Measuring the Distributional Effects of the Economic variables of the Sustainable Development in the Economic Growth in Sudan During (1990- 2017) Through using ARDL model

Abstract

This study aims to measure the affects of   economic distributional variables of sustainable development in economic growth in Sudan during the period of (1992-2017). Through using ARDL Model.

The problem of the study stated that the economic variables of sustainable development has direct effect on the economic growth in Sudan and that caused a great disruption and instability. The study assumed that the lack of investments, aids, grants and loans were mostly affected the economic growth.

The study employed historical approach that deals with the theoretical frame and also the analytical approach to explain the relevant data, and quantitative method was also used to measure the effect of variables of the development  through self-regression of gaps distribution.

The study reached to the following findings that:

Aids and grants can highly affect the economic growth on the long run because of the lack of investments.        The study recommended the necessity to encourage investments and calling off all the restrictions and boosting the investors trust to ensure the service existence and attract more investments  and also  increasing the rate of exports and creating more jobs opportunities.

Introduction

    The economic development has a vital role to play for economic policy makers in the developing countries in general and in Sudan  in Particular ,which suffers from  the lack  and weakness of local  capital consequently, encourages  foreign investments to exploit resources in order to increase exports and improve  level of individual’s income in order to  keep both the  internal and external balance  that are necessary for   economic growth.Statement of Problem:         The problem of the study is based on the economical variables of sustainable development, which is represented in a net of investment which is out of the output and average of the individual share  from the local  product ,total and official aids as a part from the production and exports of commodities that have a direct   effect on economic growth. Therefore, there will be a big breach, showed on economic instability. This study will look at measuring these effects through self regression of gaps distributions model for the distributed time gaps. The study raises the following questions:1\ what are the variables that have strong affects  on the Sudan economic growth on the long and short run?.2/ Are the influences of the economic variables on each others considered to be one of the great obstacles of economic growth in Sudan?    The Significance of study         The study is significant in  the way that, it looks at Linking the economic  variables for sustainable development with the growth rates in Sudan through, self regression of gaps distributions model for the distributed  time gaps, in order to find out what are the most important and influential variables in the process of economic growth .Objectives of study:        This study aims at identifying the distributional impacts of the economical variables of the sustainable development in the economic growth in Sudan during the period (1990-2017). Hypotheses of Study:       The study assumed that the shortage in the investments, aids, loans and grants were shown to be the most effective factors on the economic growth in Sudan in the long term.Methodology of Study:     The study employed historical methodology that explains and elaborates the theoretical framework for sustainable development and economic stability, also the analytical methodology is used to explain and analyze the most relevant data. As well as, quantitative methodology which is applied to measure the effects of variables on the growth through self regression of gaps distributions.    Structure of Study:First Axis : Development and sustainable developmentSecond Axis:  Economic stability.Third Axis : The enactment of economic sustainable development  variables and economic growth in Sudan.Forth Axis : previously conducted studies.The Previous Studies:1\ Bin Zeadan study (2018): It is a published study in Namaa Magazine for economic and commerce, 4^th editions, December 2018, under the title of : the identifiers of economic growth in northern African countries. Through the use of Bail model (1990-2016), the study was conducted to find answers to the following questions:What are the identifiers of economic sustainable growth in the north-east African countries? Can the north-east African countries achieved sustainable growth? This study aimed to measure and analyze the impacts of  Geo- economics  of  the north-east African countries on individual share out of the national income, the study also reached to several results  include that the north-east African countries are among those countries  that are yet to start the growth and better than other countries that have already maintained a high level of growth that resulted  in a distorted and crippled growth that depend on the public sector and capital sources more  than productivity, the study recommended to focus on  increasing and diversifying the local productions .2\  Hassan Yaseen study (2012):    Study published on Elzrgaa magazine for researches and humanitarians studies, first edition (2012) , volume 15 under title,  the impact of the direct foreign investments on the economic  development in Jordan , the study analyzed and measured the period (1996-2008). The problem of the study raises the following questions: what are the types of direct foreign investment in Jordan? What are the impacts of the direct foreign investment on economic development in Jordan? The study aimed to understand the reality of direct foreign investment in Jordan and the type of direct foreign investments. The study reached to many findings: that there is a statistically significant effects of the direct foreign investments on the economic growth in Jordan. Also there is relative relation between direct foreign investments and the total of local outcome that have a positive impact on the economic development in Jordan.The study recommended strong continuation in signing regional and conventional agreements in order to build a bridge for Jordan exports.3\ Warag study (2017):   Study published in Tahanoon magazine for research and studies fourth edition- 2017 with the title of the impact of public expenditure policy on economic growth in Sudan (2000-2015). The study dealt with the following questions: Is the Public expenditures policy had influenced the economic growth during the above mentioned period? The study obtained an important results including ,the increase on the public expenditure will lead to inflation rate on long term due to the decrease on the production and productivity. Therefore, the study recommended that public expenditure should be concentrated on products that are externally demanded to improve purchases rates.What are the most important factor, distinguishes this study from previous studies:   The study reflects the impact of economic variables for sustainable development on the economic growth in Sudan through ARDL model, which explains the impacts both on the short and long terms.Fourth Axis      The development and the sustainable development, defined as the submitted effort to increase the real individual income accumulated through the best and comprehension use of available human and natural resources in order to increase the national income into bigger rate in a comparison to the increase of population rate. (Abdo Elatief Mustafa12:2014).The sustainable development, has defined as providing needs for both current and the upcoming generations.It defined also as, development that aims to achieve individuals’ interests through rational consumption of natural resources, with considerations of the upcoming generations needs. ( Mustafa Yusuf Kafi,52:2017).   Objectives of Sustainable Development:1\Increase the productivity particularly, the agricultural productivity in order to achieve food security.2\ Provide health care.3\ Work to increase economic competency, and increase economic rate and create new opportunities. ( Mustafa Yusuf Kafi,86:2017). Dimensions of Sustainable Development:To provide material needs for human beings, through production and consumption. Thus, the sustainable development need gradual growth in order to combat poverty, this development should be based on vision of usage of resources without affecting the future income. ( Mustafa Yusuf Kafi,76-79:2017).    The following are dimensions of sustainable development:1\   Environmental Dimension:This dimension summarized as following:-         Provide necessary protection to the natural resources to increase the production of food resources by achieving population needs.-         Work to curb environmental issues as pollution resulted from transportation, industries retention, and heats… etc…2\ Economic Dimension:Economic dimensions of sustainable development include the following:–         Austerity in usage of resources by decreasing consumption levels of natural resources and power.-         Fair distribution of wealth and income which will be reflected on the economic growth.-         Consumption of individual from natural resources. There is paradox between individual consumption in development countries. ( Fahed Mekhmeas Khaezran and others, 59:2017). 3\ Social Dimension:      Social dimensions of sustainable development are included in the following:Balancing between the population growth and economic growth in order to limit the rapid increase in population size in order to avoid severe pressure on resources, so as to provide basic needs like education, health and etc. ( Mustafa Yusuf Kafi,79:2017).                                                    Second Axis                                       Economic StabilityFirstly: Conception of Economic Stability:The developing countries in general suffer from two structural defects, which can be represented in internal economic stability defect, which mean, defect of balance between local production and national consumption. If the consumption is more than the production, that is a clear indication of defect between national saving and investment, since the withdrawal saving of the investment lead to foreign fund resources.  This case lead to the defect of foreign economic stability that resulted from refraction of internal stability defect. ( Elwaleed Abdo Elhameed Abaas64:2010).   Then the conception of the economic stability mean the growth of the real local production that will lead to full employability, stability in prices, rate and foreign investments balance, ( James Jowartini195:1999).The conception of economic stability in developing countries have strong ties with foreign trade since, this countries depend on products and exports of commodity from the primary commodities. ( Ahmed Ali Elbwshari 61:1990).Secondly : Objective of Economic Stability:–         To achieve full employment, this means addressing at least the minimum level of the un-employability.-         Stability in prices rate.-         Stability in production sectors that will lead to economic growth and reduce the defects that represent in: recession, inflation and reducing the national product. ( MohamodAbdo Elmoneam Afr,30:1415H).Thirdly:  Local Economical Factors:      The stability in the overall indicators lead to the stability in the banking system, which play significant role in the management of the economy, it’s also highly associated with the overall economy more than with monetary policies. The influence of the exchange rating systems on the overall economic positions and relevant policies are mainly expressed by indictors that are necessary for the banking system safety. ( Elwaleed Ahmed Talha,12:2010).International Economic Impacting Factors:    Sometime economic of state might be affected by financial and economic defects and that can consequently influence the Banking systems performance of the neighboring countries or states which together have direct commercial ties.  The American economic embargo imposed on Sudan is one of the strongly affected factors in economic stability.(Sabir Mohamed Elhassan,45:2004).  Political Factors:       Political factor is considered to be one of most important and influential factor in the economic stability in case there are  political positions deterioration , lack of democracy, outbreak of civil wars and tribal disputes, it all lead to an inaccurate banking and financial system. ( Elwaleed Ahmed Talha,13:2010).Financial Crisis:    The financial crisis is different from the other type of crisis, because it touches the financial sides which make the banking system loses many features that contribute on the running of economic wheel, beside the main role it plays in functioning the financial liaison.Third AxisThe Enactment of the Economic sustainable development variables and the Economic Growth in Sudan:     The Sudanese economic did not witnessed any changes apart from other   developing  countries economy thus, the economic structure in Sudan is  a reflection of  the economic structure in  other developing countries in the passageway of economic growth. ( Osman Ebrahim Elsyed, 7:2010).In order, to explain the performance of this variables during this period, the objectives of the private sector policies should be considered with the purposes of ,removing distortions such as limitations  of freedom of exports and exchange  rate system  to increase external  competitive ability that represented on  the following ;1-    Cancel the  Cotton export taxes.2-    Keep the flexible exchange rate to achieve internal and external balance.3-     Expand the foreign exchange markets, by providing resources to respond   to the levels of foreign currency demands.4-    Sudan had witnessed   significant political changes during (2006-2013) that revealed plentiful changes on economic performance therefore, the  followings are parts of  the objectives set by the  private sector:1\ adjusting from United American Dollar to another hard currency due to several economic and political considerations, as the current American sanction on Sudan.2\ Call off the restrictions on the investments and limiting the imports.3\ prohibiting all the foreign transfers by exchangers and calling off all the attempts of feeding correspondents accounts abroad.4\ boosting trust in local and foreign investors in the local economic performance to ensure the existence of the current investments track and attract more investors. ( Sudan Central Bank, annual reports from 2000- 2013). Many developing countries as Sudan faced strong challenges, especially on economic growth achievements and economic stability, due to the shortages in capital, through which all the useful resources of the country can better be exploited. These develop countries from time to time end up resorting to foreign capital to increase its exports. also the competing capacities in the Global markets need to be improved, in order to improve the trade exchange conditions, consequently, the Global markets will increase the request for the national exports, which will clearly be reflected in the individuals income and decrease the  loans and  borrowings request. Table No (1)The Enactment of Economic Sustainable Development Variables in Sudan during period (1990-2017) 

Source: Bank of Sudan: Annual reports, 1990-2017.Source: Central Bureau for statistical Data, 1990-2017.        From the above table, we noticed that there is an increase in the individual average share from the overall local production, however, this indictor is low in developing countries compare with developed countries due to the decrease in production and productivity. When we go through Commodities of exports as percent of  imports was in continuous increase in the first years of study, then it  decreased due the foreseen  circumstances  that may result in the instability in the rate of  exchange and increase  inflation rates and reduce the investment. The official aid fluctuates between rise and fall due to the circumstances that the state has gone through, which forced state to resort to loans. The foreign net investment indictors that take percentage from local product, is an important indicator in the economic development process. As soon as economic reformation is applied by Sudan, this indicator registered highest percentage in years1992 and 2006. and it ranged between rise and fall during the period of study but in lately years it was reduced, due to political and security factors as well as , other weaknesses in  encouraging  the investors   Forth AxisThe Practical Part of the Study:     To study this phenomenon, it is necessary to describe the model employed by the study to express economic theories in a mathematical methods, since it is considered a crucial step in every study ( Tarig Mohamed Elrsheed,3:2005). The following lines can well have explained this approach:Firstly : Determine the variables :-         GROS: economic growth rate. The dependent variable.     Independent variables:-         AGO: The official aids from the overall national  production.-         EXC : commodities exports with a percentage from commodities imports.-         IN: Foreign investment net with a percentage from overall local production.-         MIC : Individual  share  average from the overall local product..-         BO : represent the model marks.Secondly: the following is mathematical form employed: GROS = B₀ – B₁ ASO +B₂ EXC +B₃ IN + B₄  MIC +U Thirdly :   marks in accordance with economic theory :   B₀  : fixed indicator ( positive).   B₁ : ( negative) indicator ,due to negative  relation between economic growth and official aids and loans.  B₂ : ( positive ) indicator , due positive relation between economic growth and  commodities exports as a percentage  from commodities imports.B₃ : ( positive ) indicator , positive relation between economic growth and  Foreign investment net. B₄ : ( positive ) indicator , positive relation between economic growth and  Individual  share  average from the overall local production.Test of chain placidity: Table No (2)

 Source:     The results of Dekei Folkar indicate that all variables are stable on the level, whereas, the percentage of commodities exports remained stable as part of the percentage of commodities of imports after taking the first variance on the stability on implicit level 5%.Fifth: Bound Test :     After analyzing the stability of time chains, the integration degree should be identified, and tested to ensure there is a long term relation between them. The variables have been integrated from the degree (1), and there is no any simultaneous relation of integration between variables, therefore, the model of self-regression of low distributions is the best model to be employed. Then the self regression of   time gaps methodology distributed to common integration. And through methodology ARDL, we can identify the relation between dependent variable and independent variable in short and long run, and consequently, the influence of the dependent variable on the independent variable can clearly be identified.Below table explain results of Bound Test:Table No (3) Bound test

 Source : Prepared by researcher, use  E-view 9 ProgramR. Squared 94%Likelihood 5.25Prob. F- statistic = 0,003D – W = 3.08From the results of ( Bound test)we reject the null  hypothesis  and accept the alternative hypothesis,  because there is co- integration between variables on the long run.Sixth : Results of correcting error :      After ensuring that  the time chains of the variables are non consonant on the first level and  different, and that  all the  variable are in full integration, it is clear that,  there is a long term  balance relation ( Shiehki Mohamed, 276:2011), therefore, it can be  better represented by short and long model, we can explain that in  the below table :Table No (4)Contegrating Form

 Source : Prepared by researcher, use  E-view 9 ProgramCointeq = LOG(GROS) – (0.9670 * LOG (ASO) +0.1981 *LOG(EXC) +0.0214 * LOG (IN) +0.1595 * LOG (MIC – .9474     Table No (5)Long run Coefficients

Source : Prepared by researcher, use  E-view 9 Program       The above results showed  that the loans and grants had mostly influenced the economic growth on long term , due to economic situation that contributed in decreasing and limiting  the  investments volume and consequently, decreasing  the productivity, which has reflect on exports and individual share average therefore, the state resort  to the loans, aids and grants.One of the above table results, the error corrected by high percentage worth 114% on short term, and continue to balance up to on the long term.From the Equation the increase of commodities exports as percentage from imports commodities and increasing investments had increased the individual share average from the overall local production meanwhile, decreasing the aids, loans and grants, which increased the economic growth averages.Seventh:  results of Akaiki and Shoartrz:All the following reviews and explanations are based on the beow tables:Table No (6)

Source : Prepared by researcher, use  E-view 9 Program           Table No (7)Number of slow down period for VAR model of Study variables

      From the results of the above mentioned table, there is counter relation between individual share average of overall local production, during previous period mic (-1), and individual share average of current  period. In other words, individual share average from the overall local production, in the previous period have a negative impact on the individual share average of current period. With a percentage worth 10%, this due to the decrease in production that consequently led to the decrease of investments and exports.It is obvious that, the individual share average of the overall local production have negative impact on foreign investment with percentage worth 71%. Also individual share average of the overall local production for three previous periods mic(-3) have negative impact on the percentage worth 13% on individual share average of  production for the current  period mic.The results also, showed that the investment for two previous periods had  clearly impacted the individual share average  and investments volume of the current period.   The ResultsDescriptive Analytical Results:1\  From table No (1) results, it is noticeable, that individual share average from overall local production has witnessed a great rise  due to  the increase in investments and production, consequently, the  export and economic growth rates had increased.2\  The same table also showed clearly , that the individual share from the overall local production last years  had increased, but with lowest rate, therefore,  economic growth underwent instability  between rise and fall. However, in the last years it  decreased due to the  lack of investments which  led to   a shortage in production that caused a decrease in the market of exports and the state  resubmitted  or resorted to aids, loans and grants.Quantitative Analysis Results :1\  Results of an extended Dikei  folar  test, indicted that all variables are stables at implicit level 5%.2\ While the Bound test showed that the variables are integrated on the long term.3\ The results of long term showed that, aids and grants had mostly impacted the economic growth rate on long term due to the  truncate of productivity And investments, which had negatively reflected on the commodities exports and the individuals incomes. Consequently, the state resorted to aids loans and others. 4\ The results of correcting errors indicated that, the errors has been corrected with very high percentage growth 114% in order to reach the balance on the long term.  5\ In the short run and based on the equation it is clear that the increase in exports and investments has directly affected the average of individuals share from the net of the local production and consequently, caused a decrease in in the official  aids , grants  and loans leading to a clear prosperity and growth in economy.   6\  The results of self regression model, heighted the individual share average form the overall local production for current period  that strongly affected  by the previous period  due the shortage in investments  subsequently, the production and productivities, which it have negative reflection on economic growth rate.Recommendations:1\  Infrastructures should be built  and production methods  should also be develop in order to achieve sustainable agricultural development  that will lead to economic development , especially in the  rural areas  where production rates should be encouraged  to reduce poverty.2\ Directing the spending towards production projects and paying great   attention to the quality of production of   competitive exports in the global markets.3\ Attention should be paid to training, to increase the specialists’   level of expertise to allow the power workers to participate in other sectors to increase the size of exports by diversifying production.4\ Follow the measurements studies, which give accurate quantitative measurement that will help in  decision – making.                   References :1-    Ahmed Ali Elboshari,(1995),Yamani economic policy, public  expend policy, Dar Eltrafeen, Yaman.p.612-    James Joarteni, (1999),Overall economic, Public and private selection, Translation by, Abdo Elftah Abdo Elrahaman,Dar Elmerekh, Saudi.p.1953-    Shiekhi Mohamed (211),methods of economic measure, lectures and applications, first edition, Dar Hamed.p.2764-    Sabir Mohamed Elhassan,(2004), management of cash policy in light of Islamic banking system, Bank of Sudan expert, Dar Masehaf Africa.p.455-    Tarig Mohamed Elrsheed< (2005), guide in measurement economic, Ge town , first edition, Khartoum.p.36-    Abdo Elateef Mustafa (2014) Studies in economic development .p.127-    Othman Ibrahim Elseid,(2010),Sudanese economic, Sudan University for publication, Khartoum.p.78-    Fahad Mekhiemz Huziran Elshamri and others,(2017),Financial policies and its impact on sustainable development, Dar Elayan for publication and distribution, first edition.p.599-    Mohamed Abdo Elmoniem Afr,(1415h), economic policy in frame of Islamic Sharia intentions, Centre of Islamic Studies, Saudi Arabia.p.3010-      Mustafa Yusuf  Kafi)2017(,Sustainable development, Academic home for publication and distribution, first edition, Jordan.p.7911-      Elwaleed Ahmed Talhaa, (2010), Financial stability  in Islamic banks, Sudan Bank, Fourth International Conference for Islamic Banking , Khartoum.p.1212-      Elwaleed Abdo Elhameed Abass, (2010), Overall economic affections public expends policy , applied and measurement study for economic development model, Hassan modern Library for printing , publication and distribution, first edition, Lebanon.7913-      Central bank of Sudan, annual reports (1990-2017).14-      Central Bureau of data statistic, (1990-2017).Secondly:Journals and Studies :1-    Dr. Bin Zaed , Fatima Elzhra,(2018), limitations of the sustainable economic model of North Africa countries, through the usage of  Bail models, Nama for economic and trade Magazine fourth edition, 2-    Hassan Yasin Taama(2015),Direct foreign investments on economic development in Jordan, analytical and measurement study during period (1996-2008), Elzrgaa magazine for researches and humanity studies, Fifteen volume, first edition, 2017.

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