Dynamics of adjusted net National income per Capital and its determinants application of ARDL and vector error correction models to Sub-Saharan Africa
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Date
2025-03
Journal Title
Journal ISSN
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Publisher
Eastern and Southern Africa Journal of Agricultural Economics & Development
Abstract
Over the past few decades, the Sub-Saharan Africa (SSA) region has experienced a myriad
of economic challenges, including highly dynamic trade trends, fluctuating commodity prices,
stagnating capital accumulation trends, varying levels of foreign investment, and rapid population
growth. These, coupled with the region's unique socio-economic landscape, necessitate a
comprehensive understanding of how different variables interact to shape income outcomes. This
paper employs the Autoregressive Distributed Lag (ARDL) and Vector Correction Models (VECM)
to analyse the dynamics of Adjusted Net National Income Per Capita (ANNIPC). The results show
complex interdependencies of capital formation, trade, inflation, and demographics indicating that
increased gross capital formation and manageable inflation positively affect ANNIPC. This
underscores the need for policymakers in SSA to prioritise capital investment strategies, such as
infrastructure development and enhanced financial access, to spur sustainable economic growth.
Additionally, improving export capacities and trade balances for elevating income levels and paying
attention to population dynamics is essential. Similarly, integrating human capital enhancement
through education and skills training into economic policies remains one of the important focal areas.
We also found a quick adjustment to long-run equilibrium among variables that underscores the need
for proactive policymaking to mitigate short-term economic shocks. A comprehensive approach,
considering these interconnected factors, will be critical for SSA's governments to create a stable
economic environment, ultimately fostering resilience and prosperity in the region.
Description
journal ,article
Keywords
Adjusted Net Income Per Capita, Autoregressive Distributed Lag Model, Vector Error Correction Model, Cointegration, Gross Fixed Capital Formation