inflows in Nigeria using data that span the period from 1981 to 2016. The
FMOLS estimator is employed. The study finds that financial openness is
negatively and significantly related to FDI inflows, but its interaction with political
regime is positive and significant. This suggests that the effect of liberalization of
capital accounts on FDI inflows is regime-dependent: the more democratic the
government is, the more FDI the country attracts. It also finds that trade openness,
expansion of domestic market, infrastructural development and acceptable levels
of inflation enhance the attractiveness of the economy to FDI. In view of the
evidence, the need for the government to be more democratic, investment in
infrastructural development, greater integration of the economy with the global
market, expansion of domestic market size by way of enhancement of per capita
income are recommended to enhance inflow of FDI to the country

The objective of this research study was to analyze the effects of entrepreneur and firm characteristics on success of small and medium enterprises (SMEs) in Gauteng province; South Africa. Using both purposive and simple random sampling procedures, a total of one hundred and fifty participants were selected and participated in the survey. A structured questionnaire was used to collect data on entrepreneur and firm characteristics affecting success of SMEs. The data were sought and analysed using SPSS statistical package. The Cronbach's alpha of 0.826 and the Keiser-Meyer-Olkin of 0.852 were obtained from the data used for the analysis. Based on the findings derived from multiple regression analysis using the ordinary least squarestechnique;managerial competence, educational qualifications, work experience, location, size of the firm, period the enterprise has operated and business sector all have statistically significant positive effects on the success of SMEs in the respective region.

The objective of the study is to investigate the factors affecting export diversification in the ECOWAS sub-region. To achieve the objective, fixed effect, random effect (feasible generalized least squares) and panel FMOLS estimators are employed for estimation of panel regression model using data set that span the period from 1995 to 2015. The empirical evidence indicates that export diversification in the sub-region is affected by real GDP per capita, gross fixed capital formation, financial institutions’ credit to the private sector and inflation. Specifically, increase in real GDP per capita and increase in gross capital formation reduce export concentration (or enhance export diversification), while increase in credit to the private sector adversely affects export diversification and encourage export concentration. This is attributed to the lending behavior of the lending institutions which tend to favor the extractive sector in allocation or extension of credits. Thus their cr...