CHAPTER THREE
THEORETICAL FRAMEWORK / RESEARCH METHODOLOGY
3.1. INTRODUCTION.
This chapter focuses on covering the theoretical framework of the models, sources of data, introduction of models, model specification, estimation of techniques, criteria for decision making. It also reports on the research method used in carrying out the study on the impact of electricity consumption on economic growth.
3.2. THEORETICAL FRAMEWORK
Before the growth theory proposed by Romar, there were other growth theories which thrived. Solow growth theory was one of such theories which was then in trend. The Solow growth theory was also known as the exogenous theory because it propounded that technology is an exogenous factor that determines economic growth.
However, what is very important about the Solow model is the fact that it explains the long run per capita growth by the rate of technological progress, which comes from outside the model.
The endogenous growth theory or new growth theory was developed as a reaction to the flaws of the neoclassical (exogenous) growth theory. Romar endogenous growth theory was first presented in 1986 in which he takes knowledge as an input in the production function. The theory aimed at explaining the long run growth when productivity growth or technical progress is endogenous.
The major assumptions of the theory are:
1. Increasing returns to scale because of positive externalities
2. Human capital (knowledge, skills and training of individuals) and the production of new technologies are essential for long run growth.
3. Private investment in Research and Development is the most important source of technological progress
4. Knowledge or technical advances are non-rival good.
In Romar’s new growth theory, the savi...
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...atory in nature. This method is chosen as a result of the nature of the study and the objective it set to achieve.
The data obtained and used for estimation would be presented in tabular form so as to ensure a clear view of variables. The data would also be analyzed following the trend of the growth pattern of the different variables.
References
Journal of Economics and Business, “Does Energy Consumption Contribute To Economic Performance? Empirical Evidence from Nigeria”.Gbadebo, OlusegunOdularu Regional Policies & Markets Nsf, FaraChineduOkonkwo Central Bank Of Nigeria.
Journal of Business Management and Applied Economics Electricity Consumption and Economic Growth in Nigeria Authors: Adeyemi A. Ogundipe, Department of Economics and Development Studies, Covenant University, Ota,AyomideApata, Department of Economics, University of Dundee, Dundee, United Kingdom.
5. (Scenario: Growth Rates) Look at the scenario Growth Rates. According to the rule of
Furthermore, the methods applied convey “the techniques or procedures used to gather and analyze data that is
Similar to Craft (2004b), Craft (2004a) uses a similar method to explore the effects the steam engine had on labor productivity growth. The difference between these two pieces is that Craft (2004a) studies the short-term effects that the steam engine had on productivity growth since he focuses only during the Industrial Revolution. However, both pieces explore the steam engines impact on growth by focusing on the contribution to growth of productivity. Craft (2004a) analogous to Craft (2004b) uses an embodied innovation growth accounting context (p.525). Craft (2004a) explains that technology contributes to growth in two ways. Technology can first contribute to growth by increasing the productivity by the fact that new technology is more beneficial
The measure of growth is flawed, how countries see their growth is based on the consumption of their people. Many countries use the GDP (Gross Domestic Product) as an indicator for growth, as defined in It’s All Connected, “(GDP) is a calculation of the total monetary value of goods and services produced annually in a country” (Wheeler 11). The...
Economic growth focuses on encouraging firms to invest or encouraging people to save, which in turn creates funds for firms to invest. It runs hand-in-hand with the goal of high employment because in order for firms to be comfortable investing in assets such as plants and equipment, unemployment must be low. Hereby, the people and resources will be available to spur economic growth.
Compare and contrast the Solow Growth Model with one Endogenous Growth Model In order to compare two models of economic growth, I will look at the primary model of exogenous growth, the Solow model, and ArrowÂ’s endogenous growth theory, based on research and development generated within the system. I will define the models and identify their similarities and differences. The Solow model, or Neoclassical growth model as it is sometimes known, is an example of exogenous growth models. This is to say that the level of economic growth depends on externally determined rates of growth in certain variables.
The theory model has a residual in the equation and later Mankiw and other researchers realized that much of residual might be due to human capital. Thus, researchers developed augmented Solow models, which contain human capital as an independent variable in explaining GDP growth. The human capital theory (Teixeira, 2016) is the foundation of this research as a country puts investment into educating human to learn skills and technology, the production per worker will increase as same as an operating machine with more advanced technology in the factory. In addition, workers with higher skill and expertise in technology can earn higher earnings to maintain healthy body and thus produce long term reliable production at work, and lead to increase in production for the employer, then the industry and the nation. By using the cognitive skills in measuring human capital can enable the research to see how effective is the education spending on the growth of the nation. From the research question of this study, how do student test scores in math and science affects the national GDP per capita, and the following hypothesis emerges: H1. Country with higher student test scores than OECD average in math and science will grow faster in terms of GDP per capita; H2. Country with lower student test scores than OECD average in math and science will grow slower in terms of
resolve problems. With the scientific method you have four steps to follow which include defining the
Walt Whitman Rostow is United Stated economist, and also a father of ecomonic theory and growth. In Rostow view through his Stages of Growth Model, there are five stages in the process of economic growth and development. The five stages are The traditional society, The precondition for take off. The take off, The drive to maturity and The age of mass consumption. In these stages Rostow point out that both of the precondition stage for take off and take off stages is very important for a country economy growth. Capital and Technology raising, is one of the most important factor for a country to achieve economic maturity for economic development. After the end of the take off stages, in general most of the economies experienced lower economic growth rates. Also at the end of the stages, the age of mass consumption, is only for country that the most people there already live in the prosperity. The country that already on these stage is mainly from West.
3. Quantitative model ? This is needed to assess the impact of every alternative of the
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
There are at least four different research perspectives about the relationship between development and economic growth. Firstly, economic growth is the basis for social development. Secondly, economic growth and social development are not necessarily linked. Thirdly, both economic growth and social development are not basic causes by each other, but they depend on interaction. Fourthly, social development is the prerequisite for economic growth (Mazumdar. 1...
Economic growth also play a role in reducing debt to GDP ratios. Therefore, money can be spent on protecting the environment. With higher real GDP a society can dedicate more resources to promoting recycling and the utilization of renewable resources investment. Economic growth encourages investment and therefore encourages a virtuous cycle of economic growth.
The measure of petroleum abundance and production in Nigeria is measured by the United States. According to the statistical data and the U.S. measures, Nigeria reserves make the country the tenth petroleum-richest nation, and by far, one of the most affluent countries in Africa. In the middle of 2001 its crude oil production was averaging around 2.2 million barrels per day. Though, there is a very prominent market for offshore rigs, nearly all of Nigeria’s primary reserves are in and around the delta of the Niger river. Ever since Nigeria became independent, it is one of the few oil producing countries that can increase its oil output drastically. The g...
South Africa in most recent times has been plagued by an energy crisis. Due to the high energy demands placed on Eskom, it has been unable to cope with this high demand for energy and therefore unable to meet the energy demands of the domestic consumer. This has consequently led to unplanned power outages and scheduled load shedding by Eskom to ease the load demand. This is an obvious inconvenience for the citizens, it is therefore in their own best interest to assist in resolving the crisis we now face. Energy optimisation and energy load reduction of each individuals household thereafter, is the most effective way to solve the electricity shortage crisis in the country. Although extensive measures have been implemented in raising awareness to this issue, either through advertisements or various ‘go-green’ campaigns, majority of the population still remain in the dark with regards to the amount of energy they consume inefficiently. This report is designed to address this problem, in doing so enlightening the reader on how to use energy efficiently taking into account their specific needs.