asian themes in social sciences research issn: 2578-5516 vol. 2, no. 1, pp. 1-3 2018 doi: 10.33094/journal.139.2018.21.1.3 © 2018 by the authors; licensee online academic press, usa 1 © 2018 by the authors; licensee online academic press, usa developing the culture of speech of secondary school students under dialectical conditions lhasaranova bairma bastuevna1* --sodnomov sonombal tsydenovich2 --oshorov sergey garmaevich3 --dondokova soelma dorzhievna4 --tsyrempilova butid tsyrendorzhievna5 1the scienсе doctor of pedagogical sciences, professor, buryat state university, ulan-ude, republic of buryatia, russia 2the scienсе doctor of pedagogical sciences, professor, buryat republic institute of education policy, ulan-ude, republic of buryatia, russia 3ph. doctor of pedagogical sciences, professor, buryat state university,ulan-ude, republic of buryatia, russia 4,5postgraduate, buryat state university, ulan-ude, republic of buryatia, russia abstract in modern times, the study of the problems of educating secondary school students in culture of speech under dialectical conditions is one of the most important tasks of the buryat language teaching methodology. this problem in the buryat language has not been studied. in the methodology, only some aspects of work on the norms of the literary language were considered. the norms of the buryat literary language are defined in general terms. they are not fully established and are not fixed in special dictionaries and reference books. in this article, the problem of educating students in culture of speech under dialectical conditions is described and ways to improve the literary speech of students under dialectical conditions are given. keywords: buryat, language, dialect, speech, pronunciation. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction as a special linguistic discipline "culture of speech" was formed relatively recently. one of the directions developed in this field became the culture of speech under dialectical conditions. the relevance of this article is determined by the following: • the problem of education of culture of speech under dialectical conditions has not actually been studied; in the methods of teaching the buryat language only aspects of work on the norms of the literary language were considered; • school programs and textbooks on the buryat language are uniform for all schools of the buryat republic, and due to their specificity the school programs do not pay attention to t eaching under the conditions of dialectical speech environment. the dialectical component is still widely present in rural schools. this necessitates the development of programs, textbooks and manuals that consider influences of local dialects on students' speech and are adjusted to the buryat language school course; • the tasks of educating culture of speech under dialectal conditions need further extension. along with working on the norms of the literary language, it is necessary to teach children to distinguish between the phenomena of the literary language and the dialect and to bring to the consciousness of schoolchildren the possibility of using dialectal words in certain speech situations. https://www.doi.org/10.33094/journal.139.2018.21.1.3 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 1-3 2 © 2018 by the authors; licensee online academic press, usa to solve problems associated with the development of literary speech in a dialectical environment, the teacher needs knowledge of dialectology and of the linguistic features of the dialect and spoken language of that locality that form the speech environment and students’ speech. the task of acquainting dialect -speaking students with a dialect as part of the buryat language and of establishing the norms of the literary language in their speech needs to be undertaken in juxtaposition of the literary language and dialect. this approach provides a conscious attitude to the dialect as part of the culture of the buryat people. learning the buryat literary language under dialectical conditions is fraught with certain difficulties. the child learns its native language at an early age in the process of communicating with adult s through imitation, mimicking adult speech, and subconscious modelling. this suggests that the child's speech depends on the speech environment where it was born and grew up. thus, the teacher deals with children who from an early age speak the local dialect, their “mother tongue.” the buryat language has four dialects and many subdialects according to the classification of e. r. radnaev: 1. khorinsky dialect with subdialects: khorinsky subdialect (khorinsky, kizhinginsky, eravniansky districts); aginsky subdialect (aginsky buryat autonomous region of transbaikal region); muhorshibirsky dialect (mukhorshibirsky, zaigraevsky, bichursky districts, except for village harlun). 2. ehirit-bulagatsky dialect: ehiritsky subdialect (ehirit-bulagatsky, bayandayevsky districts of the ust-ordynsky buryat autonomous district of irkutsk region); bulagatsky subdialect (bokhan and osinsky districts of the ust-orda buryat autonomous district); nizhneudinsky subdialect (in krasnoyarsk region); kachugsky subdialect (in irkutsk region); barguzinsky subdialect (barguzinsky and kurumkansky districts); baikal-kudarinsky subdialect (kabansky district); ivolginsky dialect (ivolginsky district). 3. khongodorsky dialect: alarsky subdialect (alarsky, nukutsky districts of ust-orda buryat autonomous district); tunkinsko-okinsko-zakamensky subdialect (tunkinsky, okinsky, zakamensky districts), the subdialect of the unginsky buryats. 4. tsongolo-sartulsky dialect: tsongolsky subdialect (selenginsky, kyakhtinsky districts); sartulsky subdialect (dzhidinsky district) (radnaev, 2011). the literary basis of the language should be unified and therefore in 1936 the khorinsky dialect was chosen as the standard language, which the predominant part of the buryat population of the republic speaks. this dialect became the language of education starting the birth of the buryat literary language. the foundations of the literary language are created in the primary school where children are introduced to the sound system of the buryat language, acquire skills of correct pronunciation. in junior grades, the education of culture of speech is based on the study of sounds, letters and those pronunciation skills that the students of the buryat language acquired in children education. work on the improvement of culture of speech in school is undertaken in accordance with the concept's b.n. golovin “two levels of mastering the literary language, defined in linguistics: 1) work on the correctness of speech, the norms of the literary language; 2) work on communicative speech, its qualities” (golovin, 2008). while the first level of teaching the norms of the literary language under dialectal conditions is undertaken in schools, the second level communicative use of the means of the buryat literary language has not been fully studied and developed. teachers of the buryat language make attempts to tackle the problems created by the dialectal environment. they actively work to correct and prevent dialectical mistakes in the speech of students, but this process is irregular. it is not a trivial task even for an experienced teacher to adjust the content of the buryat language school course to the dialectical component of teaching. teachers working in the influence of local dialects need a methodology that allows organizing work on the development of culture of speech aimed at the literary speech of students under dialectical conditions: • correcting dialectal speech mistakes should not be a fight against the dialect and should not be aimed at removing the dialect as a negative influence on students' speech; • it is necessary to maintain a respectful attitude to the dialect as to the “mother language” of children and to the richness of the buryat literary language; • while differentiating the phenomena of the literary language and dialect, it is necessary to educate the notions of appropriateness and inappropriateness of the use of dialectical words in speech. when developing exercises for the formation of speech and communication skills, one can rely on the didactic concept's i.ya. lerner of contents and teaching methods in the basis of which is the nature of student activities. ”in accordance with the nature of student activities all methods of teaching in didactic science are divided into two groups: reproductive and productive. reproductive methods are used to provide sustainable skills and abilities, productive – to contribute to the development of students' creative thinking” (lerner, 2001). taking the aforementioned didactic concept as the basis of ana lysis, we considered “methodical interpretation of productive and reproductive methods in the development of students' spe ech” developed by kapinos (2001). in teaching the buryat language, both reproductive and productive methods are used. it is conditioned by the nature of the subject itself and depends on which aspect of the language is the subject of asian themes in social sciences research 2018, vol. 2, no. 1, pp. 1-3 3 © 2018 by the authors; licensee online academic press, usa study: “language system (mastering the norms) or linguistic material (mastering the skills of communicative expedient use of language means)” (2, p. 67). all exercises are based on either complete didactic material or incomplete didactic material that needs further work or are related to the creation of texts. to represent the types of exercises, we used the classification of a.y. kupalova that is based on the types of training activities and received a methodical adaptation. exercises on content are divided into teaching lexical norms; training of grammatical norms; work on students’ communicative use of lexical dialectisms in their own expressions. “by activity, all types of exercises can be classified as follows: 1. exercises on prepared material: observation per specially prepared questions and tasks; identification and characterization of dialectical phenomena; comparison of literary and dialectical vocabulary; text analysis. 2. exercises on material that requires a partial revision to: an insert; replacement of the form, including the sample; editing of sentences and text. 3. exercises to create a text: construction of sentences; construction of text fragments; descriptions after the models suggested by the teacher; correction; compilation of working materials for writing; creation of fragments of essay in accordance with a given type of speech (description of the subject) and style; the beginning of the description, the ending of the composition; creation of text” (kupalova, 2015). by constructing this method of teaching of literary speech in the dialectical environment, we considered the data of modern linguistics from the field of culture, speech, dialectology, as well as research on the method of teaching the buryat language. the education of culture of speech under dialectical conditions requires a differentiated methodology and entirely depends on the nature of students’ dialect or subdialect. references golovin, b.n. (2008). the foundations of the culture of speech. moscow: science. pp: 320. kapinos, v.i. (2001). the development of speech: theory and practice of teaching: 5-7 grade, book for the teacher. moscow: education. pp: 191. kupalova, a.y. (2015). russian language is the native language: exercises for independent work. moscow: russian language, 17: 25-28. lerner, i. y. (2001). didactic bases of teaching methods. moscow: pedagogika. pp: 186. radnaev, e.r. (2011). buryat literary pronunciation. irkutsk: publishing house of the isu. pp: 95. asian themes in social sciences research issn: 2578-5516 vol. 3, no. 2, pp. 28-31 2019 doi: 10.33094/journal.139.2019.32.28.31 © 2019 by the authors; licensee online academic press, usa accepted: 5 november 2019 | published: 20 november 2019 28 © 2019 by the authors; licensee online academic press, usa using synfig studio as an interactive learning media: a study of senior high school in rural school anna riana suryanti tambunan1* --fauziah khairani lubis2 --bahagia saragih3 -- willem saragih4 --puan suri mira annisa sembiring5 1,2,3,4,5universitas negeri medan, indonesia. abstract the ability to make learning media is expected to motivate teachers and students in more exciting learning. but in reality, there are still many teachers who experience obstacles, especially in making learning media. the purpose of this learning assistance activity aims to provide knowledge and skills using interactive learning media in the teaching and learning process in the classroom. it is to maximize learning media (specifically synfig studio) that is available in the learning process. besides, it is to help the teachers be able to make learning media more enjoyable to achieve the learning objectives to be completed. participants in the community service program were 15 teachers in one of the high schools in the rural area, bangun purba. the learning assistance using synfig studio was done with lecture, demonstration, and practice methods accompanied by questions and answers. the availability of adequate expert in assisting instructional media, the enthusiasm of participants, the support of school principals in the implementation of activities, and supporting funds from the university were the critical success of the application of this activity realization. the obstacles faced are the teachers do not have prior knowledge about computer operations and limited time for training. the participants can take part in the practice from beginning to end. besides, all teachers can complete independent tasks well, which can make computer-based learning media. keywords: synfig studio, interactive learning, learning media. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received financial support from the universitas negeri medan. competing interests: the authors declare that they have no competing interests. acknowledgement: the authors wish to acknowledge with gratitude the support of universitas negeri medan through the research institute and the students of the english literature department. 1. introduction in the process of learning, there are several difficulties faced. teachers face difficulties in finding the right media to teach. they need creativity to develop material. in general, they only use student worksheets and books. according to the results of a survey conducted by lidiana, tambunan, and yuningsih (2017) learning systems that use student worksheets do not attract and make students bored. some teachers use images obtained from newspapers or magazines. this media is not enough to make students interested in the learning process. for that, we need learning media to increase the motivation of teachers and students in the learning process. https://www.doi.org/10.33094/journal.139.2019.32.28.31 asian themes in social sciences research 2019, vol. 3, no. 2, pp. 28-31 29 © 2019 by the authors; licensee online academic press, usa in learning, there are two most prominent aspects, namely learning methods and learning media, as a tool in teaching. teachers are expected to be able to design learning that provides opportunities for students to actively interact and communicate, both with fellow students and with teachers. one way that can make the learning process more enjoyable, useful, and expected to improve student learning outcomes in the learning process is the use of learning media. learning media is a tool or means of a messenger from learning resources to recipients of learning messages (students), so that two-way or more communication occurs, and is able to simulate audio-visual material so that it looks real through images or animation. media is everything that is used to channel messages from the sender to the recipient so that it can stimulate the thoughts, feelings, attention, and interests of students to learn. the results of the study show that the learning process using learning media, namely computer media, can increase students' motivation and achievements, and of course , the teacher needs creativity in the use of this learning media. the use of learning media is one of supporting the achievement of learning objectives (sari & setiawan, 2018). the study conducted by safitri (2013) shows that computer-based interactive teaching media on the subject of triangles in junior high schools developed are very influential in student learning achievement. this can be seen from the results of trials on one to one and small groups obtained by the average student learning outcomes in good categories. based on the field test, it is known that computer-based interactive teaching media on the subject of triangles in junior high schools have a potential effect on student learning outcomes. the previous study conducted by ahamad, mohamad, sakat, zaid, and ahmad (2012) also described that computer usage can stimulate effective learning and improve the performance of jawi education, enhancing the high level of interactivity among students. but until now, interactive learning media have not developed optimally in indonesia. one of the obstacles to the development of interactive learning media is the lack of mastery of technology in the development of interactive learning media by teachers so that the development of interactive learning materials with computers is less than optimal. this also happened in the bangun purba area. the results of the interview with one of the teachers at one of the schools in bangun purba showed that the teacher had difficulty teaching english because students had less motivation to learn. this is caused by several factors. one of the factors is monotonous and conventional teaching. conventional learning is generally dominated by the paradigm of teaching, where the teacher actively communicates information and passive students receive. students are also forced to learn what the teacher teaches by applying various types of punishment, not with an awareness of the meaning of learning, and added that learning focuses (oriented) on teachers, not students. through light discussions, the community service team suggested using computer media as a learning media so that the learning process was more interesting for teachers and students. but even more, shocking things happened. one of the teachers said that the average teacher did not have the ability to use computer media. one teacher revealed the following. "... how do we want to teach using a computer, mam. just holding a computer is rare, let alone using a computer for learning media. very rarely do we use computers to study in class, ma'am. we can't operate it. if possible, training is needed for that. so that we can be taught "(high school teacher). to ensure this, the dedication the team made a questionnaire to be distributed to english teachers in bangun purba. the results of observations from questionnaires filled out by around high school teacher’s show that it is true that teachers rarely use computers as learning media and do not have the ability to use computer applications. and from the results of interviews conducted, it was shown that teachers still use simple lecture learning methods and media so that they tend to be passive during the learning process. from the explanation of the above problems, the team proposing dedication activities offered assistance for the use of synfig studio. synfig studio is a graphic design application for 2d animation which can be a tool for education (kainz, kardos, & jakab, 2013). this application can create or make animated films that are good enough. the synfig studio application was originally developed by robert quattlebaum under the name of the animation studio voria studios. vorio studios uses synfig for internal purposes, but in its journey, vorio studios was closed, and finally, the 2d animation maker software application was released as an open-source application called synfig studio. synfig studio is an application for making 2d animations that are open source and can be obtained free of charge. the synfig application is available on several platforms such as windows, mac os, and linux. the synfig application interface consists of 7 windows: toolbox, canvas, layer, navigator, transform tool, time tracking, parameters. to use the synfig application, we can download it from the official website of synfig studio, http://www.synfig.org/ the installer file size is relatively small, only 89mb. the steps to install it are also quite easy; just run the installer and follow the flow in the installer. after the installation is comp lete, we can immediately use the synfig application. based on the analysis of the situation described above, the service team found the main problems faced by partners in bangun purba 1 high school, namely (1) partners did not have optimal understanding and skills in using computer media, (2) teachers had used the lecture method in learning. learning so far uses print media in the form of textbooks and is less varied which makes students less motivated in learning english, (3) teachers less able to use computer media, (4) teachers experience difficulties in finding effective learning to develop language learning materials england so that learning activities lead to boredom. asian themes in social sciences research 2019, vol. 3, no. 2, pp. 28-31 30 © 2019 by the authors; licensee online academic press, usa 2. method the assistance that was provided includes understanding the use of media in the learning process and deepening planning to create media in learning using computer media, in this case, the synfig studio program. there were three methods applied in this training, namely presentation methods, demonstration methods, and practice methods. presentation methods are applied in the introduction of software, their usefulness, and their application in the manufacture of interactive learning media, demonstration methods concerning the operationalization of programs, and practice methods where teachers practice directly making the learning media using synfig studio. the steps to be taken in this service activity include the following stages. 1. preparation the preparation stage is the initial stage before the implementation of service activities. in this stage, there are several things that are done; namely, internal coordination, carried out by the team to plan the conceptual, operational, and job description of each member, determining and recruiting mentoring participants. in the recruitment of participants, it is required that those who have adequate skills in the field of computers, the making of assistance instruments for making synfig studio media, such as attendance sheets, questionnaires, worksheets, preparation for consumption, publication, location, documentation, and so on. 2. implementation of mentoring this stage is the stage of assistance provided to the teachers at the school in bangun purba. this assistance includes the following. a. material presentation the material presented is related to the introduction and use of the synfig studio program for making learning media. the implementation of this program involves students to assist the mentoring and practice process so that activities can run smoothly. question and answer activities are carried out simultaneously with the presentation of material. the participants can directly discuss with the speakers directly to understand the material and share experiences related to the problems being discussed in the material concerned. b. practice assignment at the end of the material, the participants were given practical assignments according to the material presented to explore the absorption and understanding of the material and see their creativity in work. in this mentoring, the teachers were assigned to make a learning media related to the topic to be taught in accordance with the lesson plans. the service team accompanied guided and directed and provided solutions when problems arose during practical assignments. c. evaluation and improvement of learning media at the end of the mentoring, the media that had been created by the teachers was collected and assessed by the service team and then refined by the team to be returned back to the participants so that they could be used to teach. this action was taken considering that the media works produced by the teachers still needed improvement, and the service team wanted the learning media to really be immediately used for teaching. d. reflection and closing of the activity program at the end of the activity, the participants and the team reflected on the results of the training, and the participants also gave an evaluation of this training. participants get corrections and evaluations directly related to their work. after all the planned activit ies were carried out, the head of the service team closed the program and gave a message to all trainees to apply what had been obtained to improve the learning media in their respective schools. it is expected that in the future service activities, this program can be continued again and can reach the number of schools not only at the high school level so that the benefits of this program can be felt by more schools. 3. discussion the results of the activities in the outline include the following components: 1. the success of the target number of mentoring participants. 2. achieving the purpose of assistance. 3. achievement of planned material targets. 4. the ability of participants in mastering the material. the target of the trainees as previously planned, was at least 15 teachers, according to the number of computers available in the laboratory. in its implementation, this activity was attended by 15 participants. thus it can be said that the target audience has reached 100%. the figure shows that this a ctivity can be seen from the number of participants who participated can be said to be successful/successful. asian themes in social sciences research 2019, vol. 3, no. 2, pp. 28-31 31 © 2019 by the authors; licensee online academic press, usa achievement of the purpose of assisting the development of instructional media, in general, is good, but the limited time provided causes not all material on the development of instructional media can be delivered in detail. but seen from the results of the training of the participants, namely the quality of learning media that has been produced, it can be concluded that the objectives of this activ ity can be achieved. the achievement of the material targets in this activity is quite good because the mentoring material has been delivered in its entirety. assistance materials that have been delivered are: 1. introduction to professional teachers. 2. learning media theory. 3. making computer-based learning media. the ability of participants viewed from the mastery of the material still lacks due to the short time in the delivery of material and the different abilities of the participants. this is due to the large amount of material that is only delivered in one day so that there is not enough time for participants to fully understand and practice all the material provided. based on the evaluation of the implementation and results of activities, it can be identified supporting and inhibiting factors in implementing the community service program. broadly speaking, the supporting and inhibiting factors are as follows: 1. supporting factors. a. there are sufficient experts in the development of instructional media. b. the enthusiasm of the teachers is quite high for the activities of mentoring this learning media because, apparently, there are still many teachers who have not mastered the making of instructional media . c. the support of the principal of sma negeri i bangun purba, who welcomed the implementation of the mentoring activities and helped the service team organize the time and place of the implementation of the activities. d. availability of supporting funds from the university for organizing community service activities. 2. inhibiting factors. a. there are still many trainee teachers who do not have prior knowledge about computer operations. b. limited time for the implementation of the training so that some material cannot be delivered in detail. c. the catching abilities of the participants varied, some were fast, but some were slow so the time spent was less than the maximum. as a whole, the assistance activities in making this learning media can be said to be successful. this success is measured in addition to the four components above; it can also be seen from the satisfaction of the participants after participating in the activity. the benefits obtained by the teacher are able to compile and make learning media with better quality, and hopefully, these qualities can increase teacher competence and student motivation to learn. 4. conclusion the assistance program can be implemented well and runs smoothly in accordance with the planned activities that have been prepared even though not all participants of the mentoring have mastered the material presented well. this activity was very well received, as evidenced by the activeness of the participants in participating in the mentoring by not leaving the place before the training time ended. based on the evaluation that has been done, it is suggested that the existence of follow-up activities periodically in the form of similar training is always held so as to improve the ability of teachers to carry out teaching and learning. references ahamad, z., m., mohamad, r., sakat, a., zaid, m. z. m., & ahmad, a. (2012). educational technology media method in teaching & learning progress. american journal of applied sciences, 9(6), 874-878.available at: https://doi.org/10.3844/ajassp.2012.874.878. kainz, o., kardos, s., & jakab, f. (2013). the computer animation in education paper presented at the international conference on emerging learning technologies & applications, 201-2015. slovakia: stary smokoves: high tanfatras. lidiana, tambunan, t. d., & yuningsih. (2017). aplikasi pembelajaran bahasa inggris berbasis multimedia untuk kelas 3 sd negeri cipagalo 03. e proceeding of applied science, 3(1), 68-77.available at: https://openlibrary.telkomuniversity.ac.id › jurnal_eproc safitri, m. (2013). pengembangan media pembelajaran matematika pokok bahasan segitiga menggunakan macromedia flash untuk siswa kelas 2 smp . jurnal pendidikan, 14(2), 67-72 sari, a., & setiawan, a. (2018). the development of interbet-based economic learning media using moodle approach. international journal of active learning, 3(2), 100-109. available at: https://journal.unnes.ac.id/nju/index.php/ijal/article/view/13449 asian themes in social sciences research issn: 2578-5516 vol. 1, no. 1, pp. 10-13 2018 doi: 10.33094/journal.139.2018.11.10.13 © 2018 by the authors; licensee online academic press, usa 10 © 2018 by the authors; licensee online academic press, usa protection and management policy on angkor wat temple in cambodia: an overview rathny suy1 --leaksmy chhay2 --chakriya choun3 1school of public affairs, university of science and technology of china, hefei, anhui, 230026, china. 2school of management, university of science and technology of china, hefei, anhui, 230026, china. 3school of public administration, central south university, changsha, hunan, china. abstract this paper described on protection and management of the cambodian government on the angkor wat temple. it also expressed to the angkor wat during the pol pot regime that is the zero time, the country had destroyed almost sectors, and angkor was closed during that time, and some parts of angkor wat were destroyed. by the late cambodian king norodom sihanouk, angkor wat was listed in unesco's world heritage in danger (later removed in 2004), because he submitted a request for help in 1992. to protection from the angkor wat site, world heritage site together with an appeal by unesco to the international community to rescue angkor in 1994. in 1995, apsara was established to protect and manage the area, and a law to protect cambodian heritage was released in 1996. this review paper aims to provide the brief history of angkor wat temple as well. keywords: protection policy, management policy, angkor wat temple, cambodia. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction cambodia represents an ancient country in asia. cambodia is the kingdom of wonder, which has had a high old-time civilization, in particular during the angkor era; cambodian ancestors had constructed thousands of temples and are always existed. these constructions reflect the culturally rich and abundant. angkor is part of the most important archaeological sites in south-east asia. for an instant, cambodia has angkor wat temple, bayon temple in siem reap province, preah vihea temple in preah vihea province, and thousand other temples throughout the country (nguon, 2010). from the 9th to the 15th century, including forested area, angkor archaeological park includes the magnificent remains of the different capitals of the khmer empire had stretched over some 400 km2. they contain the famous temple of angkor wat and, at angkor thom, the bayon temple with its countless sculptural decorations (khmer time, 2017; wikivoyage, 2018). unesco has set up a wide-ranging program to safeguard this symbolic site and its surroundings (unesco, 1992). indian architecture and some details from cham and javanese styles were influenced a definite on angkor. as the capital cities of the empire were being built around the temples, an elaborate irrigation system consisting of canals, moats and reservoirs was created for both agricultural and religious purpose (unesco, 2013). angkor wat temple is the soul of cambodia, that why the government takes action to protect this site with prudent management. angkor wat has reached to over 1.23 million visitors during the first half of 2015 with revenues of 35 million us dollars (apsara, 2015). this excessive overcrowding could be a possibility threat to the ancient monument. tourism stands for a tremendous economic potential but it can also generate irreparable destruction of the tangible as well as intangible cultural heritage as stated in the convention concerning the protection of the world cultural and natural heritage (unesco, 2012). https://www.doi.org/10.33094/journal.139.2018.11.10.13 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 10-13 11 © 2018 by the authors; licensee online academic press, usa regarding to this concern, an international coordinating committee for the safeguarding and development of the historic site of angkor (icc-angkor) was established in order to ensure the coordination of successive scientific, restoration and conservation-related projects in 1993. moreover, a wide-range of programs was established by unesco to protect this symbolic site and its surroundings, which are already legally safeguarded by a number of laws and policies (seth, chea, fisher and chea, 2015). the cambodian government complied a strategy to divert visitors to other touristy destinations in the country with a range of impressive temple sites, eco-adventure holidays, and newly developed beach resorts to prevent further destruction to the angkor world heritage site (world archaeology, 2015). this review paper is designed to describe about history of angkor wat temple in cambodia. it also aims to provide the protection and management policy on angkor wat temple in cambodia. 1.1. angkor wat temple: brief history angkor is the architecture and layout of the successive capitals is a testament to a high level of social order and ranking within the khmer empire. it also is a great site exemplifying cultural, religious and symbolic values, as well as containing high architectural, archaeological and artistic significance. the site integrity however, is put under dual pressures: 1) endogenous: exerted by more than 100,000 inhabitants distributed over 112 historic settlements scattered over the site, who constantly try to expand their dwelling areas; and 2) exogenous: related to the proximity of the town of siem reap, the seat of the province and a tourism hub (unesco, 1992). when the khmer rouge took over in 1975, they went to temples and destroyed all the statues, mostly by beheading them and hiding or scattering them in the jungle. because of the genocide of the khmer rouge, cambodia is missing almost an entire generation and more than that its missing the population with any skills or education, and the angkor wat was closed during that time, and some parts of angkor wat were destroyed (wikipedia, 2018). in 1908, the restoration of angkor wat in the modern era started with the creation of the conservation d'angkor (angkor conservancy) by the école française d'extrême-orient (efeo). before that date, the activities at the site were primarily concerned with exploration; and the conservation d'angkor was in charge of the research, conservation, and restoration activities carried out at angkor until the early 1970s (apsara, 1995; wikipedia, 2018). in addition, protection from angkor was gone up during the khmer rouge era and the conservation d'angkor was disbanded in 1975. between 1986 and 1992, the archaeological survey of india carried out restoration work on the temple, as france did not recognize the cambodian government as the time (kapila and neel, 2013). in 1992, following a request for assist by late cambodian king norodom sihanouk, angkor wat was listed in unesco's world heritage in danger (later removed in 2004) and world heritage site together with an appeal by unesco to the international community to safeguard angkor, and the zoning of the area was set up to protect the angkor site in 1994, apsara was established in 1995 to protect and manage the area, and a law to protect cambodian heritage was released in 1996 (falser, 2015). a number of countries such as france, japan, and china are involved in various angkor wat conservation projects. 1.2. protection and management policy on 28th may 1994, the property which is legally protected by the royal decree on the zoning of the region of angkor (siem reap province) was adopted. the law on the protection of natural and cultural heritage was promulgated on 25 january 1996. on 19 th february 1995, the royal decree on the creation of the apsara national authority (authority for the protection of the site and the management of the angkor region) was laid down. the no. 70 ssr government decision, dated 16 september 2004 providing for land use in the angkor park: “all lands located in zone 1 and 2 of the angkor site are state properties”, and the sub-decree no. 50 ank/bk on the organization and functioning of the apsara national authority adopted on 9th may 2008, specifically provided for the establishment of a department of land-use and habitat management in the angkor park (seth et al., 2015). the national cultural heritage comprises cultural property created or discovered on federal territory. the purpose of this law is to protect national cultural heritage and cultural property in general against illegal destruction, modification, alteration, excavation, alienation, exportation or importation. this law shall apply to movable and immovable cultural property, whether publicly or privately owned, whose protection is in the public interest (rgc, 1996). the successful conservation of the property by the apsara national authority, monitored by the iccangkor, was crowned by the removal of the property from the world heritage list in danger in 2004. angkor is one of the largest archaeological sites in operation in the world. the anthropological studies on socio-economic conditions) result in a better knowledge and understanding of the history of the site, and its inhabitants that constitute a rich exceptional legacy of the intangible heritage (unesco, 1992; wikipedia, 2018). the purpose is to associate the “intangible culture” to the enhancement of the monuments in order to sensitize the local population to the importance and necessity of its protection and preservation and assist in the development of the site as angkor is a living heritage site where khmer people in general, but especially asian themes in social sciences research 2018, vol. 1, no. 1, pp. 10-13 12 © 2018 by the authors; licensee online academic press, usa the local population, are known to be particularly conservative with respect to ancestral traditions and where they adhere to a great number of archaic cultural practices that have disappeared elsewhere. moreover, the angkor archaeological park is very rich in medicinal plants, used by the local population for treatment of diseases. the plants are prepared and then brought to different temple sites for blessing by the gods. these aspects of intangible heritage are further enriched by the traditional textile and basket weaving practices and palm sugar production, which all result in products that are being sold on local markets and to the tourists, thus contributing to the sustainable development and livelihood of the population living in and around the world heritage site (wikipedia, 2018; wikivoyage, 2018). the public investigation unit was established to identify visitors’ demands and expectations, and to oversee the visitors’ behaviours, so that particular policies and management could respond to these issues. intangible cultural heritage has been associated with tangible heritage, specifically angkor wat, to protect the local population living within the development site, and to help them maintain their ancestral traditions and cultural practices (unesco, 2012). the management of the angkor site, which is inhabited, also takes into consideration the population living in the property by associating them to the tourist economic growth in order to strive for sustainable development and poverty reduction. two major contributions supporting the apsara national authority in this matter are: 1. the angkor management plan (amp) and community development participat ion project (cdpp), a bilateral cooperation with the government of new zealand. the amp helps the apsara national authority to reorganize and strengthen the institutional aspects, and the cdpp prepares the land use map with an experimental participation of the communities and supports small projects related to tourist development in order to improve the income of villagers living in the protected zones; 2. the heritage management framework composed of a tourism management plan and a risk map on monuments and natural resources; a multilateral cooperation with the government of australia and unesco. preliminary analytical and planning work for the management strategy will take into account the necessity to preserve the special atmosphere of angkor. all decisions must guarantee physical, spiritual, and emotional accessibility to the site for the visitors (seth et al., 2015; unesco, 2017). one of the most promising strategies to protect the cultural heritage has been the growing number of cambodian homestay schemes that have been initiated to provide tourists with a meaningful and unique experience because they will be able to stay with the local population and understand more clearly about the khmer culture and lifestyles. 2. conclusion the excessive overcrowding at this site has brought some irreversible and irreparable destruction however, there are a number of policies and laws in place to provide protection and allow economic development following the creation of the international coordinating committee for the safeguarding and development of the historic site of angkor (icc-angkor) in 1993. in order to prevent such illicit activities taking place in the future, countries need to work collectively through: the establishment task force with an advisory council to overlook the work at regional and international level to combat cultural racketeering; and finally, the establishment of an independent centre to combat antiquities laundering are some of the essential action plans to prevent any further cultural damage in the future. 3. acknowledgments the authors would like to thank the anonymous reviewers and the academic editor of this journal for the invaluable comments and suggestions which have substantially improved the manuscript. references apsara, (1995). the modern period: the creation of the angkor conservation. phnom penh, cambodia: apsara authority, the ministry of tourism. pp: 5 apsara, (2015). apsara authority: number of foreign tourists to angkor increases slightly in first seven months. available from: http://www.cambodiatips.com/news/19153/apsaraauthority:-number-offoreign-tourists-to-angkor-increases-slightly-in-first-seven-months.html. falser, m. (2015). cultural heritage as civilizing mission. switzerland: springer international. nguon, n. (2010). protecting and respecting cultural diversity in asia. phnom penh, cambodia: asian parliamentary assembly. pp: 6 kapila, d. s. & neel, k. c. (2013). asian heritage management: contexts, concerns, and prospects. uk: routledge. khmer time, (2017). angkor wat crowned the best unesco world heritage site. available from: http://www.khmertimeskh.com/5093520/angkor-wat-crowned-the-best-unesco-world-heritagesite/. http://www.cambodiatips.com/news/19153/apsaraauthority:-number-of-foreign-tourists-to-angkor-increases-slightly-in-first-seven-months.html http://www.cambodiatips.com/news/19153/apsaraauthority:-number-of-foreign-tourists-to-angkor-increases-slightly-in-first-seven-months.html http://www.khmertimeskh.com/5093520/angkor-wat-crowned-the-best-unesco-world-heritage-site/ http://www.khmertimeskh.com/5093520/angkor-wat-crowned-the-best-unesco-world-heritage-site/ asian themes in social sciences research 2018, vol. 1, no. 1, pp. 10-13 13 © 2018 by the authors; licensee online academic press, usa rgc, (1996). cambodian kram: the protection of cultural heritage. phnom penh, cambodia: royal government of cambodia. pp: 12. seth, s., chea, m., fisher, r. & chea, s. (2015). ensuring lasting protection against the destruction and deterioration of tangible and intangible cultural heritage of humanity . phnom penh, cambodia: parliamentary institute of cambodia. pp: 10. unesco, (1992). angkor wat in cambodia. available from: http://whc.unesco.org/en/list/668 unesco, (2012). convention concerning the protection of the world cultural and natural heritage . paris: world heritage committee; united nations educational, scientific and cultural organization. pp: 150. unesco, (2013). the program for safeguarding of angkor. available from: http://www.unesco.org/new/en/phnompenh/culture/tangible -heritage/icc-angkor/theprogramme-forthe-safeguarding-of-angkor/. unesco, (2017). intangible heritage phnom penh. cambodia: unesco office in phnom penh. wikipedia, (2018). angkor wat. available from: https://en.wikipedia.org/w/index.php?title=angkor_wat&oldid=826944611 . wikivoyage, c. (2018). angkor archaeological park. available from: https://en.wikivoyage.org/w/index.php?title=angkor_archaeological_park&oldid=3411650 . world archaeology, (2015). angkor wat: temple of boom. available from: http://www.worldarchaeology.com/features/angkor-wat-temple-of-boom.htm. http://www.unesco.org/new/en/phnompenh/culture/tangible-heritage/icc-angkor/the-programme-forthe-safeguarding-of-angkor/ http://www.unesco.org/new/en/phnompenh/culture/tangible-heritage/icc-angkor/the-programme-forthe-safeguarding-of-angkor/ https://en.wikipedia.org/w/index.php?title=angkor_wat&oldid=826944611 https://en.wikivoyage.org/w/index.php?title=angkor_archaeological_park&oldid=3411650 http://www.worldarchaeology.com/features/angkor-wat-temple-of-boom.htm asian themes in social sciences research issn: 2578-5516 vol. 1, no. 2, pp. 44-49 2018 doi: 10.33094/journal.139.2018.12.44.49 © 2018 by the authors; licensee online academic press, usa 44 © 2018 by the authors; licensee online academic press, usa the relationship between risk management and profitability of commercial banks in albania arjeta hallunovi1* --miranda berdo2 *1lecturer, business faculty, aleksander moisiu university, durres, albania 2department of performance audit, albania supreme audit institution, albania abstract profitability is an indicator of the capacity of commercial banks to cope with their risk and/or capital growth, showing their competitiveness and measuring the quality of management. credit risk is one of the significant risks of commercial banks by the nature of their activities. by effectively managing the exposure of commercial banks to credit risk, they not only support the viability and profitability of their business but also contribute to the system, stability and efficient allocation of capital to the economy. the purpose of the study was to determine whether there is a relationship between credit risk management and profitability in commercial banks in albania. in this paper, there are four variables: roa and roe are the dependent variables, whereas non-performing loans (npls) and capital adequacy (car) are the independent variables. the main source of data collection are the annual reports for a 7year period (2008-2015) by the albanian association of banks. for quantitative data analysis, multiple regression model was used (spss). . keywords: albania, commercial banks, profitability, roe, roa. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction as a critical part of financial systems, banks play an important role in contributing to the country's economic development and also the functioning of an economy (pasiouras and kosmidou, 2007). if the banking industry is not working well, the effect on the economy can be large and broad. efficiency of commercial banks in managing their risk in different business cycles can lead to improved losses and crises between them (alexandri and santoso, 2015). typically, ameur and mhiri (2013) defined risk as an exposure to a proposal for which one is uncertain. while risk management is the process of risk identification, risk analysis and assessment, risk audit and risk management to control the financial exposure of the commercial bank, based on study of chinoda (2014). banks are exposed to risks, while credit risk is one of the threats to the credibility of commercial banks (panda and hota, 2014). the study of profitability is important not only because of the information it provides about the health of the economy every year, but also because profits are a key determinant of growth and employment in the medium term according to ongore and kusa (2013). banking performance assessment is a process that requires special attention from several factors. in developing countries where our country is classified, it is very important to have good, sustainable, fast economic progress, thus increasing the benefits of all financial institutions (suzuki and sastrosuwito, 2014). it is imperative for every country to have the banking sector, well structured and profitable, in such a way as to be competitive and successful (saeed, 2016). the stability of the financial system depends on the profitability of the banking sector. profitability is an indicator of the https://www.doi.org/10.33094/journal.139.2018.12.44.49 asian themes in social sciences research 2018, vol. 1, no. 2, pp. 44-49 45 © 2018 by the authors; licensee online academic press, usa bank's capacity to cope with the risk and increase its capital. profitability is used to determine the progress of a business. profitability determinants have been studied and researched even though the profitability definition varies between studies (sayilgen and yildirim, 2009). 2. literature review many studies conducted by different authors have concluded that credit risk management is the main determinant of bank profitability (shrestha, 2017). but there are also studies that have proven the opposite. awoke (2014) has made a study on bank profitability, where it has come to the conclusion that there is a positive relationship between profitability and liquidity in 12 european, north american and australian banks. meanwhile gitau et al. (2017) have concluded, according to their study, that these two variables have negative relationship. gizaw et al. (2015) in their empirical study reported that us banks in the 1980s had a strong positive correlation between the equity ratio and profitability but this relationship may be negative in certain situations. in another study, abdullah et al. (2014) found the same result for commercial banks in the united kingdom during 2000-2005. another study conducted by frederick (2014) examined the relationship between credit risk and liquidity risk in relation to the profitability of banks in indonesia and revealed a negative credit risk effect and a positive effect of liquidity risk on bank profitability. ali et al. (2011) in their study showed that the management of credit risk had an effect on the profitability of commercial banks taken in the study. as to the two indicators taken as representatives of credit risk management, it turned out that npl has a greater impact than the car in one of the roe profit determinants. this effect is different in different commercial banks. gul et al. (2011) concluded in their study that credit risk management has a positive impact on the profitabil ity of commercial banks. the same conclusion was found also by isik et al. (2016), where non-performing loans, loan loss provisions and capital adequacy have a significant impact on the profitability of commercial banks in ethiopia. in other studies of this nature ishak et al. (2016) reviewed the factors that affect the performance of islamic commercial banks. it was reported that the high level of financial leverage and the high credit rate in relation to assets showed a positive correlation with profitability. also naceur (2003) concluded in a positive relationship between the credit risk of swiss commercial banks and the capital rate during 1989-1995. kosmidou (2008) study the factors that influence the profitability of commercial banks in europe. he found a positive relationship between car and profitability. previous studies also reflected a close relationship between npl and credit risk management. 3. empirical analysis in order to answer the hypothesis of the study, an econometric model has been built to identify and measure the variable that most affects the commercial banks' profitability in albania. estimated multiple regression equation: y ̂=b0+b1x1+b2x2+…bpxp this is the estimated multiple regression equation, which determines the correlation between variables taken in the study (li and zou, 2014). where b0 is the constant term of the model and b1, b2 are the regression function coefficients. using this model and comparing the coefficients next to each independent variable, it will be found which of the variables affects the profitability of the banks. table-1. summary of the econometric model for dependent variables (roa/roe). model summary model r r square adjusted r square std. error of the estimate 1 .778 .606 .579 .26319 2 .815 .665 .642 3.08454 according to the results in table 1, the test has calculated that the adjusted r square is 0.579 ie 57.9% of the roa variable explained by the model. capital adequacy and non-performing loans account for 57.9% of changes in profitability of commercial banks measured by return on assets. meanwhile, 42.1% is the unexplained part, which may be explained by other factors that are not included in the model. correlation coefficient r = 0.778 means that there is a strong linear relationship between the variables roa and independent npl and car variables. while the test has calculated that the adjusted r square is 0.642 ie 64.2% of the roe variable is explained by the model. that is, capital adequacy and non-performing loans explain 64.2% of changes in banks' profitability measured by return on equity. meanwhile, 35.8% is the unexplained part, which may be explained by other factors that are not included in the model. correlation coefficient r = 0.815 means there is a strong linear relationship between the roe-dependent variables and the independent npl and car variables. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 44-49 46 © 2018 by the authors; licensee online academic press, usa table-2. anova table. anovaa model sum of squares df mean square f sig. 1 regression 3.088 2 1.544 22.290 .000 residual 2.009 29 .069 total 5.097 31 2 regression 547.018 2 273.509 28.747 .000 residual 275.917 29 9.514 total 822.935 31 according to the results in table 2, the two hypotheses are confirmed for the importance of the first model as a whole. ho: independent variables, npl and car do not affect the dependent variable roa. ha: independent variables, npl and car affect the dependent variable roa. for α = 0.05 p = 0.000 <0.05 → ho ↓ → ha ↑ so, the basic hypothesis falls down and alternative hypotheses are accepted. it is concluded that the model is important in its entirety, independent variables, therefore, non-performing loans and capital adequacy affect the dependent variable of return on assets. to prove the hypothesis is also found critical value through fisher distribution. fc = fk,n-k-1,α = f2,29,0.05 = 3.3277 according to the results in table 2, the two hypotheses are confirmed for the importance of the second model as a whole. ho: independent variables, npl and car do not affect the dependent variable roe. ha: independent variables, npl and car affect the dependent variable roe. for α = 0.05 p = 0.000 <0.05 → ho ↓ → ha ↑ thus, the basic hypothesis falls down and alternative hypotheses are accepted, concluding that the model is important in its entirety, independent variables such as non-performing loans and capital adequacy affect the variable variability of return on equity. to prove the hypothesis is found critical value through fisher distribution. fc = fk,n-k-1,α = f2,29,0.05 = 3.3277 chart-1. fisher distribution. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 44-49 47 © 2018 by the authors; licensee online academic press, usa chart-2. fisher distribution. based on the results in tables 3 and 4, are also presented the estimated equations (for roa and roe) and the interpretation of the coefficients. table-3. coefficient table (roa). coefficients model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -3.641 .979 -3.720 .001 npl -.018 .007 -.327 -2.668 .012 car .287 .058 .612 4.995 .000 first equation estimated: y ̂ =-3.641 0.018x1 + 0.287x2 if banks keep constant capital adequacy (x2) and increase the rate of non-performing loans with a unit then return on assets will decrease to an average of 0,018 units. thus, the growth with a credit risk unit will decrease the roa by (0.018) to 1.8%. if banks keep constant the problem of problem loans (x 1) and increase the capital adequacy rate with a unit then return on assets will increase to an average of 0.287 ie by 28.7%. thus, the increase with a capital adequacy unit will increase roa by 28.7%. table-3. coefficient table (roe). model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) -46.863 11.472 -4.085 .000 npl -.265 .080 -.375 -3.320 .002 car 3.680 .675 .617 5.456 .000 second equation estimated: y ̂ = -46.863 0.2658x1 + 3.680x2 if banks keep constant capital adequacy (x2) and raise non-performing loans with a unit (x1) then return on equity will decrease to an average of 0.265 ie by 26.5%. thus, the growt h of a credit risk unit will lead to a decline in roe by (26.5%). if banks keep the problem of non-performing loans constant (x1) and increase the capital adequacy ratio with a unit (x2) then the return on equity will increase to an average of 3,680. thus, the increase with a capital adequacy unit will lead to an roe increase of 3,680 units. 4. conclusions based on the above analysis, it was concluded that credit risk has a significant impact on the profitability of commercial banks by verifying the hypothesis. some specific endings were also achieved, such as: ▪ the results showed that there is a negative relationship between credit risk and profitability roa and roe, hence there is a correlation with profitability. credit risk remains the most important risk faced by commercial banks, so its accurate measurement and credit risk management is of crucial importance. the relationship between credit risk and profitability was expected to be negative, given that the more unprofitable loans a bank has, the more the bank's profitability will be reduced. ▪ the results showed that capital adequacy has a positive relationship with two profitability variables with return on assets and return on equity. more importantly, capital adequacy has a return on equity with a higher statistical value than the return on assets. capital adequacy ratio is one of the most important variables to measure the profitability of commercial banks, because a strong capital bank is able to pursue more efficiently and has more time and flexibility to dealing with problems arising asian themes in social sciences research 2018, vol. 1, no. 2, pp. 44-49 48 © 2018 by the authors; licensee online academic press, usa from unexpected losses, thus increasing profitability. thus, from the data analyzed in this study it is noticed that capital adequacy has value for profitability. ▪ just as non-performing loans and capital adequacy influenced both models, such as return on assets and return on equity. in the roa model, two independent variables account for 57.9% of changes in profitability of commercial banks, compared to roe, which have a higher percentage of explained greater roa than 64.2%. even the coefficient of correlation shows that roe has a stronger linear relationship between roe and npl and also car while roa has weaker connections. thus, it is concluded that the return on equity is a more efficient profitability measurement than t he return on assets. the empirical study concluded that there is a strong relationship between credit risk and profitability of commercial banks. 5. recommendations ▪ credit risk and capital adequacy are significant indicators of the profitability of commercial banks in albania. it is recommended that focusing on improving or managing these indicators can result in increased profitability of commercial banks or their performance. ▪ banks should ensure that they are constantly aware of the performance of the lending portfolio and normally of the weight they occupy in the overall portfolio in order to be ready to take appropriate measures to cope with the risk cases. references alexandri, m. b. & santoso, t. i. 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(2017). the impact of credit risk management on profitability: evidence from nepalese commercial banks. available from: https://ssrn.com/abstract=2938546.  asian themes in social sciences research issn: 2578-5516 vol. 2, no. 1, pp. 4-8 2018 doi: 10.33094/journal.139.2018.21.4.8 © 2018 by the authors; licensee online academic press, usa 4 © 2018 by the authors; licensee online academic press, usa numerals in the mongolian language lhasaranova bairma bastuevna1* --sodnomov sonombal tsydenovich2--oshorov sergey garmaevich3 --dondokova soelma dorzhievna4 --tsyrempilova butid tsyrendorzhievna5 1the scienсе doctor of pedagogical sciences, professor, buryat state university, ulan-ude, republic of buryatia, russia 2the science doctor of pedagogical sciences, professor, buryat republic institute of education policy, ulan-ude, republic of buryatia, russia 3ph. doctor of pedagogical sciences, professor, buryat state university, ulan-ude, republic of buryatia, russia 4,5postgraduate, buryat state university, ulan-ude, republic of buryatia, russia abstract this paper is devoted to the etymology of numerals and classification of numerals in the buryat language. this paper reveals similarities and differences in the terms “numeral” and “number”. in the linguistic research it is established that numerals in the mongolian languages have a specific set of grammatical properties which distinguishes them as a significant part of speech. the basis of numerals is their special relation to the grammatical number. numerals that express the concept of number cannot be correlated with the grammatical category of number. numerals cannot take plural affixes. the lexical meaning of numerals is associated with the notion of plurality. numerals can be combined with nouns and identify countable objects. keywords: etymology, numerals, classification, analysis, mongolian, buryat, language. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction language is very complex and multifaceted. it is a complex system that exists and changes according to its rules and laws. and in this versatility of various meanings there is a system of quantity and number. since every language is unique and every language changes over centuries and millennia, a system of quantitative expression emerged. in this system one can find common features in related languages and new elements that significantly distinguish the languages. numerals appeared in ancient times. they were used to meet the need of people in a numerical representation. originally a range of numerical representations was very limited, and counting was primitive. the buryat language as one of the mongolic languages shares common features with the mongolian system of numerals but at the same time developed many new features during an independent period. as it is known, in the 12th 13th centuries the mongols created the great mongol state, the common mongolian nationality with its written and spoken mongolian language. the state disintegrated after genghis khan’s descendants were defeated in wars, and the mongols found themselves in different territories around the world, losing contacts with each other and experiencing the influence of other languages. the study of the mongolian language has a long history. the sanskrit grammatical treatises were translated into the mongolian language in the 17th 18th centuries. mongolian dictionaries and manuals were https://www.doi.org/10.33094/journal.139.2018.21.4.8 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 4-8 5 © 2018 by the authors; licensee online academic press, usa created. from the second part of the 19 th century the comparative-historical study of the mongolian languages started. the first scientific study of the mongolian language in european countries started at the beginning of the 19th century when the school of the study of the mongolian languages was established in kazan. the soviet period of mongolism was a new stage in the development of mongolistic studies. research on the mongolian language actively develops in mongolia, buryatia and kalmykia, as well as in hungary, germany, the united states and japan. detailed grammatical descriptions of almost all mongolian languages are created. the relevance of this article arises from insufficient research on the numerals in the buryat language. the numerals of the buryat language as a significant part of speech deserve careful and detailed consideration from the etymological point of view to determine their place in the parts of speech system and identify morphological and syntactic features. all these aspects determine the relevance of this study and need for both theoretical and practical analysis of the numerals in the buryat language. polysemy or controversy of the content side of the numerals attracts the attention of researchers. this paper presents thoughts of many russian and mongolian linguists on the origins of the concepts of “numeral” and “number”. on one hand, the grammatical peculiarities of the numerals correlate with the set of lexemes. on the other hand, numerals are language units which have not only logical features, but also linguistic ones. the formation of lexical and grammatical levels of the numerals was preceded by the formation of the “number” concept as well as by signs for their designation. the concepts “numeral” and “number” have different lexical and grammatical meanings in linguistic semantics. consider the following dictionary definitions of terms “numeral” and “number”. according to one definition, numeral is a part of speech that denotes number, quantity, measure and associates with the mental category of order by reciting numbers, multiplicities (repeatability), totality, but number is one of the manifestations of the more general language category of quantity or it is a grammatical category that expresses quantitative characteristics of mental objects. in the linguistic encyclopedic dictionary, the numeral denotes a class of meaningful words that denote number, quantity, measure and mental categories of order related to numbers, multiplicities (repeatability), totality. the number is a grammatical category that expresses quantitative characteristics of mental objects. grammatically, the number is one of manifestations of the more general linguistic categories of quantity along with the lexical expression. in v.n. dal’s “explanatory dictionary of the living great-russian language”, “numeral is a word that denotes the quantity or quantitative signification of the meaning. the same dictionary defines the term number as a quantity, count and sign itself that expresses the quantity, digit” (dal, 1955). in s.i. ozhegov’s dictionary “numerals are words (the noun or adjective) denoting quantity or quantitative signification, the order of items in counting” (ozhegov, 1999). the number as an independent grammatical category is inherent to nouns and personal pronouns; other lexico-grammatical categories of words have the syntactic category of the number. the following definitions of terms “numeral” and “number” are used in mongolian studies. g.d . sanjeev suggests that "the numeral differs from all other parts of speech because it expresses a certain amount of quantity. however, the number imitates the counting system and implies a numeric paradigm” (sanjeev 1951). according to ts.b. tsydendambaev, "the numerals are words that convey a certain number of items”. the number can express a “grammatical category of plurality denoting a limited and indefinite plurality ” (tsydendambaev, 1979). according to professor v.i. rassadin “the numeral is a part of speech that denotes the names of abstract numbers, the quantitative characteristic of objects and processes. the number is a nucleus around which other categories of numerals are grouped” (rassadin, 2013). mongolian scientist s. luvsanvandan points out that the numeral denotes the totality of numbers that can be inflected by case, they can take endings of singular and plural forms. regarding the term "number", it denotes a name of numeric signs. philologist and researcher t. өnөrbajan proposed that the numeral is an independent part of speech that expresses quantitative characteristic of objects. the number itself is an important element that is a nucleus of the numerals”. thus, “the numeral” is a word form that is used to name the exact or the expected quantity of objects, etc. the numerals are characterized by the following. they occur only with nouns; they can be used as reference words in various combinations; they can have a certain cultural sense in proverbs, other folklore genres and in literature. the term “number” is the name of a sign, the element of the counting system and it involves the simultaneous correlation with the whole (or some) paradigm of numerical units. in mongolian studies "the number" is characterized by using it in quantitative meaning. it determines the exact number. it is used in contexts that imitate the counting system and involve a numeric paradigm. basic units are not changeable in various contexts. it follows that the concepts of "the numeral" and "the number" have different lexicalgrammatical meanings. the numeral represents the quantity of objects in the counting system or names a number and has its own special grammatical features that distinguish this part of speech from others. in the https://www.multitran.ru/c/m.exe?t=4680156_1_2&s1=%d2%ee%eb%ea%ee%e2%fb%e9%20%f1%eb%ee%e2%e0%f0%fc%20%e6%e8%e2%ee%e3%ee%20%e2%e5%eb%e8%ea%ee%f0%f3%f1%f1%ea%ee%e3%ee%20%ff%e7%fb%ea%e0%20%c2%eb%e0%e4%e8%ec%e8%f0%e0%20%c4%e0%eb%ff asian themes in social sciences research 2018, vol. 2, no. 1, pp. 4-8 6 © 2018 by the authors; licensee online academic press, usa mongolian language it is a part of speech that inflects only for cases, answers the question “how much?” and indicates the number of objects or number. from the semantic point of view the numeral can be represented as a predicate, and the number can be viewed as its name in the mongolian language. they do not traditionally differ in terms of terminology. however, it is obvious that they need to be distinguished. the occurrence of numeric forms in the mongolian language has its own history, which allows us to identify the ethnic-cultural specificity of the grammatical category of numerals. according to specialists in mongolian studies, the numeral is an independent part of speech that deserves a separate consideration. in word-formation the most important feature of the numerals is the ability to express an unlimited variety of numbers by using a limited set of initial components. by the syntactic function the numerals in the mongolian languages are close to quality nouns, but differ from them as they are not accompanied by reinforced words such as masha which means “very” and egee which means “most”, etc. the numbers differ from all other names so that they express the concept of a certain amount. also, numerals are divided into several categories for semantic peculiarities and morphological features. in mongolian studies the question about the classification of numerals is not new, but it is still debatable and not completely resolved. in “modern mongolian linguistics” edited by sh. luvsanvandan the following level of numerals were identified: “undsen too “cardinal numerals”; des tоо “ordinal numerals”; ham too “collective numerals”; tugeel too “dividing numerals”; dahih too “repetitive numerals”; hjazgaaralsan too “restrictive numerals”; butarhaj too “fractional numerals”; todorhojgүj too “obscure numerals” ” (luvsanvandan, 2013). in his work about the morphological classification of numerals philologist t. өnөrbajan excluded vague and restrictive numbers and analysed dividing and approximate numbers by grouping them into 7 categories. according to the scientist, “the endings khan-khen -khon-khөn are the affixes of restrictive numeral. it should be noted that these morphemes can have different meanings and they can be found not only in numerals, but also in adjectives (il-ilhen “apparent-apparently”, har-harhan “black-blackly”), pronouns (juu-juuhan “which – any”), adverbs (ert-erthen “early a little early”, daraa-daraahan “then – later”), nouns (mor-morhon “horse a little horse”, also in verbs (unasan-unasanhan “to ride”, tohson-tohsonhon “to saddle”, mjaralzan-mjaralzanhan “to smile nicely”)” (θnɵrbayan, 2016). thus, the category of vague numbers, which includes such words as olon “many”, nileed “significantly”, baga “little”, heseg “part”, bugd “all”, heden “some” etc., is excluded from the numerals. indeed, these words differ from the numerals in terms of morphological and grammatical characteristics. only olon “a lot”, tson “a little” can be attached to the affixes of collective numeral: oluul “many”, tsohuul “quite small”; zarim “some”, hagas “half”, bugd “everything” are related to quantitative numerals. the number is the purest quantitative definition. the number as an independent grammatical category is a characteristic of nouns and personal pronouns (sometimes also pronominal nouns “who?”, “what?”), other lexico-grammatical classes of words have a syntactic category of numbers. their forms of numbers are consistent with the forms of nouns and personal pronouns. from the semantic point of view the numeral in the mongolian language can be represented as a predicate, and the number can be a name. they do traditionally differ in terms of terminology. however, it is obvious that they need to be distinguished. the occurrence of numeric forms in the mongolian language has its own history, which allows us to identify the ethnic-cultural specificity of the grammatical category of numerals. according to specialists in mongolian studies, the numeral is an independent part of speech that deserves a separat e consideration. in word-formation the most important feature of the numerals is the ability to express an unlimited variety of numbers by using a limited set of initial components. by the syntactic function the numerals in the mongolian languages are close to quality nouns, but differ from them as they are not accompanied by reinforced words such as masha which means “very” and egee which means “most”, etc. the numbers differ from all other names so that they express the concept of a certain amount. also, the numerals are divided into several categories for semantic peculiarities and morphological features. in mongolian studies the question about the classification of numerals is not new, but it is still debatable and not completely resolved. a.e. garmayeva in her work “the numerical symbolism in the mongolian languages” notes that “limited and approximate numerals are excluded from the category of numerals in the academic grammar of modern mongolian languages. in some textbooks dahih too “multiples numerals”, toim too “approximate numerals”, todorhoigui too “indefinite numerals” are included. however, the numerals are generally represented by the following types: undsen too “cardinal numerals”; des too “ordinal numerals”; ham too “collective numerals”; tugeel too “dividing numerals”; butarhai too “fractional numerals”” (garmayeva, 2009). in general, the characteristic of numerals in the mongolian languages reveals similarities and distinctions of the terms numeral and number. the results obtained allow us to make the following conclusions: the concepts “numeral” and “number” have different meanings. the numeral designates the quantity of objects in counting and identifies a number. it has special grammatical features which allow us to distinguish this part of https://www.multitran.ru/c/m.exe?t=7061524_1_2&s1=%ec%ee%ed%e3%ee%eb%ee%e2%e5%e4 https://www.multitran.ru/c/m.exe?t=7061524_1_2&s1=%ec%ee%ed%e3%ee%eb%ee%e2%e5%e4 https://www.multitran.ru/c/m.exe?t=7061524_1_2&s1=%ec%ee%ed%e3%ee%eb%ee%e2%e5%e4 https://www.multitran.ru/c/m.exe?t=7061524_1_2&s1=%ec%ee%ed%e3%ee%eb%ee%e2%e5%e4 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 4-8 7 © 2018 by the authors; licensee online academic press, usa speech from other parts. the number has a quantitative definition. the number as an independent grammatical category is a characteristic of nouns and pronouns (sometimes to pronominal nouns “ who?”, “what?”); the rest of the lexico-grammatical categories of words have the syntactic category of numbers. their number forms are consistent with the form of the noun and the personal pronoun. in the mongolian languages a.e. garmaeva identifies “eight types of the numerals in terms of their semantic and morphological characteristics. the most common and widely used numerals are cardinal, ordinal, collective, separating and fractional numerals. the scientist specifies that in the mongolian languages the numerals often act as definitions and rarely function as a subject, predicate, addition, as well as the circumstances” (garmayeva, 2009). accordingly, the numerals in the mongolian languages have a specific set of grammatical properties that allows us to distinguish them as a significant part of speech. the distinctive feature of numerals is their special relation to the grammatical number. the numeral, which expresses the notion of number, cannot correlate with the grammatical category of number. the numeral cannot take affixes of plurality. the lexical meaning of the numeral is directly associated with the notion of a set. the numerals may be combined with other nouns and denote the countable objects. the numeral in the buryat language belongs to the category of significant parts of speech expressing spatial representations and functions mainly in a group of nominal words. it has the same name as other nominal parts of speech that allows the numeral to appear in a sentence as any member, but mostly attributive. the numerals in the buryat language are divided into categories, such as quantitative, ordinal, collective, distributive, approximate and fractional. the division of the numerals into these categories is due to their significance, morphological forms and syntactic function in a sentence. the numeral is distinguished from other parts of speech by specific grammatical features: 1. by denoting the quantity, it does not have formal meaning of the number. singular and plural forms do not exist, except for those numeric names, which are at the basis of tribal and generic names of the mongolian peoples. for example, tymen “ten thousand” tymed “tymets”, but sometimes there are forms like hori “twenty”, which means the tribe hori “khorintsy”, naiman “eight” the tribe of the naimans. 2. the main sections of the numerals have attributive properties that are identical to the forms of adjectives: five-ear scouts learned about what was in the taiga. the numeral acting as a quantity denominator of an object is directly related to the head word by passing the connections of other definable words: as told to the two decrepit old people about the transportation of the products. the numeral cannot be combined with adjectives. however, the numerals can be used in a sentence as any of its members, for example: 1. subject: the first pours out, the second drinks, the third grows (riddle). 2. definitions: he was watching the departing pair of lovers for a long time. 3. additions: you will have to choose one of them. 4. the predicate: five times five twenty-five. 5. adverbial: bata came at eight (hours). the numeral is widely used in various types of texts. in literary texts, the numeral plays a significant role in the embodiment of the author's idea. there are two main functions performed by numerals in a literary text: 1. in literary texts numerals can perform their primary function. that means they are used to convey accurate, objective information. this makes fictional situations realistic and brings the artistic style closer to the publicistic or scientific style, depending on the nature of provided information. the numerals are often used in characters’ description, their appearance, age, behavior, position in society, prosperity. with the help of numerals authors draw the reader's attention to a particular detail, indirectly characterize their behavior, character, circumstances of their lives, etc. 2. other examples are even more interesting. the numerals are used not to convey accurate quantitative information, but to express an assessment (it can be both quantitative and qualitative). assessment, as a category of logic, is of great interest to linguists, because the language has a variety of means to express evaluation values at all levels. in a literary text the numerals can be used both to convey the estimated value of “many – little” (evaluation in the broad sense), and to express the qualitative characteristics (“good – bad”). in both cases, the numerals are to express and create the atmosphere of the work, to transfer the characters’ emotions and express the author's attitude. the author includes numerals in the text taking into consideration the sound, semantics and connotation of other units. semantic and stylistic factors can be defined as meaning-forming (from the author's point of view) and distinctive (from the reader's point of view). the semantic factor regulates the choice of the category within the norm, and many deviations from this norm can be explained by the stylistic choice. all categories can take the suffixes of personal and return attraction. the role of these affixes for numerals is the same as for nouns. the numerals of all categories have all the morphological forms that can be found in nominal words. but from the point of view of the syntactic requirements they are formally independent of the controlled nominal words and they are used in its original form. thus, the structure of numerals coincides in all mongolian languages in most cases. therefore, it cannot asian themes in social sciences research 2018, vol. 2, no. 1, pp. 4-8 8 © 2018 by the authors; licensee online academic press, usa be denied that all mongolian languages genetically belong to the common proto-language. it is well known that the material convergence is a known number of common words and grammatical, word-formative and partly inflectional elements. so, the material convergence is a consequence of the fact that the speakers of these languages have been in a state of close contact with each other for a long time. it should be noted that in the process of long-term historical development, the mongolian-speaking peoples, inhabiting the conquered lands, were not able to communicate with each other constantly. in this regard, the mongolian language developed in accordance with the historical fate of each particular group. references garmayeva, a. e. (2009). the numerical symbolism in the mongolian languages. ulan-ude: buryat state university. pp: 190 . oc dal, v.n. (1955). explanatory dictionary of the living great-russian language. 2nd edn., moscow: russian language. pp: 340. luvsanvandan, s. (2013). modern mongolian linguistics. ulaanbaatar: mongolian state university. pp: -173. ozhegov, s. i. (1999). dictionary of russian language. moscow. pp: 885. rassadin, v. i. (2013). grammar problems in mongolian languages. novosibirsk: novosibirsk state university. pp: 25-31. sanjeev, g. d. (1951). grammar of the buryat-mongolian language. moscow: russian language. pp: 188. tsydendambaev, t. b. (1979). grammatical category of the buryat language. moscow: science. pp: 148. θnɵrbayan, t. (2016). modern mongolian language. 2nd edn., ulaanbaatar: mongolian state university of education. pp: 246. asian themes in social sciences research issn: 2578-5516 vol. 2, no. 1, pp. 23-31 2018 doi: 10.33094/journal.139.2018.21.23.31 © 2018 by the author; licensee online academic press, usa 23 © 2018 by the author; licensee online academic press, usa growth, residential distribution, and land price in an integrated solow’s growth and alonso’s residential model wei-bin zhang ritsumeikan asia pacific university, japan. abstract this study builds a spatial growth mode l with residential distribution. the model is a synthesis of the solow growth and alonso residential models with endogenous land value. a unique feature of the study is that it deals with dynamic interactions between land value, land rent, wealth accumulation, amenity change, and residential location. it models the economic production and growth me chani sm on the basis of the solow growth model and the residential distri bution on the basis of the alonso mode l. the determination of the land value is based on zhang’s recent work on e conomic growth with endogenous land value. we simulate the motion of the economy over time and space. we carry out comparative dynamic analysis with regard to the rate of interest, the total productivity, and the propensity to save. keywords: economic growth, travel time, land rent, land value, residential location. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction this study builds a spatial growth model with residential distribution. the model is a synthesis of the solow growth and alonso residential models for a small-open economy with endogenous land value. a unique feature of the study is that it deals with dynamic interactions between determine land value, land rent, wealth accumulation, amenity and change, residential distribution. it models the economic production and growth mechanism on the basis of the solow growth model and the residential distribution on the basis of the alonso model (solow, 1956; alonso, 1964). the integration of the solow and alonso is carried out by zhang (2010). the description of a smallopen growth economy is based on the literature of open growth economies (e.g., obstfeld and rogoff, 1996). the determination of the land value is based on zhang’s recent work on economic growth with endogenous land value (zhang, 2014). the paper integrates different economic mechanisms into an integrated framework. we simulate the motion of the economy over time and space. we carry out comparative dynamic analysis with regard to the rate of interest, the total productivity, and the propensity to save. the paper is based on an unpublished presentation presented in an international conference by zhang (2018). section 2 defines the spatial growth model with endogenous land value and residential location for a small-open economy. section 3 simulates the motion of the economic system. section 4 carries out comparative dynamic analysis with regard to the rate of interest, the total productivity of the production sector, and the propensity to save. section 5 concludes the study. the appendix proves the main results in section 3. 2. the model we now build the model of dynamic interdependence between economic growth and residential density change over space for a small-open economy. the model is a synthesis of the basic features of the solow growth model and the alonso residential model with zhang’s approach to household behavior. the modelling of the residential land-use follows the alonso model. the economic system is an open urban economy built on a flat featureless plain. all workers reside over the city and work in the cbd (central business district). people travel only between dwelling sites and the cbd. an individual reside only at one location. the only spatial characteristic that directly matters is the distance from the residential site to the cbd. the isolated state consists of a finite strip of land extending from a fixed central business district with constant unit width. the system is geographically https://www.doi.org/10.33094/journal.139.2018.21.23.31 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 24 © 2018 by the author; licensee online academic press, usa linear and consists of two parts the cbd and the residential area. we use l to stand for the fixed (territory) length of the state. we assume that all economic activities are concentrated in the cbd. we use  to represent the distance from the cbd to a point in the residential area. we use ( ),tr and ( ),tp to represent the land rent and land price at location  at time .t the households occupy the residential area. we assume that the industrial product can be either invested or consumed. housing is measured by lot size. the total labor force is fully employed by the industrial sector. we select industrial good to serve as numeraire. as we assume that the transportation cost of workers to the city is dependent on the travel distance, land rent for housing should be spatially different. we use ( )tk to stand for the total capital stock. 2.1. the total labor input we use ( ),tn to denote the residential density at . we assume that all the workers work the same time, irrespective of where they live. the population n is homogenous and constant. the width of the urban area is assumed to be unity. according to the definition of ( ),,tn we have ( )= l dtnn 0 .,  (1) 2.2. the production sector let ( )tf stand for the production function. the production function is specified as follows ( ) ( ) ,1,0,, =+=  ntkatf (2) where ,a , and  are positive parameters. the rate of interest *r and wage rate ( ),tw are determined by markets. we assume that *r is constant and determined by international markets. the marginal conditions are given by ( ) ( ) ( ) ( ) ( ) ,,* tn tf tw tk tf r k   ==+ (3) where k is the depreciation rate of physical capital. from (2) and (3) we solve ( ) ( ) ., * /1 * *       n ka rwn r a rk k =        + = (4) 2.3. the relation between the lot size and residential density we assume that all housing is residential. let us denote ( ),tl the lot size of the household at . according to the definitions of l and ,n we have ( ) ( ) .0, , 1 , l tl tn =    (5) 2.4. choice between physical wealth and land consider now a household with one unity of money. he can either invest in capital good thereby earning a profit equal to the net own-rate of return *r or invest in land thereby earning a profit equal to the net ownrate of return ( ) ( ).,/,  tptr the two options are assumed to yield equal returns, i.e. ( ) ( ) . , , *r tp tr =   (6) 2.5. travel time and cost to the cbd a resident decides the time distribution between leisure time and travel time. let 0t and ( ) respectively stand for the total available time and the time spent on traveling between the residence and cbd. we have ( ) ( ) ,0tt =+  (7) asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 25 © 2018 by the author; licensee online academic press, usa where ( )t is the leisure time that the household at  enjoys. this study assumes that the travel cost ( )tct , from location  to the cbd is dependent on the distance as follows ( ) ( ) ( )., 0  ctctct += (8) 2.6. land ownership, current income, and disposable income let ( )tk , stand for the representative household’s physical wealth, and ( )ta , for the value of land owned by the household at location . the total value of land owned by the household at  is the sum of all the value of land the household owns in the economy. we have. ( ) ( ) ( ) ,~~,,~,, 0 = l dtltpta  where ( ) ~,,tl is the land that the household at  owns at .~ the total value of wealth ( ),tv owned by the household at  is the sum of the two assets’ values. ( ) ( ) ( ).,,,  tatktv += (9) the household at  collects the following rent from the land that the household owns. ( ) ( ) ( ) .0,~~,,~,, 0 ldtltrtr l =   (10) the total land rent of the economy is equal to the land rent that the population owns. ( ) ( ) .0,,, 0 0 ldtrdtr l l =   (11) the household at  has the following current income ( ) ( ) ( ) ,0,,,, * ltrwtkrty ++=  (12) from the interest payment ,rk and the wage payment ,w and the land rent income .r we call ( ),ty the current income in the sense that it comes from consumers’ wages and current earnings from ownership of wealth. the total value of the wealth that a consumer at location  can sell to purchase goods and to save is equal to ( )., tv the disposable income ( ),ˆ ty is the sum of the current income and the total value of wealth . ( ) ( ) ( ).,,,ˆ  tvtyty += (13) 2.7. the budget at each point in time, the household at location  distributes the total available budget between housing ( ),,tl saving ( ),,ts consumption of industrial goods ( ),,tc and travelling, ( ).tc the total expenditure is. ( ) ( ) ( ) ( ) ( ) .0,,,,,, ltctstctltr t +++  the disposable income equals the total expenditure, i.e. ( ) ( ) ( ) ( ) ( ) ( ) .0,,ˆ,,,,, ltytctstctltr t =+++  (14) insert (11) and (10) in (12) ( ) ( ) ( ) ( ) ( ),,,,,,  tytstctltr =++ (15) where ( ) ( ) ( ) ( ) ( ) ( ).,,,,1, *  tctatrwtkrty t−++++ asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 26 © 2018 by the author; licensee online academic press, usa 2.8. utility, amenity and optimal solution we assume that utility level ( ),tu of the household at location  is dependent on ( ),t ( ),,tl ( ),,ts and ( ),tc as follows. ( ) ( ) ( ) ( ) ( ) ( ) ,0,,,,,,,,, 0000 0000 =   tstltctttu (16) in which ,0 ,0 ,0 and 0 are a typical person’s elasticity of utility with regard to leisure time, industrial goods, housing, and saving. we call ,0 ,0 ,0 and 0 propensities to use leisure time, to consume goods, to consume housing, and to hold wealth, respectively. we specify the amenity ( ),, t at  as follows. ( ) ( ) .0,,, 11 =   tnt (17) the function, ( ),, t implies that the amenity level at location  is related to the residential density at the location. maximizing ( ),tu subject to the budget constraint (8) yields. ( ) ( ) ( ) ( ) ( ) ( ) ( ),,,,,,, , , ,     tytstytc tr ty tl === (18) where . 1 ,,, 000 000   ++ = 2.9. equal utility level over the residential area the assumption households get the same level of utility at any location at any point is represented by ( ) ( ) .,0,,, 2121 ltutu =  (19) 2.10. wealth accumulation according to the definition of ( ),,ts the wealth accumulation of the household at location  is given by ( ) ( ) ( ) .0,,,, ltvtstv −=  (20) 2.11. the land market equilibrium according to the definition the total value of the national land ( )tv is ( ) ( ) ., 0 = l dtptv  (21) the total value of land owned by the population is given by ( ) ( ) ( ) .,, 0 * = l dtatntv  (22) as the land is privately owned, the two values should equal ( ) ( ) ( ) .,,, 00  = ll dtpdtatn  (23) 2.12. the equilibrium for good production and consumption the total consumption, ( ),tc is given by ( ) ( ) ( ) .,, 0 = l dtctntc  (24) we built the spatial growth model with residential location for a small-open economy. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 27 © 2018 by the author; licensee online academic press, usa 3. the spatial dynamics this section examines properties of the spatial model. the following lemma provides a computational procedure to plot the motion of the economic system. 3.1. lemma assume ( ),twcct = where c is a constant. the dynamics of wealth per household ( )tv is described by the following differential equation ( ) ( )( ),tvtv = (25) in which  is function of ( )tv defined in the appendix. for given ( ),tv we uniquely determine all the other variables by the following procedure: w by (4) → k by (4) → f by (2) → ( )ty by (a3) → ( )tc by (18) → ( )ts by (18) → ( )0n by (a17) → ( )n by (a16) → ( )l by (5) → ( ),tr by (a5) → ( ),tp by (6) → ( ),tu by (a14) → ( ) ( ) ( )= l dvntv 0 ~  → ( ) ( )= l drtr 0 ~  → ( )tk by (a9) → ( )tc by (a12). in the lemma ( )tv~ is the total wealth defined by ( ) ( ) ( ) .,,~ 0  l dtvtntv  as it is difficult to analytically describe the spatial dynamics, we specify the parameters as follows ,2.0,8.0,03.0,1,1,50,8.0,45.0,07.0 000 * =========  ktlnar .05.0,1,01.0,02.0,1.0 100 −=====  c (26) we specify the following initial conditions: ( ) .150 =v under (26), we have .1.114,26.1,5.513 === fwk we plot the variables over time and space in in figure 1. figure-1. the motion of the economy over space. 4. comparative dynamic analysis this section carries out comparative dynamic analysis with regards some parameters. we introduce a symbol x to stand for the change rate of the variable x in percentage due to changes in value of a parameter value. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 28 © 2018 by the author; licensee online academic press, usa 4.1. an increase in the rate of interest we now allow the rate of interest to be increased as follows: .075.007.0:* r the change causes the total capital, wage rate and national output to follow as follows: .04.0,04.0,09.0 −=−=−= fwk the changes in the other variables are plotted in figure 2. the total wealth per capita and consumption level per capita are increased. the lot size, amenity and leisure time are not affected. the land rent is increased and the land price is reduced. figure-2. a rise in the rate of interest. 4.2. the total factor productivity being enhanced we now examine the effects of an enhancement in the total factor productivity as follows: .81.08.0:0 a the change has no impact on the residential density, the lot size, the amenity, and leisure time. the total capital employed by the country, the wage rate and the national output are augmented .023.0=== fwk the simulation results on the other variables are plotted in figure 3. the total wealth and consumption level per capita are enhanced. the land value and rent are increased over time and space. 4.3. the propensity to save being increased we now examine what happen to the economic system when the propensity to save is changed as follows: .81.08.0:0  there are no changes in the residential density, the lot size, the amenity, leisure time, and ,k ,w and .f the simulation results on the other variables are plotted in figure 4. the total wealth and consumption level per capita are enhanced. the land value and rent are increased over time and space asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 29 © 2018 by the author; licensee online academic press, usa figure-3. the total factor productivity being enhanced. figure-4. the propensity to save being increased. 5. concluding remarks this study dealt with economic growth and residential distribution of a small-open economy. the unique contribution of the paper is that the model integrates the solow growth and alonso residential distribution models with endogenous land value. the economic system endogenously determines land value and rent with int eractions between wealth accumulation, amenity, land, and transportation conditions. we simulated the motion of the spatial economy over time and space. we also carried out comparative dynamic analysis with regard to the rate of interest, the total productivity of the industrial sector, and preference on the spatial dynamics. although the model is developed with microeconomic foundation and deals with complicated interactions among many variables over time and space, it is based on many strict assumptions. many limitations of the model become apparent in the light of the sophistication of the literature of economic growth theory, regional science and urban economics. references alonso, w. (1964). location and land use. ma, cambridge: harvard university press. solow, r. (1956). a contribution to the theory of growth. quarterly journal of economics, 70(1): 65-94. obstfeld, m. & rogoff, k. (1996). foundations of international macroeconomics. mass, cambridge: mit press. zhang, w.b. (2010). growth, economic structure, and residential distribution of a small city. international review of economics, 57(1): 47-78. zhang, w.b. (2014). land value and rent dynamics in an integrated walrasian general equilibrium and neoclassical growth theory. annals of the alexandru ioan cuza university of iasi. economic sciences section, 61(2): 235-58. zhang, w.b. (2018). growth and residential location with endogenous land value in a small-open economy. paper presented at viii fimef financial research conference, monterrey, mexico, august 30 and 31, 2018. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 30 © 2018 by the author; licensee online academic press, usa appendix insert the definition of ( )r in the definition of y ( ) ( ) ( ) ( ) ( ) ( ) ( ) .~~,~~~,~1 00 * t ll cdlpdlrwkry −++++=   (a1) insert (6) in (a1) ( ) ( ) ( ) ( ) ( ) ( ) .~~,~11 0 ** t l cdlprwkry −++++=   (a2) insert (9) and (10) in (a2) ( ) ( ) ( ) .1 * tcwvry −++=  (a3) from (18) and (a3), we have ( ) ( ) ( ) ( ) .1 tcwvrlr  −++= (a4) insert (5) in (a4) ( ) ( ) ( ) ( ) ( ) ( ) .1 * tcnwnvnrr  −++= (a5) integrate (a5) from 0 to l ( ) ,~1~ * ncnwvrr t −++= (a6) where we use (12) and ( ) ( ) ( ) .~,~ 00   ll dvnvdrr  from the definitions of v we have ( ) ( ) ( ) ( )( ) .~ * 0 vkdanknv l +=+=   (a7) where ( ) ( ) . 0 l dknk  from (6) we have .~ *vrr = (a8) from (9) and (10) we have . ~ ~ *r r kv += (a9) from (a6) and (a9) we solve ( ),ˆ~ * ncnwkrrv t −+= (a10) where ( ) . 1 1 ˆ ** rr r +− = from (18) and (a3), we have ( ) ,1 * tcwvrc  −++= (a11) multiplying the two sides of (a11) by n and then integrate the resulted equation from 0 to l ( ) .~1 * ncnwvrc t −++= (a12) insert (18) and (a4) in (20) ( ) ,tcwvrvv  −+−= (a13) asian themes in social sciences research 2018, vol. 2, no. 1, pp. 23-31 31 © 2018 by the author; licensee online academic press, usa where .1 *rr  −− this is a first-order linear differential equation with constant coefficients. we denote its solution by ( )., tv  in the rest of the appendix we treat ( )tv , as known functions of time. insert (17), (18) and (4) in (16) ( ) ( ) ( ) ( ).0000 0   +− = ytnu (a14) where .00 10    insert (a14) in (19) ( ) ( ) ( ) ,,0,ˆ 21 0000 lnytn = +−   (a15) where ( ) ( ) ( ) ( ) .000ˆ 0000  +− = ytntn from (a15) we solve ( ) ( ) ( ) ,,0,,,0, 21 ltgtntn =  (a16) where ( ) ( ) ( ) ( ) ( ) ( ) . 00 , 0 000 000 /1      − + +          yt yt tg insert (a16) in (1) ( ) ( ) .,,0 1 0 −         =  l dtgntn  (a17) we can now determine all the variables over time and space by the procedure in the lemma. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 1, pp. 28-33 2018 doi: 10.33094/journal.139.2018.11.28.33 © 2018 by the author; licensee online academic press, usa 28 © 2018 by the author; licensee online academic press, usa revisiting the economic growth-welfare linkages: empirical evidence from nigeria richardson kojo edeme department of economics, faculty of the social science, university of nigeria, nsukka, nigeria. abstract this study aims at ascertaining the relationship between welfare and economic growth in nigeria, capturing both economic and environmental welfare. nitrous oxide emission and carbon dioxide emission in nigeria are used to capture environmental welfare while government education expenditure, per capita health expenditure and per capita income are used to capture economic welfare. using quarterly data spanning 1999-2016 and employing the cointegration analysis as well as the ordinary least squares (ols) estimation technique, the study found that a long-run relationship exists between economic growth and welfare in nigeria. it also found that both environmental and economic welfare significantly affect economic growth in nigeria. keywords: economic growth, welfare, per capita health expenditure, per capita income, economic welfare, environmental welfare, nitrous oxide emission, carbon dioxide emission. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction in economics, it is argued that social welfare should be in accordance with the growth level of a country. thus, economic development will be undermined if the authorities fail to provide enough welfare for the people as growth occurs (sardar, islam and clarke, 2002, awan, 2015). the relationship between economic growth and well-being has a long and complex linkage or inter-connection, especially linking them with sustainable development. perhaps, this spur the seminal work of the world commission on environment & development (wced) which linked development with three sustainable indices, decomposed into: environment, economic and social. arising from this, there was paradigm shift in the definition of economic development to sustainable development which is defined as a process that meets present needs without compromising the ability of future generations to meet their own needs. the wced importantly attaches strong emphasis to issues of equity, especially the goal of alleviating poverty in societies where majority of of the citizens benefit from the opportunities provided by the development process (neumayer, 1999). a contrasting perspective on the challenge of reconciling growth, social welfare and the needs of future generations was however put forward by meadows, et al, on their prediction that natural resource depletion and environmental degradation would lead to an irreversible collapse of the global economy by the early 21 st century. unlike the wced, meadows, randers and meadows (2004) present straightforward argument that because economic growth is the perceived driver behind resource depletion and environmental degradation, the consideration of economic growth should be embedded in the objective in the attainment of sustainability. this view has however been criticized on the premise that economic growth is fundamental to the improvement of welfare and future generation and as such policies that retards growth should be treated as unworkable and detrimental (abramowitz, 1981). the effect of economic welfare development on economic growth in recent times is emphasized on the growth theory (romer 1990, balami, 2006). an interesting idea in their work was that, in the long-run, output per unit of input could increase even when inputs were exhaustively accounted for. technically, advanced human capital and a growing knowledge base appear to be https://www.doi.org/10.33094/journal.139.2018.11.28.33 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 28-33 29 © 2018 by the author; licensee online academic press, usa part of this wellspring of growth. an implication of lucas hypothesis on economic welfare is thus; associated with investment in knowledge as a productive resource. this underscores the fact that economic processes which create and diffuse new knowledge are essential to shaping the growth of nations (balami, 2006, adelakun, 2011). the general proposition that economic growth is good for the environment has been justified by the claim that there exists am empirical and some measures of environmental quality. it has been observed that when income is high, there is increasing environmental degradation up to a point after which environmental quality improves. that is, poor countries cannot afford to emphasize amenities over material well -being. consequently, in the earlier stages of economic development, increased pollution is regarded as an acceptab le side effect of economic growth. however, when a country has attained a sufficiently high standard of living, people give greater attention to environment legislation, new institutions for the protection of the environment, economic and social welfare. the wellbeing of the current generation depends on both the flow of consumption it receives during its own lifetime. in another strand, it has also been contended that economic growth which necessarily leads to an enhanced quality of life and improved high-income societies is also problematic from a social science perspective. as argued by howarth, rosenwald and rosenwald (2012) eventhough economic growth provides a mix of benefits and costs in terms of its contribution to human welfare, evidence have shown that in most developing countries, growth have been able to provide material goods that can just satisfy urgent needs given that institutions that allocates goods and services to the poor are weak and in some cases, non existence. in developing societies, however, growth has generated complex set of social and environmental costs. however, recent literature has contrasted economic welfare, described as the ultimate goal of the growth process, with economic growth described as an imperfect proxy for more general welfare, or as a means toward enhanced economic welfare. this debate has broadened the definition and goals of growth, but still need to expose the important interrelations between economic growth and welfare. moreover, the widespread clamour for immediate draconian action to reduce the danger of global warming is an unjustifiable diversion of attention from the more serious environmental problems facing developing countries. resources constraints do not constitute limits to growth, and the likely economic damage done by climate change would be a negligible proportion of world output (oecd council meeting, 2015). the loss of welfare of the population in developing countries today as a result of inadequate access to safe drinking water and sanitation, renewable energy consumption, carbon dioxide emission and natural resource depletion is an indication that growthwelfare relationship should be given priority in order to meet the growth needs of the present and future generation. this paper contributes to existing literature by developing new empirical strategy to estimate the linkage between economic growth and welfare in nigeria using different measures of sustainable development indices. 2. materials and materials the data set for this study consists of secondary time series spanning 1999 through 2016. the variables under consideration are: the variables are obtained from the world bank’s world development indicators (2015) and central bank of nigeria statistical bulletin (2016). from the foregoing, it is established that there are several theories on both economic growth and welfare. however, the theoretical framework of the study is anchored on the traditional welfare theory, neoclassical welfare theory. further to verfaillie and bidwell (2000) where eco-efficiency was a key concept, this study brings together the economic and ecological variables which are necessary for economic and socio sustainability. this study adopts the multiple regression models, this is essential in this is to capture the indiv idual impact or effect of each independent variable on the dependent variable as well as determining the rate at which they (the independent variables) affect the dependent variable. in order to examine the impact of economic growth on welfare a linear functional relationship of the form is established 1 linearizing equation 1 gives: 2 (3) variables in the models are defined as follows: lnqgdp = economic growth (proxied by real growth in gross domestic product) , qco2e = carbon dioxide emission, qgee = government education expenditure as a asian themes in social sciences research 2018, vol. 1, no. 1, pp. 28-33 30 © 2018 by the author; licensee online academic press, usa percentage of gross national income, qnoe = nitrous oxide emission, qpche= per capita health expenditure and qpci = economic welfare (proxied by per capita income) 3. theories theories considering welfare states provide an adequate framework for the understanding the key relationships between institutions and social spending and their effects on human welfare and poverty levels. in the examination of the relationship between economic growth and welfare, two approaches can be distinguished: structural approach which emphasizes the importance of structural -functional factors and the political-economic approach which lay emphasis of the roles of political factors in determining the welfare of the people in the country. in the discussion of welfare, different theories have been offered. they include eco-efficiency theory which links economic efficiency with environmental efficiency. the main purpose is to identify and implemen t activities to enable production that is both economically more efficient and cleaner in order to create more values in the society (daly, 1992). eco-efficiency emphasizes on how to help individuals, companies, governments or other organizations in the society become more sustainable. it brings together the essential ingredients of economic and ecological progress which are necessary for economic prosperity to increase with more efficient use of resources without compromising environmental sustainability. but in the discussion of sustainability, indicators are essential in illustrating to policymakers and the public alike the relationship and trade-offs among the dimensions of sustainable development. however, capturing the dynamics of sustainable development and presenting them in terms of measurement indicators that could be unambiguously interpreted and easily communicated to policymakers for public policies remain a challenging task (wced, 1987, verfaillie and bidwell, 2000). there is also the traditional welfare theory designed to uncover the paradigm that lies behind traditional welfare theory to evaluate the further usefulness of that paradigm. it also assesses undercurrents within traditional welfare theory showing how they elucidate essential features of the underlying paradigm. with these goals, emphasis was further shift to the classical utilitarianism, neoclassical welfare theory and modern formulation of welfare. utilitarianism and their critics argue that the greatest happiness criterion must subsume all other notions of social good. the essence of neoclassical welfare theory is that the performance of economic institutions can and should be judged according to whether they provide economic goods in quantities that accord with people's relative desires for those goods. well-being has been widely viewed as one of the most important aspects of people´s lives both as individuals and as societies. however, despite unprecedented growth being experienced by some developing countries in the last decade, people do not necessarily feel better. as enunciated by brekke and howarth (2002). well-being which is often associated with happiness or satisfaction of life, is about having meaningful and worthwhile life, able to fulfill potentials. the discussion of well-being also draws on several reviews of literature, including dally, (1992), sen (1999), stymne and jackson (2000), sardar, islam and clarke (2002), lawn (2005), schneider, kallis and martinez-alier (2010), posner and costanza (2011), fleurbaey (2015). while a number of countries and international organizations have already used (or are in the process of setting up) some measures of well-being, currently no nation or organization regularly and systematically collects a full spectrum of measures of subjective well-being. this state of affairs has led several researchers and to express the need for developing and systematically using national accounts of well -being in recent years (sardar, islam and clarke, 2002, posner and costanza 2011). fleurbaey (2015) also argued that countries should create ongoing assessments of well-being to complement existing economic indicators such as gross domestic product gdp, savings rates, consumer confidence and social indicators like crime rates, longevity; infant mortality rates which can help improve the quality of life in societies. discussions of well-being seek to consider other dimensions such as people’s perceptions of social well being or national quality of life; patterns and trends in physical and mental health; and alternative measures of progress. it is also concerned with how different qualities such as people’s social welfare and social reforms, structure of economy, fiscal and structural reforms, innovation, research, innovative activities and coordination of industrial policies and transition to a socio-ecological model in the future affect personal and social wellbeing and influence territorial intelligence. wills and ng (2012) carried out theoretical study on welfare economics and sustainable development and found that welfare maximization does not necessarily imply sustainable development, and sustainable development does not imply welfare maximization. however, welfare maximization requires sustainable development; sustainable development is necessary though not sufficient for welfare maximization. in this regard, the organization for economic cooperation and development (oecd) (2015) therefore posit that governments should lay much emphasis on all aspects of welfare: economic, environmental and social that would go a long way in promoting economic growth of a country. but cracolici et al (2009) presented a different analytical framework for assessing spatial disparities among countries. the study combined economic and non-economic aspects of a country’s performance in an integrated logical framework using simultaneous equation models. one of the interesting finding is the inability of most countries to turn higher education asian themes in social sciences research 2018, vol. 1, no. 1, pp. 28-33 31 © 2018 by the author; licensee online academic press, usa skills acquired by the citizens into greater economic performance over time. the study is of the view that accurate policies aiming at environmental care is highly desirable. ogboru and anga (2015) adopted a theoretical approach in the evaluation of the effects of environmental degradation on nigeria and its implication for sustainable economic development. the paper submitted that nigeria has a national development policy objective of achieving rapid economic growth and improvement in individual welfare on a sustainable basis, economic instruments and incentives are required to propel this development process in the desired direction. awan (2015) examined the relationship between environment and sustainable economic development and found that both developed and developing countries are responsible for environmental hazards as developed countries are using excessive resources to produce surplus goods for export while poor countries re exploiting their existing resources to feed their growing population and end poverty level. gowdy (2015) carried out a seminal work on the new welfare economics for sustainability. he emphasized the debate that has been going on over various definitions of sustainability which have been conducted within the framework of traditional welfare economics. he posited that equating per capita consumption with welfare contradicts empirical evidence suggesting that the link between happiness and wealth/income is relatively weak. he therefore concludes by saying that alternative approaches to measuring well -being are being developed and these have great potential to move the sustainability debate forward. mazumdar (2010) found evidence that in the middle and low-income countries there is one-way causal relationship between the two phenomena, but only up to a certain level of income, after which growth and human development move independently. the results, as highlighted by the author, vary with respect to both the three different indicators of human development and the different income level clusters. in particular, for the low and middle income countries human development precedes economic growth, that is, low social development implies low labour productivity and in turn low income. 4. results table-1. llc group unit root test. order of integration llc t-statistic probability conclusion i(0) 1.21746 0.8883 non-stationaryat level i(1) 2.43837 0.9926 non-stationary at first difference i(2) 11.4068 0.0000 stationary at second difference table-2. johansen’s test for cointegration. hypothesized no. of ce(s) eigenvalue trace statistic critical values. probability none * 0.513272 118.9584 95.75366 0.0005 at most 1 * 0.313170 72.15525 69.81889 0.0322 at most 2 0.280718 47.73682 47.85613 0.0513 at most 3 0.218897 26.31923 29.79707 0.1194 at most 4 0.120742 10.26107 15.49471 0.2512 at most 5 0.028764 1.897079 3.841466 0.1684 table-3. johansen cointegratiom test for economic growth and the environmental welfare determinants. hypothesized no. of ce(s) eigenvalue trace statistic 0.05 critical values. probability none 0.224980 28.66103 29.79707 0.0672 at most 1 0.128195 12.09468 15.49471 0.1524 at most 2 0.047907 3.177367 3.841466 0.0747 table-4. regression results. variables coefficient t-statistic probability c 23.66019 8.4124 0.0000 lnqpci 0.931475 11.8393 0.0000 qco2e -0.001128 -0.4099 0.6833 qgee -6.006190 -1.9868 0.0514 qnoe -0.000360 -1.4097 0.1636 qpche 0.002361 2.7671 0.0074 5. discussion the result in the table above table reveals the result of the levin, lin and chu unit root test for multiple series, also employed in panel unit root testing. the results shows that as a group, the variables are neither stationary at level form nor at first difference. however, at the second difference, the variables become stationary. it is important to note that this result is expected, since most macro-economic and environmental time-series data are known to be non-stationary at level form, except for very cases where it occurs. since some asian themes in social sciences research 2018, vol. 1, no. 1, pp. 28-33 32 © 2018 by the author; licensee online academic press, usa of our variables are non-stationary (i.e., at level form), we go further to carry out co integration test. the essence is to show that; although our variables are non-stationary series, the variables have a long term relationship or equilibrium between them. that is, the variables are co integrated. in table 2, the johansen test for co-integration has not returned a full rank because the probabilities of all the hypothesized cointegrated equations are not less than 0.05. therefore, we make our conclusion using the first hypothesis that none of the variables are cointegrated. since the probability there is less than 0.05, we actually reject the hypothesis and therefore conclude that there is cointegration or long-run relationship among the exogenous variables as well as between them and the independent variable. next, we will now check for the long-run relationship or the cointegration between our dependent variable and the environmental welfare determinants in table 3, as a contrast to a full rank which signifies that there is no cointegration between the dependent and the independent variables, we have a zero rank, which then implies that there is a long-run relationship between economic growth and the environmental welfare determinants. the result presented in table 4 reveal that as at the first quarter of 1999, i.e. at the beginning of this study, the gross domestic product was about #18.86 billion. furthermore, over the quarterly period of 1999:1 to 2016:4, a #1 increase in per capita income leads to an overall increase in gdp to the tune of n0.93 billion. now, still within the period under study, a 1% increase in carbon dioxide emission in nigeria reduced gdp growth rate by 0.11%. also, still in the period under study, a 1% increase in quarterly government education expenditure shows a very high degree of negative responsiveness by economic growth by 6.0. furthermore, a 1% increase in the nitrous oxide emission in the environment leads to a decline in the quarterly gdp growth rate by about 0.04%. finally, still within the quarterly period of 1999:1 to 2016:4, a 1% increase in per capita health expenditure of government on the citizens of the country increases the growth rate of gdp by about 0.24%. this suggests that any attempt at increasing emissions in nigeria will lead to a reduction in the environmental welfare as growth and other development indicators will be affected negatively. also, since government education expenditure has a negative relationship with economic growth, there is a diversion of fund meant for education. thus, further increase in expenditure on health and education should be closely monitored. 6. conclusion this study analyzed the relationship between economic growth and welfare in nigeria and found hat essentially, there are a number of problems with the economic growth strategy. first, although economic growth is necessary for poverty reduction it is not sufficient, as growth alone cannot overcome the entire important factors that contribute to poverty. although, in general, policies fostering economic growth facilitate poverty reduction, some types of growth clearly do not clearly improve welfare. beside, the benefits of growth have often been concentrated, contrary to the need of them to be widely shared for growth to have the greater impact on the people. in view of the findings, there should be radical change of the economic system through restructuring, improving the social environment and abilities of the poor, investing in basic and technical education to raise the supply of skilled labour, improving social health care, encouragement of good governance. the governments can directly help those in need especially the vulnerable and most at risk, such as the elderly and people with disabilities in terms of monetary or food aid. references abramowitz, m. (1981). welfare quandaries and productivity concerns. in: thinking about growth. pp: 352377. available from: https://doi.org/10.1017/cbo9780511664656.015. adelakun, a. (2011). for first time voters, change in motivation. the punch tuesday 19th april. awan, a.g. (2015). relationship between environment and sustainable economic development: a theoretical approach to environmental problems. international journal of asian social sciences, 3(3): 741-761. brekke, k. a. & howarth, r. b. (2002). status, growth, and the environment: goods as symbols, applied welfare economics, cheltenham, u.k.: edward elgar. balami, d. h. (2006). macroeconomic theory and practice. maiduguri: salawe prints. cracolici, m.f., cuffaro, m. & nijkamp, p. (2009). the measurement of economic, social and environmental performance of countries: a novel approach. social indicator research, 95: 339-356. available at: 10.1007/s11205-009-9464-3. central bank of nigeria (cbn), (2016). statistical bulletin, abuja. daly, h. e. (1992). allocation, distribution, and scale: towards an economics that is efficient, just, and sustainable, ecological economics, 6: 185-193. fleurbaey, m. (2015). on sustainability and social welfare. journal of environmental economics & management, 71: 34-53. available at: https://doi.org/10.1016/j.jeem.2015.02.005. gowdy, j. (2015). towards a new welfare economics for sustainability. ecological economics, 53(2): 211-222. available at: https://doi.org/10.1016/j.ecolecon.2004.08.007 howarth, r., rosenwald, p. & rosenwald, j. (2012). sustainability, well-being, and economic growth. minding nature, 5(2). https://doi.org/10.1017/cbo9780511664656.015. https://doi.org/10.1017/cbo9780511664656.015. https://doi.org/10.1016/j.jeem.2015.02.005. https://doi.org/10.1016/j.ecolecon.2004.08.007 https://www.humansandnature.org/september-2012-vol-5-num-2 https://www.humansandnature.org/september-2012-vol-5-num-2 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 28-33 33 © 2018 by the author; licensee online academic press, usa lawn, p. a. (2005). a theoretical foundation to support the index of sustainable economic welfare (isew), genuine progress indicator (gpi), and other related indexes. ecological economics, 44(3): 105-118. meadows, d. h., randers, j. & meadows, d. l. (2004). limits to growth: the 30-year update (white river junction, vt: chelsea green publishing. ng, y.k. & wills, a. (2012). welfare economics and sustainable development. welfare economics journal, 1(6): 1-9. neumayer, e. (1999). the isew: not an index of sustainable economic welfare. social indicators research 48(1): 77-101. ogboru, i. & anga, r.a. (2015). environmental degradation and sustainable economic development in nigeria: a theoretical approach. research journal of economics, 3(6): 11-20. oecd council meeting, (2015). policies to enhance sustainable development. posner, s. m. & costanza, r. (2011). a summary of isew and gpi studies at multiple scales and new estimates for baltimore city, baltimore county, and the state of maryland . ecological economics, 70: 19721980. romer, p. (1990). endogenous technological change. journal of political economy, 98(5): 71-102. sardar, m., islam, n. & clarke, m. (2002). the relationship between economic development and social welfare: a new adjusted gdp measure of welfare. social indicators research, 57(2): 201-228. schneider, f., kallis, g. & martinez-alier, j. (2010). crisis or opportunity? economic de growth for social equity. journal of cleaner production, 18(2): 511-518. sen, a. k. (1999). development as freedom. new york: anchor books. stymne, s. & jackson, t. (2000). intragenerational equity and sustainable welfare. ecological economics, 33(2): 219-236. verfaillie, h.a. & bidwell, r. (2000). measuring eco-efficiency: a guide to reporting company performance: world business council for sustainable development (wbscd). world commission on environment and development (wced), (1987). our common future. new york: oxford university press, 43. world bank, (2015). world development report. washington, d.c.: world bank. asian themes in social sciences research issn: 2578-5516 vol. 2, no. 1, pp. 9-15 2018 doi: 10.33094/journal.139.2018.21.9.15 © 2018 by the authors; licensee online academic press, usa 9 © 2018 by the authors; licensee online academic press, usa development without human resource development (hrd): analysis of hrd policy of pakistan muhammad mujtaba1* --sadaf jamal2 --yaseen shaikh3 1,2phd-management sciences, szabist, karachi, pakistan 3ms-project management, muistd,muet, jamshoro, pakisatan abstract the purpose of this study is to understand the importance of human resource development (hrd) in context of economic development of pakistan and to assess that at what level hrd policy of the state is effectively aligned with development of country. the qualitative approach is used in this study by applying triangulation method to collect data from different dimensions for same phenomenon by using phenomenology and focus group methodologies to reach in-depth understanding of matter through participants lived experience and opinions. unstructured interviews were conducted from the representatives of the concerned government organizations and policy experts of pakistan to collect primary data. the findings of research explain that the hrd policy of pakistan is not aligned with its vision of economic development and achieving the objects of the vision is unrealistic and inconsistent. this paper is useful for policy makers, investors and hr specialists to understand the importance of hrd in economic development of country. keywords: development, human resource development (hrd) policy, public policy licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction human excellence is one of primary and leading determinant to convert the vision into reality. the regular investment on the human resource development (hrd) is nucleus reason behind the continuous success of leading firms. quality of available human resource is not only support to domestic investors but also attract the attention of foreign investors for the development of country. it is key ingredient of strategic policy of firm towards its profit which ultimately helps in economic growth of the country. human resource is acknowledged as single imperative strategic resource behind the success of fast economic growth of singapore (osman-gani, 2004) and singapore workers are recognized as best workers of the world in productivity and innovation (standards, productivity and innovation board, 2003). according to clarke and gholamshahi (2018) the initial point of every development in 21 st century is focused on innovation, that can only be achieved through people, the innovation is not a government, not a business, not an institution but the people who work inside the these systems, where state responsibility is to develop and implement the effective public policy whereas as function of institutions is to prepare those kind talent to run the operations according to national public policy of that particu lar state. recent past history of east asia exhibit that a number of countries had dramatically improved their economic growth through effective hrd policy and invested huge amount on development of human skills. astonishing economic growth of asian tigers (i.e. singapore, honk kong, taiwan and south korea) was mainly based on governments’ concentration and huge investment on hrd (tilak, 2002). the accomplishment of every public policy is dependent on hrd policy that means availability of human knowledge and skills in the country to implement the all public policies. in this regard, the careful attention of https://www.doi.org/10.33094/journal.139.2018.21.9.15 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 9-15 10 © 2018 by the authors; licensee online academic press, usa policy makers is inevitable and they need to think across and think ahead before hallmark the hrd policy of state because incompetence and careless attitude in designing of hrd policy will ultimately affect the economic targets. the capability of country to compete in at global platform is mainly depend on value addition and low cost of product through human knowledge and skills (reich, 1991). international institute of management development (1995) it is necessary for state to create competitive business environment in country through formulating effective public policy on macro and micro level with special focus on research work and develop knowledge and skilful human society. hrd policy should be focused to create valuable human force for state through providing quality of education and new training to people towards development of required skills (yussif and ismail, 2002). in context of pakistan, according to international labor organization, (2016) the pakistan has world’s 9th largest labor force, which is great potential for country to easily compete in global economy in every field with the support of designing and implement of effective hrd policy. quality as well as quantity of professionals (i.e. having managerial, technical and computer knowledge) are core drivers to run country’s economy on fast track (afza and nazir, 2007). according to pakistan vision-2025, the pakistan will be the asian tiger in 2025 and counted in the list of top ten economies of the world in 2047. the central pillar of this vision was based on development of human and social capital (i.e. knowledge and skill) of the country as exhibited at figure 1.1. figure-1.1. pakistan vision~2025. source: planning commission report (2015). the vision was designed on seven pillars and among seven pillars, two (i.e. human, social capital and developing competitive knowledge economy-through value addition) are directly linked with hrd policy and very essential for success of all development projects of vision-2025. but the existing hrd policy of pakistan is complex as well as irrational and there is no consistency within and with other public polices pertain to development of country. the public policy makers of pakistan have failed to understand the phenomenon and value of hrd (afza and nazir, 2007). 1.1. research problem according to global human capital report (2017) the pakistan’s ranking in human resource development is in critical condition, and it has decreased from 2016 to 2017 as exhibit in at table 1. table-1. pakistan ranking in list of global human resource development. year pakistan number total countries in ranking score 2016 118 130 53.10 2017 125 130 46.34 source: the global human capital report, (2016); (2017) . according to asrar-ul-huq, (2015) there is great need to realign the hrd policy of pakistan with its economic targets, so that development projects can be achieved in true spirit towards economic prosperity in country. further, the regular advancements in information technology have created challenges for policymakers to realign their policy every time and develop their human resource accordingly (tabassum, 2015). to retain skilled human resource, the organization needs to prepare comprehensive plan of hrd policy asian themes in social sciences research 2018, vol. 2, no. 1, pp. 9-15 11 © 2018 by the authors; licensee online academic press, usa before benchmark the strategic goals. hrd policy is varied form organization to organization but every hrd policy is directly or indirectly related state’s hrd policy. the existing state hrd policy of pakistan is so complex and unrealistic. due to existing system of human resource development of pakistan, almost every development project has failed to achieve its objectives and has taken the country from bad to worst ranking position at world economic forum. human resource development is key factor for pakistan to understand and handle with globalization phenomenon (afza and nazir, 2007). the focus of this study is giving the understanding to public policy makers of pakistan to accept the realities of human development so that they should make complete and effective hrd policy for enrichment in economic competitiveness of country. human knowledge and skills are key instruments of nation to compete in globalization (thurow, 1994). 2. literature review according to united nations report (1991) the hrd policies and activities support to acquisition of human knowledge, skills and attitude that bring mutual benefits for an individual and a business, and at larger for society. these policies are mostly developed macro level and micro level, macro level the policy need to focus on well being of nation (i.e. knowledge, skills, attitude, health) which helps in economic planning and it controls inflammation among citizen, whereas at micro level it is concerned with development of organization and individual (latif, nazar, khan and shaikh, 2011). the policies of advanced countries of world are committed to enhance human resource in digital epoch to achieve their economic targets, the prime challenge of these countries is not technology but the development of human capital (clarke and gholamshahi, 2018). asia pacific economies are in straight competition with europe, united states and japan in context of attainment of knowledge and skills to achieve their economic development (dunning, 2006; porter, 1990). the main capacity of state to prepare effective public policy is based on knowledge and skills of policy makers and for execution of the public policy the state again required desired knowledge and skill of its people; development of any public policy without alignment or having data of available knowledge and skill in the country is the failure of policy as well as wastage of resources; one of the main reason behind the failure of public policy in non-developed countries is incompetency of policy makers to formulate effective public policy, the policy makers don’t have requite data, knowledge and skill for preparation of public policy; they use traditional bureaucratic approach in 21st century to compete with developed countries which instead of taking them five year ahead but taking ten year back them than current status (united nations, 2005). singapore’s hrd policy has contributed a major role in national policy of country along with constant and adjustment of hrd policy in consonance with other sub national polices, this country don’t have any natural resource except port and having very small land but due to expertise in human resource, the singapore is one of most developed country of asia in these days, the uniqueness of singapore success in globalization is grounded on strong foundation of human expertise and its huge continuous investment on human by implementing systematic policy of hrd policy (osman-gani, 2004). national hrd policy infrastructure or system of singapore is divided in two sub systems namely tripartite and multi departmental under one umbrella-main system, firstly, the tripartite approach (sub system) is consist of the cooperation of government, employers and unions, whereas the second approach of multi departmental is based on the involvement of all government department and agencies under one umbrella (ministry of manpower, 2003). in tripartite system, the government provides various skill trainings (align with national policy objectives) to its citizens, motivate and finance to employees to enhance their skills and encourage the employers to improve the existing skill of their employees, the fund for this program generated through government budget and contribution of employers who pay 2$ every month to government and in return the government provide 90% discount in training programs of employees, through this system the employers happily send their employees for different trainings at very minimum price, and ultimately, this system increase the hrd of country, in addition to this, the government is operating number of different project under the council of tripartite institution such as lifelong training school to give skill training to everyone at every stage of life, latest trainings to unemployed citizens so that they can reskill themselves to meet the job vacancies requirement of different firms and other various program under the centralized command and authority (ministry of manpower, 2003; skills development fund, 2003). whereas in multi departmental (sub system) in national polices for hrd policy, the singapore government has created a proper network of collaboration among all departments, in which every department share its required skills or human resource for its future development projects at central level, then the concerned government authority of hrd department gives the timeline or period in which the requisite human resource will be available in singapore’s labor market for particular project, after getting confirmation of date of availability of human resource in labor market then every department of state the hallmark its policy separately. example, before 1998, the information regarding human resource needs of nation (all departments) collected by the edbeconomic development board and submitted to cptecouncil for professional and technical education singapore for its consideration, and then concerned agencies of hrd provide the timeframe to meet the targets of development of required human capital in the country. presently, the ministry of manpower (mom) is responsible to develop and implement the national human resource development policy; the existing strategic plan of hrd plan is designed by the mom with the vision to make singapore hub of talent capital with a systematic and constant enhancing knowledge and skills (education asian themes in social sciences research 2018, vol. 2, no. 1, pp. 9-15 12 © 2018 by the authors; licensee online academic press, usa system and hrd strategies are strongly linked and integrated with each other) of employees (osman-gani, 2004). pakistan economy is very weak to compete in world level but it has great potential to compete in global trade war through the development of human resource (afza and nazir, 2007). according to planning commission (2005) the main obstruction in development of human resource is the disparities and inconsistency of hrd policy with the other public policies, consequently, these is huge gap and mismatch among education, training and skill programs.(afza and nazir, 2007). according to clarke and gholamshahi (2018) majority of asian countries national public policy is primarily supported by hrd policy which provides the human capital to achieve the main targets of economic development, these countries are spending a huge amount of money on education, trainings and skills programs in as systematic way to train and polish their people to fulfil the future needs of different projects in their countries (such as hong kong, china, india, taiwan and others). whereas, the pakistan national policy for economic development is completely disconnected with hrd policy, even there is no coherence within departments which are working on development of human resource of pakistan. the existing hrd policy government of pakistan is so complex and unrealistic structured as exhibited in figure 2.1. figure-2. structure of hrd policy, pakistan. source: tabassum, (2017) international journal of science and research. 3. methodology the qualitative method was adopted to collect the primary data by conducting interview. qualitative method is dynamically helpful in that research work which is based on analysis of secondary data and lived experiences, basically this method is helpful to understand a mixture of phenomenon of meaning (freeman, 2014). triangulation method is used to check trustworthiness (i.e. credible, transferable, confirmable and dependable) by collecting data from different sources such as in depth interviews-phenomenology and group discussion-focus group. triangulation is used to collect the data from different sources to create in depth understanding of phenomenon and avoid any kind of biasness about qualitative research study (patton, 1999) whereas phenomenology is very helpful in context of philosophy and methodology to understand the complex problems of organization; it is legitimate source to collect the data and participant view in language taken as facts to understand the reality (goulding, 2005) it is core purpose is to expand and give depth understanding of lived experience (spiegelberg, 1982) it supports to focus on critical expression on conscious lived experience, it is primarily emphasis to uncover the invariant characteristics of experience (jopling, 1996); (bashir, syed and qureshi, 2017). the sample size of this study was fifteen (15), which include eight (08) representatives of different departments who were engaged in development and implement the hrd policy of pakistan and one focus group interview cum discussion from seven (07) policy experts. 4. data analysis and findings 4.1. effective public policy the state is fully responsible to develop effective public policy and built up environment of trust among individuals, local investors as well as foreign investors and for effective execution of development projects but unfortunately, the pakistan’s government has failed to build up that level of trust among these outfits. main reason behind this scenario is that the public policy of pakistan is unrealistic and inconsistent to address the many problems of these outfits. the national policy makers develop different sub public policies in isolation and under the influence of political parties. the hrd policy of pakistan is made by policy makers in a way like bits and pieces and there is no one track to reach destination. therefore, there is no connection of hrd policy with national polices pertain to development or non-development projects. there is no proper road map for development of human resource, like all departments who are working on hrd in pakistan are constructing its own separate road (program) and which has no link with any other road, and these dif ferent constructed asian themes in social sciences research 2018, vol. 2, no. 1, pp. 9-15 13 © 2018 by the authors; licensee online academic press, usa roads are not connected with any central road, in addition to this these all roads (programs) are made with low quality of material which can only be survive for only short time. 4.2. competency of policy makers the globalization has entirely changed the pattern of policy making techniques and procedures which were based on orthodox approach. furthermore, the continuous innovations in computer technology have created tough challenges for policy makers to draw effective public policy which should have consistency with other polices. pakistan policies makers are using orthodox approach, and they don’t have specialized skills, and even don’t have accurate data of existing available human resource in the country. therefore, the policy makers of pakistan need specialization in different fields which are very important and directly connected in preparation of public policy. 4.3. magnitude of hrd policy in development hrd policy is an important for development of country in every field. due t o globalization and advancement in computer technology have increased it importance as compare to other public policies and it is direct impact on all government vision. thus, every policy must be hallmarked after the confirmation of development of human capital in specific time for particular project. it required systematic working with specialized skills in different fields, but in pakistan, the policy makers are not aware the importance of hrd in economic development of country and they continuously ignoring as well as failed to give priority to hrd. consequently, policy makers have allocated very limited budget for the development of human resource which exhibit itself that the lack of understanding the hrd importance in economic development of country. furthermore, the limited budget which they allocated is only waste of money because the education and skill training programs which they are offering through different organizations or institutions are obsolete and no more use in upcoming days. 4.4. research and development and database of human resource research and development perform very important role in innovation but in pakistan research and development progress is very limited. many projects of pakistan, the government hires human capital of other countries to conduct research in pakistan, which is very much expensive and infeasible because the expert of other country environment cannot identify the exact problem or solution as compare to expert who lives in pakistan environment and understand the social and cultural aspects. there is acute shortage of research and development in pakistan. availability of accurate human resource data (i.e. numbers, type, categories, fields, location and others) is indispensable while making future plans of hrd policy. in pakistan, there is no institute or department which can provide this comprehensive information and most of the times, the policy makers of pakistan just manipulate the data while making hrd policy. 4.5. role of private institutions in hrd policy private institutes of different countries are performing very vital role in human resource development and states governments create positive environment for them to help states in development of human resource to meet requirement of human resource in upcoming projects of the country. in pakistan, the government doesn’t have any proper workout on this aspect in hrd policy. overall the results and findings of this study portray that the pakistan is located in one of the prime location of world and this land has number of natural resources, it has the capacity to compete in world trade war and economic development of this country can be enhanced through review and systematic formulation and implementation of national public policy (it includes all polices) by involving private institutions. current ranking position of pakistan in hrd is in alarming situation and main cause of this is reason is complete failure of existing hrd policy. the national policy makers of pakistan are avoiding realities or escaping themselves from the globalization while making public policy for economic development, whereas they clearly mentioned in vision 2025 that hrd is main pillar of pakistan vision2025, in which pakistan will be asian tiger up to 2025 and top best economy of world up to 2027. the existing hrd policy of pakistan is consist of bits and pieces structure; there is no clear road map of one destination. a number of departments are working on human resources development without any clear picture of destination and th ere is no coherence with each other such as education development programs have no one destination among them, every department have its own programs of education, having its own targets and own way of working patterns which is not linked with education programs of other departments, likewise in training and skills programs and research and development programs in pakistan. 5. conclusion and recommondations according to public policy of pakistan vision-2025, the pakistan will be the asian tiger up to 2025 and pakistan economy will be counted among top developed economies up to 2047, the main pillar of this policy is human resource development but in reality, the current scenario of economic development of country is opposite to vision. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 9-15 14 © 2018 by the authors; licensee online academic press, usa pakistan’s ranking in global human resources development is continuously decreasing; it has reached at number of 125 out of list of 130 countries, which counts in danger zone in context of human resources development. the policy makers of the country are failed to develop ef fective hrd policy which is ultimately support to all other public policies in context of vision2025. this policy is made in bits and pieces which is organizing by various departments, there is no one track to reach destination. further, it is unrealistic and inconsistent with economic development. there is great need that present government of pakistan should take this matter seriously and consider following recommendations for the betterment of the country; 1. there is great need to establish a separate ministry for human resources development with having three major portfolios i.e. research and development, education and trainings and skill. all portfolios should be further segregate with macro and micro goals. each goal should be further planned according to short term and long term goals. they should work under one umbrella. 2. sufficient budget should be allocated for this ministry and hire competent professional (purely on merit basis) in domain for the formulation of effective hrd policy and they should work independently to identify the different programs for hrd according world standard. 3. proper comprehensive research should be conducted to analysis the availability of human resource in pakistan such as filed wise, category wise, industry wise, etc. and prepare comprehensive database for this purpose. further, identify the shortage human resources sketch the hrd program, accordingly. all hrd should be involved based with computer knowledge. 4. all public policies and its projects must be reviewed and rationalized according to facts. no policy should be hallmarked before the concurrence of hrd ministry. according to economic targets of country the hrd ministry must realign it policy with other policies and world best policy standards of human capital development, and set the timeline for the development of requisite human capital in country. 5. there is great need that government should encourage to private institutes through public private partnership for this purpose. further, there is great need to work on available human capital in pakistan and further required in depth study in each component of hrd, such as education, training and skill which definitely help in hrd of pakistan. references afza, t. & nazir, m. s. 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(2002). human resource competitiveness and inflow of foreign direct investment to the asean region. asia-pacific development journal, 9(1): 89-107. https://www.pc.gov.pk/web/vision http://www.sdf.gov.sg/ http://www.spring.gov.sg/ http://hdr.undp.org/sites/default/files/reports/220/hdr_1991_en_complete_nostats.pdf https://publicadministration.un.org/publications/content/pdfs/e-library%20archives/2005%20human%20resources%20for%20effective%20public%20administration%20in%20a%20globalized%20world.pdf https://publicadministration.un.org/publications/content/pdfs/e-library%20archives/2005%20human%20resources%20for%20effective%20public%20administration%20in%20a%20globalized%20world.pdf https://publicadministration.un.org/publications/content/pdfs/e-library%20archives/2005%20human%20resources%20for%20effective%20public%20administration%20in%20a%20globalized%20world.pdf asian themes in social sciences research issn: 2578-5516 vol. 1, no. 1, pp. 21-27 2018 doi: 10.33094/journal.139.2018.11.21.27 © 2018 by the authors; licensee online academic press, usa 21 © 2018 by the authors; licensee online academic press, usa customer satisfaction and service quality in the marketing practice: study on literature review sokchan ok1---rathny suy2---leaksmy chhay3---chakriya choun4 1school of logistics and supply chain, naresuan university, phitsanulok 65000, thailand. 2school of public affairs, university of science and technology of china, hefei, anhui, 230026, china. 3school of management, university of science and technology of china, hefei, anhui, 230026, china. 4school of public administration, central south university, changsha, hunan, china. abstract both public and private parts have given considerable keenness with respect to the perfect customer satisfaction in the current decades. customer satisfaction has been a renowned point in advertising practice and educational research since cardozo's (1965) a basic examination of customer effort, expectations and satisfaction. the service quality and customer satisfaction are associated with their definitions to their associations with alternate points of view in business. the service quality is an attracted assessment that mirrors the customer’s perception of reliability, assurance, responsiveness, empathy and tangibility; and significant quality while satisfaction is more careful and it is affected by point of view of service quality, item quality and cost, also situational fragments and individual components. this paper concentrated on the literature on the key elements of this study which was service quality, customer satisfaction and expectation. in particular, the accompanying principle focuses were demonstrated about service quality, customer expectation, customer satisfaction, theory of servqal, and related studies on customer satisfaction and service quality. this study used a descriptive design, by exploring some of the literature that discusses on customer satisfaction and service quality how to improve the both public and private business parts in marketing practice. keywords: customer satisfaction, service quality, customer expectation, servqal. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction both public and private parts have given much thoughtfulness regarding the ideal customer satisfaction in the recent decades. normally, managers have asked for their staff to do customer satisfaction considers for their own particular associations. an expert or specialist must operationalize the idea of customer satisfaction keeping in mind the end goal to gauge it. all the more critically, with a specific end goal to have legitimacy for any estimation, the examiner is required to accept some model of the topic. the investigator must utilize exceptionally unequivocal conceptualizations of the topic (at the end of the day, models) in the event that she/he hopes to do research and examination that have importance for authoritative choices. customer satisfaction has been a famous point in marketing practice and scholastic research that introductory investigation of customer exertion, expectations and satisfaction (cardozo, 1965). in spite of many endeavours to quantify and clarify customer satisfaction, they still do not give off an impression of being an accord with respect to its definition (joan and joseph a., 2000). customer satisfaction is the main basis for deciding the quality that is really delivered to customer through the production and service, and by the going with servicing (abraham and taylor, 1999; "improving your measurement of customer satisfaction: a guide to creating, conducting, analysing and reporting customer satisfaction measurement programs," 1999). service quality is extraneously seen attribution in view of the customer experience about t he service that the customer perceived through the service encounter, and service quality appraisals are shaped on judgments of result quality, collaboration quality and physical environmental quality (zeithami and leonard 1990). service https://www.doi.org/10.33094/journal.139.2018.11.21.27 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 22 © 2018 by the authors; licensee online academic press, usa quality is one of the fundamental measurements, which are figured into the consumer’s satisfaction judgments, and service quality is a demeanour shaped by long-time overall assessment of a company's executive (jenet, 2011). this paper studied the literature on the key elements of this study which was service quality, customer satisfaction and expectation. specifically, the following main points were indicated: 1) service quality, 2) customer expectation, 3) customer satisfaction, 4) theory of servqal, and 5) related studie s on customer satisfaction and service quality. 2. literature review 2.1. service quality service quality is merely a disposition shaped by long haul general assessment of an unmistakable performance. service quality is naturally seen attribution in view of the customers experience about the service that the customer perceived through the service encounter. service quality appraisals are created on judgments of result quality, interaction quality and physical environmental quality. service quality is one of the key measurements, which are figured into the customer's satisfaction judgments (zeithami et al., 1990). services are created and expended in the meantime, which makes it hard to gauge; test and thusly particular uniform quality can seldom be set. subsequently, it is hard to decide how customers assess the service quality (parasuraman, zeithaml and berry, 1985). on the other hand, the heterogeneity of service suggests its delivery differs from producer to producer, consumer to consumer and day -to-day (a. parasuraman et al., 1985). that is additionally in light of the fact that the consistency of staff conduct is difficult to guarantee since what the customer gets may vary from what the firm expected to deliver. there are natural challenges in executing and assessing what constitutes service quality. for one, quality perceptions regularly rely on upon a rehashed examination of the customer’s expectation about a specific service. accordingly, if a service over and again neglects to experience the customer ’s expectations it will be seen as poor service. furthermore, in services customers assess the service procedure and additionally the ultimate result (hoffman and bateson, 2006). on account of transport travel, that will be whether the transport leaves on an opportune way, how smooth the excursion was, the manner by which lovely the experience with the transport conductor was and on the off chance that they landed at their last goal on time. other illuminated of parasuraman, zeithaml and berry (1985) battled that "a company can finish a strong reputation for quality service exactly when it dependably meets customer expectation". in any case, there are constantly crevices between the refinements of acceptances and expectation among contrasting endeavours in the midst of the service methodology. as indicated by (candido and morris, 2000) proposed five gaps crevices as take after: gap 1 is the hole between customer perception and management's perception of service; gap 2 is the hole between customer-driven service plans and gauges, and management perceptions of customer expectation; gap 3 is the hole between customer driven outlines and norms and service delivery; gap 4 is the hole between service delivery and outer correspondences to customers; and gap 5 is the structure of the other four gaps` disagreement that suggested the between service quality`s expectation and perception. figure-1. the model of gaps. source: parasuraman, zeithaml and berry (1988). 2.2. customer expectation there are many reviews on "customer expectation" to figure out what customers truly require, so that business operations can quickly offer the products and service that can take care of customers` needs and asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 23 © 2018 by the authors; licensee online academic press, usa demand. pervious research said expectation as "desires or needs of customers which are what they feel a service provider ought to offer instead of would offer" (parasuraman, zeithaml and berry, 1988); as the customers` past experience will probably influence their future expectation (zeithaml, berry and parasuraman, 1993). in this manner, their past experience will, in somehow, impact their future expectation; moreover, the : expectation-satisfaction relationship" likewise impacts the customers` decision making whether to use or not to use the service once more, contingent upon their positive or negative past understanding. at the end of the day, customers' expectations influence the arrangement of their satisfaction inside discriminative circumstances and furthermore the expectation is some of the time more significant just when they are unambiguous (nyer, 1996). after customer experienced great service, they would inform other regarding the service quality of the supplier. thus, if service providers comprehend their customer`s preference along service quality estimations and staying to give some quality of service which will precisely diminish the gaps in service quality between customers and satisfied by the service providers those great words from the customer`s preference on service quality will acquire unwaveringness from the other service users (manjunatha and shivalingaiah, 2004). as per, hong kong association in 2001 gave the customer service excellence as follow: (1) interview staff at basic process regions or lead inside and out interviews with customer to outline questionnaire before directing overview; (2) typical point canvassed in a customer satisfaction overview which incorporates (overall satisfaction, performance of forefront staff, punctuality and appearance, service skill, enthusiasm , tidiness and cleanliness after work, level of bolster gave, decision to keep on purchasing products/service, and comparison of products/service with contenders.); (3) design a criticism and request that customer rate service quality customer satisfaction; and (4) use a specialist to outline and, if fundamental, direct a study. these are four treks to comprehend the customer need and expectation which is the fundamental methodology for the transportation service provider as it can help in keeping the organization from getting dissensions from those customers who feel disappointed. 2.3. customer satisfaction customer satisfaction is a key component of business methodology which determines the bearing of service performance. customer satisfaction was given a few definitions which can be in various circumstances and they are constantly identified with both products and services. the customer satisfaction was characterized as the customer`s evaluation a product or service as far as whether that product or service has addressed the customer's needs and expectation (alan, mary and dwayne 2012); as indicated by them, there are variables that impact customer satisfaction, for example, product/service quality, perceptions of value or reasonableness, value, individual elements (buyer's mind-set or passionate state), and different purchasers et cetera. the definition and specified that customer satisfaction is a affective term and they distinguish five unique sorts of satisfaction, which is pleasure, relief, novelty and surprise (oliver and swan, 1989). martin and pranter (1989) likewise specified that in innumerable service environments, customers possibly impact the satisfaction or disappointment of different customers. notwithstanding that pleasurabl e experiences with kindred customers add decidedly to the service experience and appear to improve the impression of service quality too (martin and pranter, 1989). bitner (1990) said that if the service is affective it has an immediate and prompt impact on the customer satisfaction; accordingly it is critical to urge the staff to deliver the correct service to the ideal people in sensible time and indicating great conduct (bitner, 1990). customer satisfaction has likewise turned into a noteworthy benefactor for improving a service company, for example, long-term gratefulness, customer dependability customer maintenance. numerous analysts additionally contend that customer satisfaction has a big effects customer expectation for repurchase (cronin, brady and hult, 2000). besides, satisfied customers spread positive informal exchange and it pulls in new customers and makes long-term business benefit. the measuring customer satisfaction gives a sign on how an organization is performing or giving products or services; hence, customer satisfaction will be the degree of accomplishment to every one of the organizations including the public sectors too (tirimba, richard, robert, thomas and tom, 2013). the item and service quality traits when were enhanced, the customers` satisfaction would extend as the expanding number of customer satisfaction dependably prompt more noteworthy greater customer retention and loyalty (eugene and vikas, 2000). these would lead the association to increment more prominent gainfulness. the model of chain reaction of customer is provided as follow: figure-2. the chain reaction model of customer. source: eugene and vikas (2000). asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 24 © 2018 by the authors; licensee online academic press, usa 2.4. the servqual the servqual scale which is otherwise called the crevice demonstrate by parasuraman, et al. (1988) has appeared to be one of the most ideal approaches to gauge the quality of services gave to customers. this service assessment technique has been demonstrated steady and dependable by some authors (brown, churchill and peter, 1993). they held that, when seen or experienced service is not as much as the expected service; it infers not as much as palatable service quality; and when seen service is more than anticipated service, the undeniable surmising is that service quality is more than acceptable (jain and gupta, 2004). from the way this hypothesis is exhibited, it appears the possibility of servqual best fits the assessment of service quality from the customer perspective. this is on account of when it is expressed “perceived” and “expected” service; it is certain this goes to the individual, who is going to or is devouring the service; who unquestionably is the consumer/customer (jenet, 2011). in first servqual show that came had 22 sets of likert-sort things, where one section measured saw level of service gave for a specific association and the other part measured expected level of service quality by respondent (kuo, 2003). assistant examination prompted the finding that the five of ten measurements were corresponded as demonstrated as follows: (1) tangibility: physical offices, hardware, and appearance of faculty; (2) reliability: capacity to play out the guaranteed service constantly and precisely; (3) responsiveness: readiness to help customers and give incite service; (4) assurance: learning and obligingness of employees and their capacity to move trust and confidence; and (5) empathy: minding individualized consideration the firm gives to its customers. figure-3. the model of servqual. source: parasuraman, zeithaml and berry (1988). the collected total of distinction between perceptions and expectations from the five measurements shapes the worldwide see quality construct (laroche, kalamas, cheikhrouhou and cézard, 2004). taking after this view, customers' expectations were fulfilled through the result dimension (reliability) and surpass it by methods for the procedure measurement (tangibility, assurance, responsiveness, and empathy). to affirm the legitimacy of servqual model in the evaluation of service quality, expressed that "service quality is an engaged assessment that mirrors the customer's perception of reliability, assurance, responsiveness, sympathy, and tangibles" (zeithaml, mary and dwayne, 2006). they included that among these measurements, "reliability" has been indicated reliably to get the most critical measurements in service quality (zeithaml et al., 2006). different analysts saw the need of components of service expectations that are practical and specialized measurements (grönroos, 1984). the idea was that, consumers make service evaluations in view of the specialized measurement that is what is delivered and on the practical measurements that is the way, why, who, and when it is delivered (grönroos, 1984; laroche et al., 2004). in spite of the fact that the components recorded in servqual model have been turned out to be the fundamental strategy for assessing service quality from the consumer’s perspective (brown et al., 1993), downsides in utilizing servqual in measuring service quality has been the reason that the servperf scale was proposed (jain and gupta, 2004). after they raised doubt about the theoretical premise of the servqual, having discovered it, prompted perplexity with service satisfaction (jain and gupta, 2004). these analysts disposed of the "e" for 'expectation` asserting rather that "p" for ‘performance’ alone ought to be utilized. they implied that higher perceived performance involves higher quality service. lamentably, amid this previous century, customers have changed their behaviours in ways that sometimes fall short for hierarchical conduct. till date, it is misty as to which of servqual and servperf is predominant in measuring service quality (jain and gupta, 2004). this review measured service quality with other service quality measurements, for example, specialized and utilitarian measurements proposed by grönross (1983). thus it was demonstrated that the servqual display must not be utilized as a part of assessing service quality in organizations. this could imply that; distinctive businesses may require diverse estimations for service quality. asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 25 © 2018 by the authors; licensee online academic press, usa 3. method this study used a descriptive design, by exploring some of the literature that discusses on customer satisfaction and service quality how to improve the both public and private business parts in marketing practice. 4. discussion 4.1. customer satisfaction and service quality concerning relationship between customer satisfaction and service quality, initially recommended that service quality would be forerunner to customer satisfaction paying little respect to whether these builds were total or exchange particular. a few specialists have discovered observational backings for the perspective of the point said above (claes and michael, 1996) where customer satisfaction came subsequently of service quality. in relating customer satisfaction and service quality, scientists have been more exact about the significance and estimations of satisfaction and service quality. satisfaction and service quality have certain things in like manner; however satisfaction by and large is a more extensive idea, though service quality concentrates particularly on measurements of service (alan et al., 2012). in spite of the fact that it is expressed that different elements, for example, cost and item quality can influence customer satisfaction, saw service quality is a part of customer satisfaction (valarie, mary and dwayne, 2006). this hypothesis agrees to the possibility of alan et al. (2012) and has been affirmed by the meaning of customer satisfaction introduced by different specialists. figure-4. customer perceptions of quality and customer satisfaction. source: alan et al., (2012). the above figure demonstrates the relationship between customer satisfaction and service quality. the creator exhibited a circumstance that service quality is an engaged assessment that mirrors the customer’s perception of reliability, assurance, responsiveness, empathy and tangibility and substantial quality while satisfaction is more comprehensive and it is affected by view of service quality, item quality and cost, likewise situational components and individual variables (alan et al., 2012). it has been demonstrated from past looks into on service quality and customer satisfaction that customer satisfaction and service quality are connected from their definitions to their relationships with different perspectives in business. parasuraman et al., (1985) in their review, recommended that when seen service quality is high, then it will prompt increment in customer satisfaction. some different authors comprehended with the thought raised by parasuraman et al., (1985) and they recognized that “customer satisfaction is based upon the level of service quality that is given by the service providers “(saravanan and rao, 2007). investigating figure 4 relating it to these authors’ perspectives, it is obvious that meaning of customer satisfaction includes anticipated and saw service. notwithstanding what alternate scientists have discovered from customer satisfaction and service quality, some different authors, went into points of interest to acquire customer value in the investigation of the relationship between customer satisfaction and service quality. accentuation was then paid to the investigation of the dynamic relationships among service quality, customer value, customer satisfaction and their impacts on future practices after the key drivers of customer value and customer satisfaction were distinguished (wang, po lo, chi and yang, 2004). this review mixed the investigation of customer satisfaction and service quality with customer value which added more weight to the linkage between customer satisfaction and service quality because value is the thing that customers look in an offer. 5. conclusion the service quality is a drawn in evaluation that mirrors the customer’s perception of reliability, assurance, responsiveness, empathy and tangibility and substantial quality while satisfaction is more thorough and it is influenced by perspective of service quality, item quality and cost, moreover situational segments and individual factors. the service quality and customer satisfaction are connected from their definitions to their asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 26 © 2018 by the authors; licensee online academic press, usa relationships with different perspectives in business. this review mixed the investigation of customer satisfaction and service quality with customer value which added more weight to the linkage between customer satisfaction and service quality because value is the thing that customers look in an offer. customer satisfaction and service quality are basic considers business look into for customers, that analysed the relationship between service quality, value, satisfaction and behavioural goals in both public and private business parts. references abraham, p. & taylor, e. 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(2007). measurement of service quality from the customer's perspective – an empirical study. total quality management & business excellence, 18(4): 435-449. available at: 10.1080/14783360701231872. http://dx.doi.org/10.1016/s0022-4359(05)80006-5 http://dx.doi.org/10.1016/s0022-4359(00)00028-2 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 21-27 27 © 2018 by the authors; licensee online academic press, usa tirimba, o.m., richard, b.n., robert, m.b., thomas, o.o. & tom, o. k. (2013). service quality and customer satisfaction at kenya airways ltd. european journal of business and management, 5(22): 170-179. valarie, a.z.a.p. & leonard, l.b. (1990). delivering quality service: balancing customer perceptions and expectations. 1 edn., new york, usa: free press. valarie, a.z., mary, j.b. & dwayne, g. (2006). services marketing. 4th edn., mcgraw-hill; international ed edition. pp: 608. wang, y., po lo, h., chi, r. & yang, y. (2004). an integrated framework for customer value and customer‐relationship‐management performance: a customer‐based perspective from china. managing service quality: an international journal, 14(2/3): 169-182. available at: 10.1108/09604520410528590. zeithaml, v.a., berry, l. l. & parasuraman, a. (1993). the nature and determinants of customer expectations of service. journal of the academy of marketing science, 21(1): 1. available at: 10.1177/0092070393211001. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 1, pp. 1-9 2018 doi: 10.33094/journal.139.2018.11.1.9 © 2018 by the authors; licensee online academic press, usa 1 © 2018 by the authors; licensee online academic press, usa review of agriculture and rural development to poverty reduction in cambodia: swot analysis rathny suy1 --chakriya choun2 --leaksmy chhay3 1school of public affairs, university of science and technology of china, hefei, anhui, 230026, china. 2school of public administration, central south university, changsha, hunan, china. 3school of management, university of science and technology of china, hefei, anhui, 230026, china. abstract agriculture contributes immensely to the cambodian economy in various ways; namely, in the provision of food for the increasing population; supply of adequate raw materials to a growing industrial sector; a major source of employment; generation of foreign exchange earnings; and, provision of a market for the products of the industrial sector among others. this study aims to review the background of agricultural and rural development in cambodia to do action in poverty reduction in rural society. this study used a descriptive design to provide swot analysis based on secondary data such as kinds of literature, government reports, and ngos documents. keywords: agriculture, rural development, poverty reduction, swot, cambodia. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction cambodia is situated in southeast asia and is also a low-income country in the region. over two decades of war and conflict have left cambodia becomes one of the poorest countries in the world, with extensive damage to its physical, social and human capital. the government has made significant efforts to rehabilitate the nation, with development partners taking an active part in development in various sectors (farib, 2012). in cambodia, approximately 80% of the population is placed in rural areas, and 71% depend primarily on agriculture (largely rice) for their livelihoods (world bank, 2006). agriculture accounted for 32% of gdp in 2008 and employed 57% of the labour force in 2006 (ngin, 2011; ngo and chan, 2010). although the current economy is still contributed to significantly by industry (at 22% of gdp in 2008) and services (45% of gdp in 2007), given that 30% of the populace are living in poverty (in 2007) and most of them are farmers in rural areas, an improvement in agriculture would seem the most effective approach in accelerating poverty reduction in cambodia (ngof, 2007; rgc, 2006; world bank, 2006). agriculture has also been identified as a key to diversifying the sources of economic growth, with the potential to reduce poverty, if focused on smallholders (cdri-ids, 2006). if growth in agricultural productivity can be enhanced by between 3% and 4 %, the cambodian millennium development goal (mdg) on poverty targeted at 19.5% in 2015 could be achieved. cambodia’s economic performance over the past decade has been impressive, and poverty reduction in the country has made considerable progress. over the past 10 years, economic growth has averaged 9.7% per annum, while from 2004 to 2007, it averaged nearly 11.0%. at the same time, poverty has been reduced significantly (around 10 percentage points in a decade) and is still fall, from 35.0% in 2004 to 30.1% in 2007. despite the main sources of growth being in non-agricultural sectors, agriculture still remains a large sector of the economy, comprising 32.5% of gross domestic product (gdp) and absorbing 59.0% of the total labour https://www.doi.org/10.33094/journal.139.2018.11.1.9 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 2 © 2018 by the authors; licensee online academic press, usa force (adb, 2010). exports have increased from almost zero to 65.0% of gdp in 2007, slightly falling to 52.7% in 2008 due to the impact of the global financial crisis (adb, 2010). however, there is concern that this growth has not benefited from a large proportion of the population and that sustaining this rapid growth and reducing poverty will prove difficult. the policies required to sustain growth are different from those to initiate it, and experience from other countries shows that very few have managed to achieve sustained growth over the longer term (dani, 2007). while global economic history shows that the process of development usually entails a shift from agriculture to manufacturing and services, the consensus for cambodia is that in the short to medium term, poverty reduction will require growth in rural areas, most likely through sustained agricultural growth and the ability to capture value added from agro processing (dani, 2007). historically, agricultural diversification has been ineffective in cambodia, but agro-industrialization and foreign investment appears to be increasing. exports of raw agricultural products, such as cassava, maize, paddy, and soybeans to thailand and vietnam, are significant, although remain unrecorded. however, there are nascent signs of emerging rural enterprises in cambodia concentrating on agroindustry, with the establishment of private rubber and cashew plantations, cassava starch factories for biofuel, and a rudimentary animal feed industry sponsored by cp thailand. further, over 2010–2011, reports of significant agribusiness investment pledges surfaced from indonesia and kuwait to develop cambodia’s rice industry (i.e., close to $1 billion in planned investments in irrigation, contract farming, and modern rice mills), and there are also indications that private equity firms are standing by to invest over $600 million in agribusiness. in recent years have made the country somewhat less aid dependent, and increasing levels of domestic savings have further deepened the country’s ability to sustain its own growth. for instance, savings have gone from 2.3% of gdp in 1998 to 30.3% in 2008 (adb, 2010). despite these generally positive signs, however, there is justifiable concern about cambodia’s ability to seize the opportunities presented. a set of structural and institutional constraints to agricultural and rural development exists, which, unless addressed by appropriate interventions and policies will result in a slowing of economic growth and poverty reduction (adb, 2012). this review paper aims to study on agricultural and rural development in cambodia, and how to reduce poverty in rural areas. this study also provides swot analysis based on secondary data. 2. literature review 2.1. the concept of agriculture and rural development concept of agriculture and rural development has been conceived as a response to the increasing external pressure on rural communities. therefore, it is necessary to redefine identities, strategies, practices, and networks within the territory to overcome the current model of the organization by single commodity chains and sectors and redefine the territory as a competitive production unit based on economies of scope. agricultural development, a subset of economic development, implies a sustained increase in the level of production and productivity over a reasonable length of time and the subsequently improved wellbeing of farmers as reflected in their higher per capita income and standard of living. macrae, hill, henning and bentley (1990) defined that the sustainable agriculture is at the same time a philosophy and a system of farming. it is rooted in a set of values that reflect an awareness of both ecological and social realities and a commitment to responding appropriately to that awareness. it emphasizes design and management procedures that work with natural processes to conserve all resources and minimize waste and environmental damage, while maintaining and improving farm profitability (macrae, hill, henning and bentley, 1990). the meaning of rural development has been the subject of much debate and little agreement. the definition of rural development has evolved through time as a result of changes in the perceived mechanisms or goals of development. the rural development as a process whereby concerted efforts are made in order to facilitate the significant increase in rural resources productivity with the central objective of enhancing rural income and creating employment opportunity in rural communities for rural dwellers to remain in the area (olayide, 1981). according to ploeg et al., (2000) explained that rural development is reconstructing the eroded economic base of both the rural economy and the farm enterprise, and represents the well -understood self-interest of increasing sections of the rural population (ploeg et al., 2000). rural development can be distinguished from agricultural development which it entails and transcends. efforts by such governments to pump money into agricultural development did not yield the meaningful change desired hence, efforts should be made to include provision of modern infrastructure, primary health care, food and shelter, employment opportunities, recreational facilities, affordable and compulsory primary and secondary education, loans and other incentives, to be part of rural development for the benefits of rural dwellers (olayiwola and adeleye, 2005). from the foregoing, it is obvious that rural development is not a oneoff thing or an immediate and snap phenomenon. asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 3 © 2018 by the authors; licensee online academic press, usa 2.2. agriculture and rural development in cambodia: an overview cambodia has great potential for agricultural development. in this regard, and faced by a number of extremely difficult challenges, government and development partners have made great efforts in relation to formulating and implementing policy and programming to accelerate development in the sector. this section presents an overview of the progress in agricultural development, the evolution of ard policy, and the institutional arrangements for coordinating the task in the sector. cambodia is a post-conflict country, and still emerging from two decades of war and civil strife (1970s and 1980s) and a decade of internal conflict and unstable politics (1990s). first, the country transformed from a centrally planned to an open market economy in 1989, which resulted in major changes, such as the official recognition of private land ownership and the liberalization of trade, industry and transportation. second, free market economy policy was officially adopted in 1993, simultaneous to the establishment of the royal government of cambodia’s first mandate . the cambodian economy has rapidly developed, with an average growth rate of over 9% in the last decade see figure 1. the highest growth rate of 13.3% was in 2005 and was thanks to strong growth in garments, tourism and construction, and agriculture due to the blessing weather in the year (hang, 2010). in 2007, the economy continued to rise at 10.2% even during the critical period of the global economy. notwithstanding, the gdp growth was contracted to 6.7% in 2008 due to the inflationary pressure from high oil and commodity prices (imf, 2009; tong and hem, 2010) and to 0.1% in 2009 because of impacts from the world economic crisis. cambodia is gradually recovering from the global economic crisis and the growth rate in 2010 was forecast at 5.5%. figure-1. gdp growth, 1994-2010. source: hang (2010); ngin (2011). the recovery is chiefly owing to the re-emerging growth in industry (at 5.7% in 2010) and services (at 2.4% in 2010) sectors, while agriculture grew at 2.3% in 2010, a downturn from 5.7% and 5.6% in 2008 and 2009 respectively see table 1. growth in garment exports (over 21% in the first nine months of 2010 and estimated 15% in 2011) significantly attributes to the spur in the industrial sector (hang, 2010). this pattern of economic growth highlights the central proportions of industry and services sectors in the gdp increase in relation to agriculture sector’s in the last decade see figure 2. table-1. macroeconomic indicators: 2008-2010. 2008 2009 2010 gdp (nominal, $ million) gdp (per capita, in $) gdp (growth rate) agriculture industry service 10,337 738 6.7% 5.7% 4.0% 9.0% 10,391 731 0.1% 5.6% -2.5% 4.6% 11,304 783 5.5% 2.3% 5.7% 2.4% budget revenue (% gdp) budget expenditure (% gdp) overall deficit (% gdp) 13.3% 15.9% -2.9% 11.8% 20.4% -6.4% 12.5% 18.4% -5.9% inflation (average) 19.7% -0.6% 4% gross foreign reserves ($ million) 2,164 2,367 2,500 source: hang (2010); ngin (2011). asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 4 © 2018 by the authors; licensee online academic press, usa figure-2. gdp share by sector, 1993–2007. source: nis (2008); tong and hem (2010). the economic growth needs to be reflected in the employment of the labour force. as reported in table 2, cambodia is predominantly agrarian. in 1995, 81% of the labour force was involved in agriculture. nonetheless, the percentage of employment in agriculture shrank to 57% in 2006 due to the mushrooming of garments industry since the early 1990s. conversely, manufacturing and construction employed merely 3% of the labour force in 1995, but it rose to 14% in 2006 (ngin, 2011). likewise, the services sector has absorbed more labour force, surging from 16% in 1995 to 28% in 2006. this trend of labour force signifies that despite the dominance of agriculture its contribution to gdp is increasingly minimal; down from 46% in 1993 to 27% in 2007 see figure 2. table-2. cambodian employments by sector, 1995–2006 (percentage). year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 agriculture 81 78 79 77 76 74 70 67 64 60 59 57 industry 3 5 5 9 6 8 10 11 12 13 13 14 service 16 17 16 14 17 18 20 21 24 27 27 28 source: imf (2009); tong and hem (2010). 3. method this study used a descriptive design, by exploring some of the secondary data such as literature review, government report, and ngos report that discusses about evaluate the swot analysis of agriculture and rural development in cambodia. 4. discussion agricultural development, a subset of economic development, implies a sustained increase in the level of production and productivity over a reasonable length of time and the subsequently improved wellbeing of farmers as reflected in their higher per capita income and standard of living. sustainable national development through agricultural and rural development is generally concerned with the need for agricultural and rural development practices to be economically viable, their adaptability and flexibility over time to respond to the demands for food and fibre (both high and low). because agriculture is affected by changes in market and resource decision in other sectors and regions, it is important that these changes do not provide a rationale for depleting the agricultural and rural resource base locally (oni, 2008). this section discusses about swot of agriculture and rural development in cambodia based on secondary data, so in figure 3 showed about swot analysis was used to evaluate the strengths, weaknesses, opportunities, and threats involved in any venture. asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 5 © 2018 by the authors; licensee online academic press, usa figure-3. swot of agriculture and rural development in cambodia. note: this figure was created by authors based on secondary data. 4.1. strengths agriculture sector is still contributing 37% to the gdp and employed about 67% of the workforce. the country has achieved agricultural production increased by 4.3% with a paddy harvest at record levels (about 9.3 million tons). the country’s agricultural resources consist primarily of 3.7 million hectares of cultivated land, of which 75% is devoted to rice (fapda, 2014). in 2013, cambodia exported a record level of 1.2 million tons of rice, accounting for more than 3% of the worldwide total rice exports. cambodia’s economic performance over the past decade has been admirable, economic growth has averaged 9.7% per annum, while from 2004 to 2007, it averaged nearly 11.0% (adb, 2012). the fallout of the global financial crisis pushed gdp growth to almost zero in 2009 for the first time, but forecasts are for a return to higher positive growth in 2010–2011. at the same time, poverty has fallen (around 10 percentage points in a decade), going from 35.0% in 2004 to 30.1% in 2007. as a resul t of such economic development, income per capita increased from $250 in 1998 to $795 in 2008 (adb, 2012). cambodia has just re-entered the world market as a rice exporting nation, following a 30-year hiatus caused by war, political isolation, and a decimated agricultural sector. given the country’s recent success in achieving surplus rice production, the cambodian government is bent on expanding its production and export capacity and becoming a major rice export nation (usda, 2010). public statements by government ministers in the last year indicate that cambodia wants to double rough rice production by 2015 to approximately 15.0 million tons (9.45 million milled basis) and export 8.0 million (5.0 million tons milled rice) (usda, 2013). analysts from the usda foreign agricultural service (fas), the economic research service, and the u.s. embassy in phnom penh investigated rice production prospects in cambodia and the outlook for continued growth in the sector during recent travel in the country. it is generally believed that rice has been continuously cultivated in asia for over 10,000 years, having been first domesticated in eastern india and the lowland plains of southeast asia. in cambodia today, rice is the overwhelmingly predominant food crop, is grown on an estimated 2.3 million hectares or nearly 85% of the country’s total cultivated area. the lowland plain itself surrounds a very large wetland area, and includes cambodia’s largest inland water body, tonle sap lake or “great lake” (usda, 2010). the cambodian government recognizes that its goal of joining the ranks of the world’s major rice export nations will require the considerable additional development of its irrigation infrastructure in the heavily populated south eastern mekong river floodplain and in the lowlands surrounding tonle sap, cambodia’s asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 6 © 2018 by the authors; licensee online academic press, usa “great lake”. the ministry of water resources and meteorology (mowram) has reported that they successfully brought approximately 650,000 hectares of rice area under irrigation between 1996 and 2007, and have plans and finance sufficient to irrigate an additional 800,000 hectares over the next decade. in total, mowram acknowledged that it had received commitments totalling the us $1.1 billion for irrigation infrastructure development, with the additional us $850 million pledged in october 2009 from the chinese government for the construction of dams (hydro), irrigation, roads, and port upgrades (usda, 2010). 4.2. weaknesses in this section, the weaknesses have five main areas based on the framework of hausmann, rodrik, and velasco (2005) to set of critical and binding constraints to poverty reduction, improved productivity in the rural sector, and improved private and public engagement in increasing value added see figure 4. basically, these critical constraints include: 1) low levels of technology adoption and human capital required to utilize such technology; 2) poor infrastructure (e.g., rural roads; irrigation; and post -harvest storage and handling, processing, transport, and logistics); 3) microeconomic risks to appropriation of returns (e.g., property rights, corruption, and the business-enabling environment related to taxation and fees); 4) difficulties in coordinating markets and marketing through formalized mechanisms of exchange; and 5) difficulties in accessing finance for agricultural investments, including the high cost of finance relative to the economic returns to investment in agriculture and agro-industry. figure-4. growth diagnostics for cambodia, binding constraints, and interlinks. source: adb. (2012) based on hausmann, rodrik, and velasco (2005). many of these critical constraints are related. unequal access to opportunities manifests itself in fewer educational opportunities for the poor and reduced health outcomes, which in turn are re lated to human capital constraints. the uneven playing field for the poor relative to the rich manifests in unequal access to infrastructure, productive assets such as land and credit, and policy outcomes that discriminate against the poor. the potential for agriculture as a driver for rural economic growth lies not so much in specific products or processes but in overall increases in efficiency arising from the removal of subsector-wide constraints. while it is important to address these constraints, this review points out that once land tenure, human capital, infrastructure, market access, and access to credit have been achieved, movement of smallholder farmers along the commercialization path to improved household incomes will occur only after the enabling environment of value chains have been addressed (adb, 2012). however, it is clear that there are a few specific areas in which considerable benefits could be realized. actions are needed to promote the use of modern technology in production and post -harvest storage processes; expand investment in agricultural research and development; strengthen rural infrastructure, particularly roads and irrigation drainage systems; develop markets and institutions; improve financially intermediation; and improve access to health and education services (adb, 2012). asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 7 © 2018 by the authors; licensee online academic press, usa 4.3. threats land degradation: according to the unccd and wocat, takes many forms. the main forms in cambodia are soil degradation, and deforestation, and consequent loss of biodiversity. the fao study, cambodia had the second lowest level of degradation (at 43%). however, this still involved about 7.7 million ha of land areas (fao, 2014, 2016). environmental conditions and disasters: cambodia experienced extensive rainfall during the early wet season of 2013, which enabled timely planting of the wet season rice crop. however, heavy rain in september upstream of the mekong basin and in cambodia caused flash floods and river flooding; affecting 20 provinces see figure 5. flooding has caused 168 death, affected 377,354 households and 139,000 hectares of wet season rice cultivated areas (of which 5,700 hectares were destroyed), as well as other infrastructures (baran, schwartz and kura, 2009; kim and chem, 2014). figure-5. rice cultivated areas affected by floods. source: ministry of agriculture, forestry and fisheries, cambodia. climate change: climate change is also another important threat hanging like a domicile`s word over cambodian agriculture. the average temperature in cambodia has been increasing since 1960 by 0.8°c, and with it, the frequency of unusually hot days and nights has increased as well. further 0.3 -0.6°c increases are expected by 2025. alternative estimates put the expected warming at 0.7 -2.7°c of the 2060s. temperature increases will be more severe from december to june. all climate change models agree that rainfall in cambodia will increase, but the magnitude of change is uncertain (baran et al., 2009; kim and chem, 2014). 4.4. opportunities rising global and regional demand for food will continue to provide markets for increased cambodian exports, which will be facilitated by the continuation of market-oriented agricultural and trade policies (fao, 2014). public investments will help continue to reduce the costs of doing business and attract private investments to create jobs. some drivers underpinning future agricultural growth in cambodia will be identical to those of the past. for example, gdp growth will increase domestic demand for more diverse food and encourage further outmigration of labor from agriculture (kem, chhim, theng and so, 2011). depending on the world bank (2013), cambodia’s gdp will continue to expand rapidly up to 2030, though at a slower pace (slightly over 7%) than over 2000-2010 (8.2%). gdp is expected to grow in real terms from its present value of $13 billion to $23 billion by 2020, and to nearly quadruple to $50 billion by 2030 population growth expected to decline from 1.4% to 1.1% over this projection period, real gdp per capita would increase from $957 in 2012 to $2,733 by 2030 (kean, 2012). rising asean and global demand for food will offer market outlets for cambodian exporters, but penetrating foreign markets will be more challenging. the further increase in cross-border trade will require cambodia to have an adequate capacity and network of agreements in place with major trading partners (especially china) for food safety and quality standards, double tax agreements, transit, and harmonized trade and commerce legislation (e.g., anti-dumping, labelling, trademark protection). adequate physical and institutional infrastructure is needed to achieve such competitiveness, including more stable and cheaper asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 8 © 2018 by the authors; licensee online academic press, usa access to energy, improved transportation network and logistics systems, highly effective information and communication systems, and financial institutions to support trade and investment (hang, 2010). national strategic development plan, it is the royal government`s overall goal that is “poverty reduction and economic growth through enhancement of agriculture sector development”. this strategic plan always update the goal every five years to ensure food security, increase incomes, create employment and improve nutrition status for all people in local and global by productivity and diversification, and commercialization of agriculture with environmentally sound protection and food security (kem et al., 2011). 5. concluding remarks the cambodian government has over the years formulated good agricultural but such policies have been found inefficient and ineffective since the intended results were not realized because the weaknesses of ard have much than strengths. to reach the millennium goals of cutting hunger and poverty, agricultural growth must be handed over on top of the development agenda. in the future, the weaknesses and threats will be abolished. the best way that in order to facilitate rural development, the government should adopt an integrated rural development approach this is a multidimensional strategy for enhancing the quality of lif e of rural people. it is based on the assumption that the socio-economic fragment of the traditional rural system is obsolete, so integrated rural development strategies should be designed to change this framework and promote structural changes. the rural people should be deeply involved. there is needed for training and retraining of the rural people to enhance the dissemination of new skills and ideas on the establishment, management and skills of small-scale industries. 6. acknowledgments the authors would like to thank the anonymous reviewers and the academic editor of this journal for the invaluable comments and suggestions which have substantially improved the manuscript. references adb, (2010). agriculture and rural development sector in cambodia. metro manila, philippines: asian development bank. pp: 2. adb, (2012). rural development for cambodia: key issues and constraints. metro manila, philippines asian development bank. pp: 127. baran, e., schwartz, n. & kura, y. (2009). climate change and fisheries: vulnerability and adaptation in cambodia reducing poverty and hunger by improving fisheries and aquaculture. penang, malaysia: the worldfish center. pp: 8. cdri-ids, (2006). roundtable discussion on cambodian development issues. phnom penh: cambodia development resource institute and institute of development studies. dani, r. (2007). one economics, many recipes: globalization, institutions, and economic growth new jersey: princeton university press. fao, (2014). food and agriculture policy trends country fact sheet. phnom penh, cambodia: food and agriculture organization fao, (2016). cambodia: economy, agriculture and food security. phnom penh, cambodia: food and agriculture organization. fapda, (2014). socio-economic context and role of agriculture country fact sheet on food and agriculture policy trends. phnom penh, cambodia: food and agriculture policy decision analysis. pp: 6. farib, s. (2012). cambodia report: news and views on cambodia. available from: http://www.apri.ac.nz/camnews_jun-02.html. hang, c. n. (2010). the cambodian economy and development: review and analysis: presentation at the annual general meeting of the cambodian economic association. imf, (2009). cambodia: statistical appendix. washington, d.c.: international monetary fund. kean, s. (2012). the rice situation in cambodia. phnom penh, cambodia: department of horticulture and subsidiary crops under the general directorate of agriculture, ministry of agriculture, forestry, and fisheries. pp: 41 kem, s., chhim, c., theng, v. & so, s. (2011). policy options for vulnerable groups: income growth and social protection. phnom penh, cambodia: cambodia’s leading independent development policy research institute (cdri). pp: 80. kim, s. & chem, p. (2014). climate change vulnerability and adaption assessment methods and tools applied in cambodia. phnom penh, cambodia: cambodia’s leading independent development policy research institute (cdri). pp: 6. macrae, r. j., hill, s. b., henning, j. c. & bentley, a. j. (1990). policies, programs, and regulations to support the transition to sustainable agriculture in canada. american journal of alternative agriculture, 5(2) : 76-92. available at: 10.1017/s0889189300003325. ngin, c. (2011). economic growth, agriculture and poverty reduction in cambodia. paper presented at the third annual conference of the academic network for development in asia (anda): the http://www.apri.ac.nz/camnews_jun-02.html asian themes in social sciences research 2018, vol. 1, no. 1, pp. 1-9 9 © 2018 by the authors; licensee online academic press, usa international seminar on skills development for the emerging new dynamism in asian developing countries under globalization, the graduate school of international development, nagoya university, japan. ngo, s. & chan, s. (2010). does large-scale agricultural investment benefit the poor?. phnom penh: cambodian economic association. pp: 55. ngof, (2007). ngo position papers on cambodia’s development in 2006. phnom penh: ngo forum on cambodia. olayide, s. o. (1981). elements of rural economics. [ibadan]: ibadan university press pub. house. olayiwola, l. m. & adeleye, o. a. (2005). rural development and agro-industrial promotion in nigeria: concepts strategies and challenges. journal of social sciences, 11(1): 57-61 available at: 10.1080/09718923.2005.11892499 oni, k. c. (2008). agro-industrialization for national food security: issues, constraints and strategies. paper presented at the the 32nd annual conference and general meeting of nifst, lautech. ploeg, j. d. v. d., renting, h., brunori, g., knickel, k., mannion, j., marsden, t. and ventura, f. (2000). rural development: from practices and policies towards theory. sociologia ruralis, 40(4): 391–408. rgc, (2006). national strategic development plan 2006-2010. phnom penh: royal government of cambodia. pp: 60. tong, k. & hem, s. (2010). chinese investment in cambodia. in annual development review 2009-10. phnom penh: cambodia development resource institute. usda, (2010). cambodia: future growth rate of rice production uncertain a commodity intelligence report: united states department of agriculture. pp: 10. usda, (2013). cambodia: seasonal flooding impacts wet season rice production in 2013 a commodity intelligence report: united states department of agriculture. pp: 3. world bank, (2006). cambodia: halving poverty by 2015?. phnom penh: the world bank office, cambodia, 4: 4. asian themes in social sciences research issn: 2578-5516 vol. 2, no. 1, pp. 16-22 2018 doi: 10.33094/journal.139.2018.21.16.22 © 2018 by the authors; licensee online academic press, usa 16 © 2018 by the authors; licensee online academic press, usa human capital is a competitive advantage of businesses: analysis of automobile firms of pakistan muhammad mujtaba1* --sadaf jamal2 --jawaid ahmed qureshi3 --yaseen shaikh4 1,2,3department of management sciences, szabist, karachi, pakistan. 4ms-project management, muistd, muet, jamshoro, pakisatan. abstract the purpose of conducting this research is to examine the significance of human capital (hc) in automobile sector of pakistan because leading automobile firms of the world have claimed that hc has major role beyond their success. this is quantitative research which is based on philosophy of positivism. the primary data of this study was collected from management and crucial employees of main light transport vehicle automobile firms of pakistan. result of this research indicates that there is strong impact of human capital on firm performance; it performs the function of oxygen in hard-hitting competition where every firm is busy to take a lead in open market. this study is very constructive not only for the automobile industry but this work will also create awareness and need of hc in all manufacturing firms of pakistan in the scenario of globalization. keywords: human capital (hc), competitive advantage, automobi le licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction human capital (hc) is ultimate weapon of business firms’ globalization where everyone is busy to launch innovative product to take lead in competition. hc is only resource of f irm who conceptualized creative ideas to develop innovative products by using their knowledge, skills and experience; it gives edge to business firm against its competitors (wang, shieh and wang, 2008). the worldwide fast growing competition and economic integration have increased the concentration of organizations on the development of hc (butt and katuse, 2017). think creatively, diagnose problem and establish novel solution of customer needs indicate the uniqueness of human capital; it performs the role of oxygen for firm in competition (aryee et.al, 2016). hc is not only one time solution of firm performance but it is long tenure competitive advantage if firm continue to invest on the hc development and keep its moral high through motivation (liang and gang, 2017). according to liu et.al, (2017) the china is one of the emerging economy of the world and the chinese firms are competitive almost in every field of business due to innovation and reduction in price of product and it happened due to hc. the race of competition, where frequent changes are required to meet the customer needs, the talent war has taken the place among revivals, where primarily focus of firms management is to align functions of human resource department with continuously developing the human capital for favourable long term position of firm against its competitors, therefore, in the light of global competition, the critical strategy behind the firm performance is “one companyone way to successconsistently valuing people”, like any fine gardener recognizes, to encourage healthy growth, beside to fertilizing as well as watering, he also has to prune and weed, however, in many companies, human resources professionals spend https://www.doi.org/10.33094/journal.139.2018.21.16.22 asian themes in social sciences research 2018, vol. 2, no. 1, pp. 16-22 17 © 2018 by the authors; licensee online academic press, usa large efforts on planting, watering and occasionally fertilizing it, but particularly no one is cutting away deadwood or development inhibiting underbrush (bartlett, christopher and ghoshal, 2002). according to morris, et, al, (2017) due to globalization, the firms need to understand and address the functions of human resources management at micro level to develop the their human capital. whereas, firms needs to invest on employees to develop their knowledge and keep them motivated so that they can show their full commitment and loyalty with firm through generate new ideas, and identify the hurdles and solution-in progress of firm (aleo and sergi, 2017). lee and mah (2017) argued that economic incorporation at worldwide has carried broad change in the industry of automobile to deliver more comfortable, cost -effective or high quality automobiles to its customers at national level as well as catch the attention of other markets customers at regional level to raise the profitability, there is example of korea, taiwan, china and indonesia. pakistan automobile industry has great potential to perform import role in development of country as same industry is performing remarkably in east asia countries, the finance-ministry (2017) has explained in its economic survey report (20162017), that the pakistan automobile industry can contribute major role in the gdp of country because presently, it is one of the fast growing and having reasonable contribution in the gdp of pakistan, but there is great potential in this industry to improve the production to attract local as well as foreign (i.e. south asian countries) customers through improvement of firms performance with help of hc; in this connection the government of pakistan has given tariff incentives in new auto policy to attract new investments in this industry, now its depend upon the automobile firms to improve their performance bring innovate and maintain the quality of vehicles to attract local and foreign customers to avoid import of vehicles. production-ministry (2017) has explained in its industries and production report (20162017), that it is great need of time that automobile firms of pakistan must deliver the innovative and quality of products to decrease the import of vehicles. hc has shown great potential to maintain firm performance for extensive time and considered as ultimate economic resource of firm (tripathy, alana and sahoo, 2017). there is dearth of academic research in automobile industry of pakistan, especially in the context of hc importance in firm performance to attract local and foreign customers, this is age of competition where firms must focus on the mind of customers and produce only those products which provide something new which must catch the attention of the customers (butt and katuse, 2017). this is quantitative research which is based on philosophy of positivism. the primary data of this study was collected from management and crucial employees of major light transport vehicle automobile firms of pakistan (i.e. indus motors, pak suzuki co. and atlas honda motorbikes) 2. literature review 2.1. human capital according to vidotto et. al, (2017) the human capital is the type of intellectual capital, which is combination of unique knowledge and motivational characteristics such as education and skills, thoughts and association which formed into the mind as well as in the actions of person. hc consists to those employees who equipped with distinctive knowledge, expertise and capability to change the situation of market in the favour of their employer (lin, et. al, 2017). aryee et.al, (2016) they argued that the success behind the renowned manufacturing corporations (like apple, honda, toyota, ibm or sony) is based on the philosophy of gathering best talent (hc) to remain dominate on market. choices of “make” or “buy” available to business firms make their hc pool (quinn, 2005). morris, et. al, (2016) there is need to understand the importance of hc in context of firm survival in competition, which is rapidly changing. whenever top management invest additional resources on potential employees, their worth will automatically increase in terms of unique talent, and that uniqueness performs important role in competition (lin, et. al, 2017). business firms are functioning in competitive environment dynamic and complex, and this environment has much focused on the significance on hchigh potential, knowledge, skills, innovative, who helps in development of organizational strategy and having capability to develop routes for the implementation of strategy and having the potential to execute the strategy towards improve the firm performance (partouvakis and karakasnaki, 2017). tripathy, alana and sahoo (2017) broadly, they called hc as complete package or force of combined knowledge of different fields which has established to move the firm effectively on zigzag track of competition towards destination. in sequel perusal of different literature work in domain, the concept of hc is consists of two dimensions such as knowledge and motivation, the knowledge dimension is embedded in employee, whenever employ ees leave the organization it will go with him; whereas motivational dimension is attached with position when employee leave the organization it will be automatically detached from him. 2.2. knowledge knowledge is vast term, which create relationship between knower and known, here knower is subject (i.e. individual) whereas known is object (i.e. anything). in context of hc, it focused only on scare knowledge (i.e. intellectual and critical thinking, technical knowhow, having ability to identify the customer needs, cultural barriers, market trends), and this knowledge embedded in employees through relevant domain education, skills, experience and professional networks (morris, snell and bjorkman, 2016). education and skills are essential obligation of hc, which comes through educational institutions, long and short terms trainings, and asian themes in social sciences research 2018, vol. 2, no. 1, pp. 16-22 18 © 2018 by the authors; licensee online academic press, usa by doing the repetition of action, it is not fixed at particular point, it is continuous process and based on innovation of technology or paradigm in the market, which compel to organization to invest and train their potential employees in new technology or pattern to take lead in competition (bartlett, christopher and ghoshal, 2002). experience is also important because it provides practical understanding and implication of knowledge, as the experience increase, it strengthen the knowledge, it is a lived or on job experience which enable the employee to encounter different problems and resolve them with best market practices in real scenario, and leaning of employee will increase as many as individual face the challenges and resolves them with best practices (quinn, 2005). the professional network is one of the key component to explore new ideas and business, it is combination of professionals who hold and share diverse knowledge with each other not only within organization but also outside of the organization because the external network also performs indispensable role into corporation’s capability to explore new ideas and new production, and failure to discover latest ideas as well as knowledge can lead towards poor performance (rogan and mors, 2017) 2.3. motivation “can do” and “will do” are two different conceptual dimensions of hc, “can do” is the capacity of employee to perform the work and it represent the knowledge, whereas “will do” is the willingness of employee to perform the work and it represent the motivational dimension, both dimensions interdependent on each other to explore new idea to understand the customers’ need and become the competitive advantage of firm’s performance (aryee, et, al, 2016). there is need of motivational factor which energize the employee to use his knowledge and go some extra miles than other employees, generate some new ideas and perform central role in the operations of organization, actually the motivational factor boost the speed, constant selfrenewal and flexibility (bartlett, christopher and ghoshal, 2002). the firms need those employees who have knowledge, they retain them longer period of time by keeping them motivate all the time (liang and gong, 2017). compensation and benefits is one of important motivational element which financially bound to employee to stay in firm, in fact, the agreement on compensation and benefits between employer and employee is mutual investment, if employer invest more than the expectations from employee must be high whereas if employer invest less than expectations must be less from employee, in less expectation case the employee will just performed his duties as per job description, he will not go extra mile to explore new ideas, (aryee, et. al, 2016). barrachina, cabrales and cabrera (2017) they described that, in the process of developing hc the organization firstly, select the high potential employees from available human resources, secondly, the organization spend sufficient amount on their development through different trainings, thirdly, once they complete their trainings, then the organization increase their responsibilities (i.e. job enrichment) along with promotions and sufficient increase in their compensation and benefits. make choice of career focused and energetic employees who accept the challenges and wanted to do more, then set up team of experts who help and coach to these rising star of firm (davis, 2017). aryee, et. al, (2016) they defined that innovative behaviour of employee is based on seeds of empowerment and conducive environment, which give individual free hand to utilizing firm’s resources and peace of mind to do brainstorming at every time to explore the customer need. organizations whose aim is innovation, they expect high commitment from potential employees by providing them learning environment to develop new ideas (barrachina, cabrales and cabrera, 2017). according to davis, (2017), this is era of talent war, where established organizations have focused to maximize hc by creating dynamic work climate, broadly, it has reduced the bureaucracy and increase decentralized structure (i.e. team work) so that decisions can be taken at the spot and avoids unnecessary procedures. 2.4. competitive advantage before1980s the tangible assets were considered the competitive advantage and more focus was given to production to meet demand, but is the era of globalizationwhere every firm is compelled to bring innovative product in market to leads in market, and the innovation is outcome of mind of human who bring new ideas on basis of his knowledge (lepak and snell, 1999). barrachina, cabrales and cabrera (2017) they argued that innovation is based mainly on two important phases (i.e. generation phase and adoption phase), generation phase includes acknowledgment of opportunity, do research, design, development, marketing as well as distribution, whereas adoption phase is based on two processes (i.e. initiation process and implementation process), initiation process includes all actions that attached to identify the need, such as aware of a likely or potential innovation, assessing its appropriateness, make judgment and decide to take up (adopt) the innovation, while implementation focus to take all actions that relates to innovation. the conceptual framework of this is study is prepared according nature and objectives of research. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 16-22 19 © 2018 by the authors; licensee online academic press, usa figure-1. conceptual framework. source: self developed and it is equated like. firm performance = f (knowledge (capability) x motivation) 3. methodology this is quantitative and cross sectional research study which is based on philosophy of positivism. the primary data of this study was collected from management and crucial employees of major light transport vehicle automobile firms of pakistan (i.e. indus motors, pak suzuki co. and atlas honda motorbikes). population of this research work is consist of management and crucial employees, who were working in three well known automobile firms of pakistan and deals with light transport vehicles such as atlas honda, pak suzuki and indus motors. the sample size of this was study 201 and convincing sampling method was used to collect data. firstly, a close ended questionnaire was designed and refined after discussions with domain experts to confirm the validity of contents and context. once the validity of questionnaire was finalized then a pilot test was conducted from 30 respondents to check the reliability before starting comprehensive survey. the reliability result of pilot test was .78 which indicated that the reliability of research work for further process to conduct survey. 4. data analysis and discussion 4.1. reliability primary data was collected from 201 respondents through comprehensive survey. firstly, the reliability analysis was done by using spss. results of same are exhibited at table 1 which indicated that overall reliability (chronback’s alpha) is 0.926>.07 whereas are individuals variables reliability are ranging from 0.706 to 0.850>.07. it depicts that the scale used for this research is satisfactorily reliable for testing hypotheses. table-1. reliability. variable no. of items chronbach’s alpha value overall reliability 30 .926 formal education and skills (fes) 3 .706 experience (ex) 3 .765 professional network (pn) 3 .776 compensation and benefits (cb) 3 .748 career enhancement (ce) 3 .723 empowerment and conducive environment (ece) 3 .737 competitive advantage (ca) 6 .843 firm performance (fp) 6 .850 *reliability is good at 0.7>. 4.2. correlation analysis correlation test was applied to examine the relationship among variables the correlation, all results of test are exhibiting significant value of .000 as shown at table 2. it depicts that there is sufficient relationship among all variables. the strong correlation in context of independent variables and dependent variable is identified between compensation and benefits and firm performance with pearson value of .640 with significance level at .000, whereas the competitive advantage as mediating variable has strongest relation with firm performance, the correlation value of this relation is identified with value of. 721 as pearson correlation and it is significant at .000. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 16-22 20 © 2018 by the authors; licensee online academic press, usa table-2. correlations. fes ex pn cb ce ece ca firm performance pearson correlation .584** .597** .597** .640** .611** .619** .721** sig.(2-tailed) .000 .000 .000 .000 .000 .000 .000 n 201 201 201 201 201 201 201 **.correlation is significant at the 0.01 level (2 -tailed). 4.3. regression analysis according to nature of research, the conceptual framework was divided into two models for the purpose of regression analysis to get accurate results such as model-1: to check the impact of independent variables on mediating variable and model-ii: to check the impact of mediating variable on dependent variable. firstly, the regression analysis was applied to on model-1 to check the impact of independent variables on mediating variable. results are indicating at table 4 that coefficient is f= 44.955 with significant value of .000b, it shows that overall impact of model is significant. whereas table no.3 indicating that r=.763 this shows that independent variables are impacting on mediating variable, this shows that 76.3% variance in mediating variable because of independent variables. table-3. model summary. model r r square adjusted r square std error of the estimate 1 .763a .582 .569 .575 a. predictors:(constant),fes,ex,pn,cb,ce,ece. table-4. anova a. model sum of squares df mean square f sig. regression 89.073 6 14.845 44.955 .000b 1 residual 64.065 194 .330 total 153.138 200 a. dependent variable: competitive advantage (ca). b. predictors:(constant), fes,ex,pn,cb,ce,ece. table-5. coefficients a. model unstandardized coefficients standardized coefficients t sig. b std. error beta 1 (constant) .399 .126 3.164 .002 formal education and skills (fes) .145 .061 .163 2.376 .018 experience (ex) .074 .064 .083 1.159 .248 professional network (pn) .006 .063 .006 .090 .929 compensation and benefits (cb) .067 .071 .074 .936 .350 career enhancement (ce) .224 .067 .242 3.356 .001 empowermentand ce(ece) .311 .063 .343 4.917 .000 a. dependent variable: competitive advantage. further, table 5 results are indicating significant value of three independent variables such as formal education and skills= beta is .163 and significance is .018, career enhancement= beta is .242 and significance is .001, and empowerment and conducive environment= beta is .343 and significance is .000. it means the raise of 1 in empowerment and conducive environment then competitive advantage will increase by 34.3%, and same is other two significant variables. whereas remaining three independent variables results are insignificant. secondly, the regression analysis was again applied on model-ii to check the impact of mediating variable on dependent variable. results are indicating at table 7 that coefficient is f= 215.929 with significant value of .000b, it shows that overall impact of model-ii if significant. whereas at table no.6 the r=.721 this shows that mediating variable is impacting on dependent variable, this shows that 72.1% variance in dependent variable because of mediating variable. table-6. model summary. model r r square adjusted r square std error of the estimate 1 .721a .520 .518 .628 b. predictors:(constant),competitive advantage. asian themes in social sciences research 2018, vol. 2, no. 1, pp. 16-22 21 © 2018 by the authors; licensee online academic press, usa table-7. anova a. model sum of squares df mean square f sig. regression 85.120 1 85.120 215.929 .000b 1 residual 78.447 199 .394 total 163.567 200 c. dependent variable: firm performance. d. predictors:(constant), competitive advantage. table-8. coefficients a. model unstandardized coefficients standardized coefficients t sig. b std. error beta (constant) .605 .126 4.789 .000 1 perceived performance .746 .051 .721 14.695 .000 a. dependent variable: firm performance. further results are indicating at table 8 that the significant value of mediating variable i.e. beta is .721 and significance is .000, it means the raise of 1 in competitive advantage then firm performance will increase by 72.1%. 4.4. sobel test for further cross check the regression analysis results, the sobel test was applied to reconfirm the results and check the effect of independent variables on dependent variable through mediating variable. results of sobel test are exhibited at table 9. table-9. sobel results. variable sobel test statistic two-tailed probability sig. formal education and skills 2.34627065 0.01896233* experience 1.15265451 0.24905222 professional network 0.09523608 0.92412732 compensation and benefits 0.94170435 0.34634403 career enhancement 3.25923492 0.00111713* conducive environment 4.67732803 0.00000291* *significant. sobel test results are indicating that there is significant impact of formal education and skills, career enhancement and conducive environment (independent variable) on firm performance (dependent variable) through competitive advantage (mediating variable).whereas there is no significant impact of experience, professional network and compensation and benefits on firm performance through competitive advantage. the overall regression analysis depicted that human capital has strong impact on firm performance, it is performing major role in competition which exist among automobile sector. education and skills, career enhancement and empowerment and conducive environment are important factors of human capital, which make employees capable and motivate them to go extra miles and perform major role for their firms in competition. 5. conclusion this research study illustrates that hc has major role in completion, it develop creative thinking and resolve the problems of automobile firms to lead in globalization. hc consists of those employees who acquired distinguish knowledge and have motivation to think beyond the box and identify as well as develop those products which meet the customers’ needs. hc is not only focus on present need of customers but also predict the future needs of market and provide firm long sustainability in business competition. there is great need for automobile and other manufacturing firms of pakistan to understand the significance of hc as compare to other resources in firm performance, so that maximum main manpower of firms may be converted in experts to run the firms in effective way. further, firms need to focus and enhance the education and skills of employees, focus on career development of employees, delegate the powers to their employees to empower them to take decision at their own end and provide them conducive environment, so that they can develop creative ideas for the development of innovative and quality products to attract attention of local customer as well as foreign customers. in this study only light transport vehicle manufacturing units were focused whereas automobile sector is vast field and there is great need to conduct comprehensive research study on complete 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(2008). effect of human capital investment on organizational performance. social behavior and personality, 36 (8): 1011-1022. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 1, pp. 14-20 2018 doi: 10.33094/journal.139.2018.11.14.20 © 2018 by the authors; licensee online academic press, usa 14 © 2018 by the authors; licensee online academic press, usa perspectives on india-bangladesh water dispute: the farakka barrage rajkumar singh department of political science, bnmu, west campus, p.g. centre, saharsa-852201 (bihar), india. abstract the holy waters of ganga have proved despair rather than a hope in relations between india and bangladesh. it was after the initial differences in regard to the construction of farakka barrage between india and pakistan that the former had taken almost a unilateral decision to construct a barrage, in particular, to save the port of calcutta from excess silting. years after the independence of bangladesh commissioning of the barrage took place and that was the starting point of a series of bilateral negotiations/agreements to determine the share of water that each side was to receive during the lean season of every year. in the start indobangladesh relations was marked as honeymoon phase of their relationship with no differing perceptions in sight. however it all took a ‘u’ turn when sheikh mujib was assassinated in august 1975 and a series of coup reigned in bangladesh one after another. at a later stage the sharing of waters at farakka had become more a matter of politics than of economy as the change over suited the military generals of bangladesh, who, apart from all, faced the problem of legitimacy. difference of social, political, economic and religious bases in india and bangladesh has added fuel to the fire and the waters of farakka was paraded before the world community as the most blatant example of india’s “intransigence” against a weak and small neighbour. in between the relationship of love and hate the two had signed three agreements on the sharing of ganga waters at farakka respectively in 1975, 1977 and 1996. the paper aims to examine the different aspects of the two sides and mutual understanding thereupon. the study is beneficial for the countries of the region and outside to keep the fight between bordering neighbours away and help promote regional / global peace in the larger interest of humanity. keywords: india, bangladesh, socio-economic condition, agreements and prospect. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. initial developments in pre and post independence phase the issue of constructing a barrage across the river ganga at farakka was alive and drew the attention of the people then in power. continuous efforts were undertaken and committees of experts were appointed from time to time to formulate measures, to maintain uninterrupted navigation on hooghly waterway. opinions on the issue were sought by a large number of engineers of world repute like stevenson moore in 1919, sir william willcock in 1930, t.m. oag in 1939 and a. webster in 1946. at the time of partition sir cyril radcliff, the chairman of the bengal boundary commission, who was authorised to demarcate boundary between india and pakistan, realised the importance of farakka and saw to it that the entire bhagirathi-hooghly the off take from ganga was given to india as it was a must for the existence of calcutta city and the port. keeping it in view, the boundary commission demarcated the district of murshidabad, which was predominantly a muslim majority area in india, and in lieu awarded the region of khulua, which was a hindu dominated, to pakistan. https://www.doi.org/10.33094/journal.139.2018.11.14.20 https://www.doi.org/10.33094/journal.139.2018.11.14.20 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 15 © 2018 by the authors; licensee online academic press, usa in post-independence phase dr. walter henson of germany was first and final to suggest, in 1957, that proposal for the construction of a barrage across the ganga was the best solution of this technical problem. it was the most purposeful measure with which the long term deterioration in bhagirathi-hooghly could be stopped and could possibly be converted into a gradual improvement (dixit, 1969). earlier a detailed report of calcutta port prepared by hydraulics study department of the port in 1957 was handed over to dr. henson in which it was said that in the monsoon season considerable volume of sand are brought down to the various bars and crossing the hooghly and with the increase in the monsoon flows practical only with the sharp peaks, the river channel established by dredging during the dry season is disturbed. it also pointed out that the study improvement in depths over the bars and crossing occur when there are prolonged head water supply (foreign affairs record, 1977). the suggestion of dr. walter was based on this exhaustive report. 2. early status of india construction of a barrage at farakka across the river ganga was necessitated more from india’s point of view that forced new delhi to take a lead in its planning and execution. ten million tonnes of silt entered the river every year from the sea with high tides. the monsoon floods in hooghly flashes 6 million tonnes of silt back to the sea leaving behind an accumulating balance of 4 million tonnes every year which was slowly but regularly choking sections of the river. massive dredging operations had been undertaken from time to time to keep the shipping channel clear. calcutta port authorities were spending rs. 75 lakhs per year preceding the year 1972 for dredging but in 1972 the expenditure went up to rs. 10 crores : yet the silting continues unabated. the 126 miles voyage between calcutta port and the estuary through the river hooghly took as much as 26 hours because the ship had to wait at three points enroute for the high tide to cross the shallow points. calcutta is an important indian port situated on the bank of the river hooghly. the port is situated 126 miles away from the sea. it is through this hooghly water way that ships of all states have to pass to reach calcutta port and it is sustained by the supply of water from ganga. after flood of an unprecedented magnitude in the year 1789, it abruptly changed its course and carved out the present day channel known as padma that flows into bangladesh territory. the upper reaches of its former channel became a distributary and consequently began to silt up, reducing the number of days in the year in which large vessel can use the port at a greater inland distance (vaishnav, 1975). thus, the main objective of farakka barrage project was the improvement of calcutta port, and for the fresh water supply from hooghly to adjoining industrial complex. the silt makes it impossible for the ships to reach calcutta port throughout the year because there has been fast deterioration of sailing opportunities. in january 1957 the maximum drafts were 27 feet; in january 1959 the drafts fell to 24 feet (bains, 1962). the number of sailing opportunities has also been seriously affected. in 1938 ships of draught of 26 feet could use the port nearly 300 days a year, now such vessels could not use the port at all. the resulting decline in traffic handled by the port had been drastic. the port handled 11 million tonnes of traffic in 1964 -65 but it declined to 7.5 million tonnes in 1974-75. the decline took place despite rapid industrialisation of the hinterland since india’s independence in 1947. the deterioration of the bhagirathi-hooghly and consequent decline of the calcutta port affected the health sanitation and economic life of the people not just on the banks of the river but a vast area of land historically dependent directly or indirectly on the river . apart from decline in traffic and deterioration in sailing opportunities, the government of india viewed the interests of the population of calcutta city which was much more than the population of bangladesh. indeed, the rational of saving calcutta city and the port impinges upon the economy of as many as 13 states of india as well as the neighbouring countries nepal and bhutan. the industrial and commercial activities located in the area cover some of the most vital sectors of the indian economy including minerals and metals, transport machinery, steel, textile, tea, jute, food processing and leather industries. the utilisation of ganga waters by india for such vital purpose, affecting the life of a large segment of the indian society could by no stretch of imagination be characterised as wasteful. 3. pakistani status pakistan had, since the beginning of the plan, been opposing the construction of a barrage across the river ganga at farakka mainly on the ground that execution of the project would reduce east pakistan’s supply of water, deprive it of its share of water and further development. it also put forward seven points in favour of its argument for not constructing the barrage as it would cast an adverse effect on the overall development of its eastern part (financial express, 1977). india, on the other hand, had repeatedly assured pakistan that farakka barrage scheme would not disturb the irrigation scheme of east pakistan for the met rological conditions of east pakistan were such that there was generally an excess of water and the problem was how to drain it away. pakistan had also charged india that latter’s approach to the issue had been contrary to international law and practice. s. pirzada, the foreign minister of pakistan, in reply to a question in pakistan’s national assembly, declared on 18 july 1967 that the waters of the river ganga should be equitably be shared by the two countries on the basis of genuine needs and in accordance with international law. asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 16 © 2018 by the authors; licensee online academic press, usa despite differences between the two over the construction and purpose of the barrage, delegations of india and pakistan met several time to resolve the issue. four meetings of the experts of the two countries were held between july 1960 and january 1962 but failed to break the deadlock. in march 1961 when jawaharlal nehru, the then prime minister of india, and ayub khan, the president of pakistan discussed the issue at the commonwealth conference of prime ministers, in london, the two dignitaries seemed poles apart. while nehru assured ayub khan of a reasonable settlement, the latter had suggested to refer the matter to the technical experts (alva, 1979). pakistan had also repeated its suggestion in july 1961, in mid 1962, in may 1963 and in june 1965, but the government of india, in its reply, maintained that ministerial conference could only be held after the exchange of data regarding the project. with a view to put pressure on new delhi islamabad tried to internationalise the issue by raising it at the international water for peace conference, held in washington, in may 1967. again in 1968 it was raised at the afro-asian legal consultative committee meeting held in bangkok. the year also witnessed bilateral talks between the two in the second week of may in which indian side explained how the barrage would help east pakistan in overcoming recurring flood menace (lok sabha debates, 1977). however, it rejected the pakistani delegation’s suggestion that good offices of a third party like the world bank should be used to resolve their differences over the utilisation of the water of the eastern rivers. nothing concrete came out from the several round of talks that were held between india and pakistan in 1969-70. probably the domestic setting of pakistan was not favourable during the 1968 to 1970 talks. it was during this period that president ayub khan had stepped down and yahya khan had taken the charge of the office. a movement in east pakistan for autonomy had already been launched by the national awami league party. by raising unwarranted objections during the talks, the government of pakistan wanted to show that how much serious it was in resolving the crisis. it was, probably, an act to counter the autonomy movement and divert the attention of the opposition parties. the sincerity of pakistan itself was not without doubt. 4. emergence of bangladesh the most crucial determinant of any policy, whether domestic or foreign, is the people constituting a nation, whose attitude reflecting the extent of their socio-economic and cultural development play a significant role in all policy matters (arbatov, 1973). bangladesh is a geographical integrate of the subcontinent earlier known as indo-pakistan sub-continent. what formerly was a nation state as part of the big continent of asia, became a sub-continent when the nation was partitioned forming two nations–india and pakistan in august 1947. bangladesh is a geographical unit of the sub-continent which before 1947 was one nation state. apart from common inheritance in terms of culture, tradition and socio-economic and political legacies, the countries of the sub-continent have many more things in common than irritants among them. even then irritants have had the upper hand and what was once a single nation state, has fallen apart divided into at least three independent nation states (narain, 1987). the physical proximity of bangladesh with india and other neighbours is an important factor which at once, is viewed as the cause of irritation and a possibility of amicability between the two countries. in comparison to west pakistan, the socio economic structure of bangladesh at the time of independence was in a advance stage because feudal relations had already made rooms for semi-feudal, semi-capitalist relations. the hindus and the muslims constituted two distinct sections of population in bangladesh. there are social and religious differences between them. yet, close association and system of fictive kinship have brought them in close contact with each other. it kept the nationalist ideology in the political culture of bangladesh intact more or less before its independence in december 1971. as it was strong enough in its base, the separate ethno-cultural entity of bengalis had contributed to the forming of political culture, particularly during the colonial days. after 1947 the idea of a distinct national group received political validity and was intensified by two leading events : the language movement of 1952 and the six point programme of 1966 (chakravarti, 1978). the next remarkable phase in the politics of bangladesh was the period 1947-71 which witnessed solidification of this nationalism, thus india commenced its relations in 1971 with a mature country from the view point of nationality. in 1947, the eastern pakistan was economically stronger than its western part but as latter’s discriminatory policy continued in each and every sphere of economy, it l agged far behind the pace of development in united pakistan. during two and a half decades of being part of pakistan, bangladesh was exploited by west pakistanis almost in the same fashion, as had been by the british. the continued economic disparity finally brought forth the concept of two-economy to the forefront. the two-economy thesis was propounded by some east pakistani economists and rested primarily on two points : first, because of its geographical peculiarity. pakistan did in fact have two separate and distinct economy; and second, the economic policy of the government of pakistan always worked against the interest of east pakistan and gave rise to economic disparity between the two wings of pakistan. thus, the creation of pakistan seriously damaged trade and economic activity in the eastern region and east bengal was the worst sufferer. bangladesh, in terms of national resources, is not such as to develop self reliant economy. it has jute and natural gas. in terms of minerals it is very poor. for coal and iron it is thoroughly dependent on others. there is not much scope for hydro-electric power, as mostly the region is asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 17 © 2018 by the authors; licensee online academic press, usa flat, despite huge availability of water. the disrupted economy and the resultant chaos in east bengal was one of the factors behind the demand for autonomy and subsequently the clamour for independence. as a result of the differing perceptions in socio-economic sphere the purely bilateral problem of sharing the ganga waters at farakka was sought to be internationalised and attempts were made, though not very successfully, to malign india in every possible way. backed by the call of jehad, against the “ungrateful hindus” who were accused of not having accepted the sovereignty of bangladesh over the distribution of ganga waters, the government of bangladesh sought to make the farakka issue a communal one. in the postmujib phase of indo-bangladesh relations, the new government did nothing to curb anti-indian tirade in the communal press in bangladesh. the supporters of the new regime sought to link the farakka issue with general accusations against india and called for eliminating the last of the national traitors and their agents and for this they resolved to “stand by the armed forces”. surprisingly, technical aspects and the problem of recurring floods due to uncontrolled river waters were side tracked and, instead, the so-called threat of india’s aggression was projected at various international fora. apart from the religious affinity of the people of bangladesh, the fact that they lived as citizens of pakistan for over 24 years during which religion used to play a vital role in both the domestic and foreign affairs of the country had become one of the most important factors in the image formation of the people (bari, 1975). this image was negative one, and nurtured on the basis of the so-called fundamental difference between ‘muslim pakistan and hindu india’. the legacy of this long association with pakistan remained in future an important aspect which has a definite bearing on indo-bangladesh relations. despite the fact that religion is very close to one’s being, it has neither been a factor to unite diverse communities nor it has been a sole factor to create politically sovereign identities out of one social community. though the first division of the indian sub-continent was made on the basis of religion, substantial religious minorities remained in both the newly created nations india and pakistan. in india the leaders of national liberation movement had recognised the concept of unity in diversity and tried to carry forward the movement on secular lines. they were opposed to communal demand for the creation of pakistan and denied the twonation theory which was being proposed by the british colonialists. perhaps on being influenced from india, the national liberation movement in bangladesh threw off the mask of religion and sought to unite the people with the aim of defending bengali nationalism, language and culture. in this movement, the humanitarian role played by india, in contrast to the ghastly crimes perpetrated by the west pakistani military rulers, brought the people of bangladesh nearer to their indian brethren into a bond of cordiality and friendship. during the entire period of liberation movement religion did not play even the minimal progressive role, as it had already proved its futility in keeping pakistan united. reintroduction of religion after the liberation of bangladesh, as a political tool, was, therefore, not in tune with the objectives of national liberation movement. 5. responses of bangladesh expressing total solidarity with the principles and objectives of the national liberation movement the first government of sheikh mujibur rahman, in its historic constitution of 1972 included nationalism democracy secularism and socialism. however, the later developments on the issue made it clear that the secular principle of bangladesh was planted on a religious society where still people were not in favour of discarding it. religion was too sacred a trust with the people, which could not be allowed to be polluted by political considerations. unfortunately people failed to understand that bangladesh had emerged as a secular state, not because the religion of the vast majority of the people was in danger, but to ensure fuller manifestation of its secular values like language and culture in the context of socio-economic development, free from foreign exploitation. bangladesh’s survival as an islamic state kept it away from india and put nearer to powers, friendly neither to india nor to bangladesh. the bangladesh war of independence was fought under the leadership of awami league who shared almost the same framework of social philosophy as the indian ruling party of the time. the mixture of a rather populist version of socialism with reformist vision of state capitalism, and an ideological adherence to the principle of secular and democratic state brought india under the congress and bangladesh under the awami league within the same general framework of state ideology (uyangoda, 1999). the perceived mutuality of interests between india and bangladesh took concrete shape during 1971-1975 or till sheikh mujibur rahman was all in all at the helm of affairs. the post-mujib period of bangladesh nourished a strong anti–india feeling which became violent and did not spare even the bilateral issues, such as, the sharing of ganga waters at farakka. keeping in view the geopolitical terms and also because of india’s role in bangladesh’s national liberation movement it was a difficult task for any government in the country to go whole hog against india, nevertheless the fact remains that both, at the government level and with its abetment at the level of media serious attempts were made to undermine friendly relations with india. however, this difficult task was made easy by the post-1975 regimes of bangladesh. the new rulers had anti-indians’ as one of its plank, and they immediately embarked upon an anti-indian tirade. they used irritants not unusual between neighbouring countries as bases for their campaign and used every national and international forum to defame india. dhaka’s failure to make a point at the colombo summit of non-aligned asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 18 © 2018 by the authors; licensee online academic press, usa nations was paraded as a success and india’s just criticism of bangladesh’s attempts to internationalise farakka issue was branded as an exhibition of frustration, disillusionment and defeat at the colombo meet (saturday, 1976). war hysteria was sought to be created in bangladesh in which the then ruler ziaur-rahman was next to none and said, ‘we are concerned about the aggression being carried out from across the border and also about the deliberate withdrawal of huge quantum of water from the ganga to the detriments of bangladesh. we will face up these aggressions at all costs and shall stand up heads erect in full glory of a free nation. each one of us shall fight arm in hand, if need be’(bangladesh observer, 1976). the anti-india tirade in the post-mujib phase had a definite national as well as international support. ruler’s new plank was fully backed by the communal political parties, which had been rehabilitated after the coup. the ultra-leftists and pro-beijing elements were also not lagging behind in supporting zia’s government. the military rulers of bangladesh while embarked upon india for latter’s hegemonic ambitions, they, as a balancing act, sought to improve country’s relations with china. it is significant to note here that beijing, along with washington, was the instigator of the conspiracy that overthrew sheikh mujibur rahman. in the changed circumstances both china and the us became the champion of bangladesh’s inalienable rights vis-a-vis india. two goodwill delegations from bangladesh visited china in may and june 1976 and peking had officially condemned the indian attitude towards bangladesh on the ganges river waters and border disputes. china gave full support to bangladesh on the farakka issue at the un. it was clear from the perception and attitude of the new rulers of bangladesh that they formed the anti indian policies in total disregard of the ground realities, prevailed in relations between the two countries. failure of bangladesh effort to carry the farakka issue at colombo and the un, established the fact that the problems between the two countries could not be resolved on the crest of communal propaganda, and that to talk of war and military preparedness to face indian transigence was, to say the least unrealistic. having realised the disappointments, in the beginning of the year 1977 bangladesh agreed to talk on the issue with india that made substantial agreements to be signed possible on the sharing of ganga waters between india and bangladesh. 6. concluded agreements on farakka after the independence of bangladesh a major breakthrough came in the relations of the two countries when they signed a treaty of friendship, cooperation and peace during indira gandhi’s visit to dhaka in march 1972. article vi of the treaty maintained that the high contracting parties further agreed to make a joint study and take joint action in the fields of flood control, river basin development and the development of hydro-electric power and irrigation. the discussions of the two prime ministers on sharing of the waters of ganga at dhaka resulted in the formation of a joint rivers commission (jrc) relating to which, statutes were signed in dhaka on 24 november 1972. the jrc was entrusted with the task of discussing at length the approach to long term planning for development of the water resources of the ganga and other river systems. as a follow up of the good understanding between india and bangladesh, the two had signed an interim agreement on the sharing of ganga waters at farakka on 18 april 1975. the agreement came at the end of three-day negotiations between jagjivan ram, the agriculture minister of india, and his bangladeshi counterpart abdur rub sernibat. under the agreement signed in dhaka india was allowed to draw up to a specific volume of water for its feeder canal for the benefit of calcutta port. the daily withdrawal of water ranged between 11,000 and 16,000 cusecs in the last ten days of april and may respectively. the remaining flow of water was allowed to go to bangladesh. despite several lackings, the agreement was welcomed by most of the leading newspapers as it set an outstanding example of mutual understanding and accommodation (lok sabha debates, 1975). the port of calcutta required 40,000 cusecs of water throughout the year including the lean months, which was necessary to flush the silt up hooghly. secondly, there was no time limit in the agreement. it would have been better if some time limit would have been fixed. thirdly, during the lean season heavy withdrawals would reduce the share of padma in bangladesh. but it is significant to mention here that it was done on an adhoc basis. jagjivan ram, a signatory of the agreement and india’s minister for agriculture, in a statement in the loksabha on 21 may 1975, maintained, ;since the discussion regarding the allocation of the minimum flow of ganga during the lean months are continuing between the two governments the present agreement is a provisional assignment to enable the running of the feeder canal.’ lack of any agreement for the lean season flow of ganga at farakka made bangladesh anxious more than that of india and therefore, it raised the issue at different international fora. the second agreement on the sharing of ganga waters at farakka was signed on 5 november 1977 when a non-congress government under the premiership of morarji desai had taken over in india. with the change of guard at new delhi, a climate of mutual understanding and cooperation created that paved the way for such an exhaustive and liberal agreement between the two countries. the signed agreement contained fifteen articles divided into three parts. the first part covered articles i-vii and dealt with the terms and conditions of the sharing of ganges waters during the lean season. article ii of the agreement provided for the sharing of waters from 1st january to 31st of may every year which was to depend on the actual availability of waters at the barrage. it also gave a guarantee to bangladesh of 80% of its share for ten days 21 -30 april, every year. asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 19 © 2018 by the authors; licensee online academic press, usa articles iv-vii were related to the setting up of joint committees of the representatives nominated by the two governments to observe and record the daily flow below the farakka barrage and in the feeder canal as well as at hardinge bridge. the committee was to be responsible for supervising the implementation of the shortterm aspects of the agreement relating to the division of the available waters during the lean season (the hindu, 1977). according to part ii of the agreement the joint rivers commission was reactivated with a view to finding a long term solution of the problem. the third part (articles xii-xv) dealt with the provisions of review and duration of the agreement. prime minister morarji desai and atal bihari vajpayee, the minister for external affairs, made an official statement in the loksabha and rajyasabha respectively on 14 november 1977 in which they maintained that the agreement had to be based on the principles of shared sacrifices and mutual accommodation without affecting the right and entitlement of either country during the lean season when there was not enough water to meet the requirement of both the countries. among other things, the statement also noted the government of india’s hope that the approach and spirit which made the agreement possible, if app lied to larger spectrum of country’s relations with bangladesh, should lead to an ever-widening cooperation between the two countries. but as the good wishes of the new janata government was not sufficient to fulfil the needs of calcutta port, the agreement drew critical references in both the houses particularly from the members of west bengal. they termed the agreement as ‘nothing but an apologia for a political agreement entered into with the intention of appeasing a military regime’. they called the agreement a sell out for political purposes in which the interests of the port of calcutta had been compromised (lok sabha debates, 1977). the third and the latest agreement on the sharing of ganga waters at farakka was also signed during the reign of a non-congress government on 12 december 1996. it was signed by sheikh hasina, the prime minister of bangladesh, and her indian counterpart h.d. devegowda, who headed the government of a united front. the treaty will be valid for 30 years with provision of review after every five years or earlier. the signed treaty provided that if the availability of water at farakka is 70,000 cusecs or less, it will be shared between the two on 50-50 basis. if the quantum is between 70,000 and 75,000 cusecs, bangladesh will get 35,000 cusecs while india will retain the rest. if the quantum rises above 75,000 cusecs, india will retain 40,000 cusecs, while the rest will go to bangladesh. the lean period for both the countries starts in the first week of january and lasts 150 days. but the leanest period is between the middle of march to the first week of may. in addition, the 10-day hydraulic cycles giving the advantage to india and bangladesh alternately, ensures that neither side will face a crisis during the period (indian recorder, 1997). the agreement of december 1996 on the sharing of ganga waters at farakka is for the longest period ever signed by the two countries. jyoti basu, played a very active and positive role in the negotiations and provisions have been made to take care that neither bangladesh nor india or more precisely west bengal is at a disadvantage. it was welcomed in new delhi and dhaka where both sides expressed satisfaction over signing of the treaty. because the new government of bangladesh is not committed to an anti-indian programme, they seized the opportunity to begin a new chapter in india–bangladesh relations. they put the relations on a stronger basis and hoped it to be so in future. 7. conclusions and cautions in the start indo-bangladesh relations was marked as honeymoon phase of their relationship with no differing perceptions in sight. however, it all took a ‘u’ turn when sheikh mujib was assassinated in august 1975 and a series of coup reigned in bangladesh one after another. at a later stage the sharing of waters at farakka had become more a matter of politics than of economy as the change over suited the military general of bangladesh, who, apart from all, faced the problem of legitimacy. although india and bangladesh share 54 trans-boundary rivers, big and small, the major area of dispute has been india’s construction and operation of the farakka barrage. the aim of construction of the farakka barrage was to increase the lean period flow of the bhagirathi hooghly branch of ganga to increase the water depth at kolkata port which was threatened by siltation. later as irrigation withdrawals increased in bangladesh, dispute arose between india and bangladesh over the sharing of the lean season flow at farakka. the inadequacy of water during the lean season to meet the assessed demands in the two countries is the root cause of the conflict. even after three agreements made so far in 1975, 1977 and 1996 on the division of water between india and bangladesh during lean season the bangladesh government feels that the reduction in flow caused damage to agriculture, industry and ecology in the basin in bangladesh. because of the inability of the concerned governments to come to any lasting agreement over in last decades on sharing the river water, this problem has grown and now it is also viewed as a case of upstream-downstream dispute. on the other india is committed to carry forward the mission of strengthening the historic bonds and impart a vision for the future that is durable, sustainable and conducive for the collective prosperity of the region. references alva, m, (1979). ‘janata foreign policy: a critique'. in k.p. mishra (ed.), janata foreign policy. new delhi: vikash publishing house. pp: 14 asian themes in social sciences research 2018, vol. 1, no. 1, pp. 14-20 20 © 2018 by the authors; licensee online academic press, usa arbatov, g. (1973). the war of ideas in contemporary international relations: the imperialist doctrine, methods and organisation of foreign political propaganda. moscow: progress publishers. pp: 54-55. bains, j.s. (1962). the farakka barrage: international law aspects'. modern review, 112(5): 367. bangladesh observer, (1976). august 22 ( dhaka). bari shamsul, a.f.m. (1975).’ image and realities of bangladesh – india relations'. law and international affairs, 1(1): 45. chakravarti, s.r. (1978). bangladesh: problems of national liberation movement'. in s.r.chakravarti, swaroop rani dubey, p.c. mathur and virendra narain, turmoil and political change in south asiabangladesh, sri lanka, india and pakistan. jaipur: aalekh publishers. pp: 26-27. dixit, r.k. (1969). india -pakistan talks on farakka barrage and related matters’. indian journal of international law, 9: 215-16. financial express, (1977). october 3 (new delhi). foreign affairs record, (1977). august 8, new delhi: ministry of external affairs. government of india, 23(8): 151. indian recorder, (1997). january 15-21, new delhi: a weekly of events and happenings, 4(3): 2543. lok sabha debates, (1977). november 14, new delhi: lok sabha secretariat, 7(1): 298. lok sabha debates, (1975). april 21, new delhi: lok sabha secretariat, 2(37): 235. lok sabha debates, (1977). december 15, new dehli: lok sabha secretariat, cols.9,218,232,236 and 268. narain, v. (1987). foreign policy of bangladesh, 1971-1981: the context of national liberation movement. jaipur: aalekh publishers. pp: 19-25. saturday evening post, (1976). august 21. philadelphia: the curtis publishing company. the hindu, (1977). november 6, chennai(india). uyangoda, j. (1999). indo-bangladesh relations in the 1970s: bangladesh perspectives'. in shelton u. kodikara (ed.), south asian strategic issues , sri lankan perspectives. new delhi: sage publications. pp: 69. vaishnav, t.d. (1975). ‘bangladesh accord on farakka barrage: background and implications'. socialist india, new delhi: ministry of external affairs, 11(2), june 14. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 2, pp. 76-83 2018 doi: 10.33094/journal.139.2018.12.76.83 © 2018 by the authors; licensee online academic press, usa 76 © 2018 by the authors; licensee online academic press, usa assessment of housing quality in ede, nigeria adewale yoade1* --olabisi adeyemi2 --olawunmi yoade3 1,3department of urban and regional planning, wesley university ondo, nigeria. 2department of urban and regional planning, federal polytechnic ado-ekiti, ekiti state, nigeria. abstract this study examined the housing quality in ede, nigeria and the impacts of urbanization on environmental degeneration of urban built environment. a total of 388 housing units, consisting of 236, 78 and 74 units were drawn for sampling from the high, medium and low density areas of the study area, respectively. the secondary data involved available census data, official documents and other relevant secondary data were obtained from existing literature, on books and journals. the study established that majority (62.6%) of the respondents are female while 37.3% of the respondents are male in the study area. findings established that 63.9% and 55.1% have no educational qualification and primary education in high and medium density areas respectively while in contrast majority (91.1%) in low density area have tertiary education in the study area. findings also revealed that householdsize has a significant influence on the overall housing quality in the study area. the study concluded that it is imperative to check and prevent further decay for good living and working environment. keywords: urbanization, environment, housing quality, infrastructural facilities and amenities. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction providing adequate housing is a concern, not only of individuals but also of governments (un-habitat, 2006). although, global data on housing quality is limited, yet the united nations (1996) asserts that the cost of doing nothing is detrimental in all spheres because the urban slums are potential breeding places for social and political unrest. thus, international concerns have been growing over the deteriorating housing conditions in urban areas of developing nations. it is estimated that over a billion of the world’s city residents live in insufficient quality housing, mostly in the sprawling slums and squatter settlements in developing countries (un – habitat, 2006). such areas are regarded as areas of most visible expressions of human poverty (yoade and adeyemi, 2015). in spite of the pathetic housing situation experienced in nigeria, attempts by the various housing professionals including architects, planners and government agencies to improve the quality of housing have not yielded any desirable result. rather than providing a culturally determined as well as user’s responsiv e dwellings, most housing developments have been based on planners’ standard. attention is paid to what the buildings look like and not how they will be used in practice and their cultural fit. while appearance is important, houses must serve the everyday needs of the people for whom they are designed (muller, 1984; gyuse, 1993). however, it has been affirmed that adequate and good quality housing provides the foundation for stable communities and social inclusion, and that housing should reflect the cultural, social and economic values of a society as it is the best physical and historical evidence of civilization in a country (onibokun, 1982; onibokun, 1985; foster, 2000). in its entirety, housing is thus connected with the essence of life as it affects the whole of life in every way. whereas, previous studies have underscored the need to improve the quality of housing, only https://www.doi.org/10.33094/journal.139.2018.12.76.83 asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 77 © 2018 by the authors; licensee online academic press, usa a few of them within the nigeria context had actually examined and stressed on the specific impact and relevance of households’ socio-economic as well as socio-cultural attributes on housing quality. this study is thus a contribution in this direction. using ede as a case in point, the main objective of this study is to examine the effect of socio-economic and socio-cultural parameters in the determination of residential quality in nigeria (yoade, olayiwola and popooala, 2013). series of studies have also been conducted on the quality of housing: (see: agbola, 1998; adeleye, 2012; aduda, 2002; jiboye, 2004). of much relevance is jiboye (2009a) in his study of users’ house-hold size and housing quality in osogbo, nigeria. he characterized the form and physical environment of slum and concluded that government in its wisdom has to re-organize their attitude and approach to slum eradication. from the foregoing, less emphasis has been given to the relevance of socio-economic together with sociocultural factors on housing quality. the example of an emerging but traditional city like ede is yet to be examined. 2. literature review housing, which is often defined as a multi-dimensional bundle of services, is also a bundle of contradictions and paradoxes. this is because the exogenous variables, acting in concert with or in contradistinction from the endogenous variables, often create paradoxical situations (agbola and agunbiade, 2007). likewise, agbola (1998) concludes that housing is a combination of characteristics which provide a unique home within any neighborhood; it is an array of economic, social and psychological phenomena. in other words, housing could be seen as a multidimensional package of goods and services extending beyond shelter itself. the need to appreciate the relevance of a habitable (qualitative) housing therefore, requires an understanding of the concept of ‘quality’ which according to onion, cited in afon (2000), “is a mental or moral attribute of a thing which can be used when describing the nature, condition or property of that particular thing”. mccary, cited in jiboye (2004), noted that reaching a definition of quality depends not only on the user and his or her desires, but also on the product being considered. in essence, quality is a product of subjective judgment which arises from the overall perception which the individual holds towards what is seen as the significant elements at a particular point in time ( olayiwola, adeleye and jiboye, 2006). in assessing the quality or suitability of housing, previous qualitative studies have identified some criteria as relevant indicators for quality evaluation in residential development. among such is abloh (1980), who noted that housing acceptability should take into account, type of construction, materials used, and amount of space, services and facilities, condition of facilities within and outside dwelling, function and aesthetics among many others. ebong (1983) identified aesthetics, ornamentation, sanitation, drainage, age of building, access to basic housing facilities, burglary, spatial adequacy, noise level within neighbourhood, sewage and waste disposal, air pollution and ease of movement among others, as relevant quality determinants in housing. however, hanmer et al. (2000), conclude that qualitative housing involves the provision of infrastructural services which could bring about sustainable growth and development through improved environmental conditions and improved livelihood. in nigeria, and other third world nations, the need to provide qualitative housing based on user’s responsive and culturally determined considerations particularly for the vast majority of the urban population is central to the achievement of sustainable cities and human development. nonetheless, the use of relevant information evolving from human values in housing development has been negligible. yet, they are critical in guiding housing improvement and development. perhaps, this study could bridge this gap by providing explanations for the relevance of users’ household-size in residential quality development in nigeria. previous studies have indicated that a more appropriate method of evaluating the quality of the built environment is through the affective responses based on the user’s assessment (ilesanmi, 2005). however, good quality housing standards are essential and basic to planning. these, not only ensure the safety and wellbeing of people but also promote beauty, convenience and aesthetics in the overall built -up environment. good quality housing means more than a roof over one’s head. it also means adequate privacy; adequate space, physical accessibility; adequate security, security of tenure, structural stability and durability; adequate lighting, heating and ventilation; adequate basic infrastructure, such as water supply, sanitation and waste-management facilities; suitable environmental quality and health-related factors; and adequate and accessible location with regard to work. all of these should be available at an affordable cost and should be determined together with the people concerned (lewin, 1981; olotuah, 2006; un – habitat, 2006). furthermore, poor housing has repercussions across a whole range of other aspects of life, such as employment, as housing not only fulfills the basic human physical need for shelter but also satisfies social requirements. a house provides a center for an individual and the basis for family life, emerging as an important symbol of social standing and aspirations. thus, the fulfillment of housing quality needs is a complex process. a good housing, therefore, must possess a general layout of good appearance, and comply with the general customs and habits of the people without which it may turn into a slum (lucas, 1990; sholamith, 2000; unicef, 2001). asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 78 © 2018 by the authors; licensee online academic press, usa yet the sufficient and good quality provision of this basic need elude a high proportion of the population of these countries (abiodun, 1985; olayiwola et al, 2005; national housing policy, 2006). housing is a basic human need. the understanding of its concept, as well as its components that provide for good quality, as is germane to this study is evaluated. in this study therefore, qualitative evaluation will be based on user’s assessment of the physical criterion of housing. this will consider among other variables identified above, the quality of housing in terms of adequacy of basic infrastructures, suitability of the building design; integrity of the building elements, as well as that of fixtures within the dwellings. it is against this backdrop that this study examined housing quality in ede, nigeria. 3. study area ede is a town in osun state, southwestern nigeria. it lies along the osun river at a point on the railroad from lagos, 112 miles (180 km) southwest, and at the intersection of roads from oshogbo, ogbomosho, and ife. ede is one of the older towns of the yoruba people. it is traditionally said to have been founded about 1500 by timi agbale, a hunter and warlord sent by alaafin (king) kori of old oyo (katunga), capital of the oyo empire, to establish a settlement to protect the oyo caravan route to benin (127 miles [204 km] to the southeast), a purpose similar to that of other nigerian towns. nearby towns include awo, iragberi and oshogbo. the study area lies between lat. 7o421’n and 7o 471n and long. 4o211 and 4o271 east of greenwich meridian. based on 2006 population census, the population of the area was put at 159,307. most of the inhabitants of the area engaged in subsistence farming and trading. ede is well known as a hospitable land. locally made food includes "eko and ila". also sons and daughters of ede can be found all over the world and works of lives. there are several compounds in ede towns including ile agate, agboja, imole, ile idigba, ile obadina, ile alusekere, ile yemope, ile mogaji, ile oluyinka, ile babanla pegba, jagun olukosi, ile olorigogoro, ile alagbede, etc . 4. methodology the study area, ede consists of three residential zones identified based on the pattern of city growth the high, (zone a), medium ((zone b) and low area (zone c) (jiboye, 2009b; jiboye, 2009c; jiboye, 2010). housing samples were taken from a total of 3,888 housing units identified within these zones in the study. the data for this study were collected through administration of questionnaires on residents in the study area. the eleven (11) political wards in ede north local government were divided according to the stratified residential areas six (6) wards in the high density area, three (3) wards in the medium density area and two (2) wards in the low density area. in the administrative of questionnaires, one (1) ward was sampled in each residential zone. however, in the three (3) selected wards, every 10 building was selected from which a household head was surveyed. from the process, 388 questionnaires were administered to comprising, 236, 78 and 74 in high (a), medium (b) and low density (c) areas respectively. the data collected were collected were analyzed using frequency distribution, mean and analysis of variance (anova) table 1. table-1. distribution and selection of samples in osogbo. residential zones no of quadrates no of housing unit per quadrate total units per zone number of samples retrieved per zone (10%) high (a) 157 8 2368 236 medium (b) 19 55 780 78 low (c) 9 75 740 74 total 185 138 3,888 388 source: author’s field work, 2016 . 5. analysis and discussion background information of the respondents’ findings established that majority (62.6%) of the respondents are female while 37.3% of the respondents are male in the study area. in disaggregated manner, 81.1%, 61.5% and 57.2% of the respondents are female in zone a, zone b and zone c respectively in the study area. also, majority (62 .3%) are of age 50 years and above while just 2.1% are below 20 years of age in the study area. in disaggregated manner, 52.9% of the respondents are 50 years and above in zone a while 55.1% and 75.6% of the respondents are above 50 years of age in zone b and zone c respectively in the study area. the study revealed that 41.8% have no formal education while 25.0% of the respondents have primary education at all in the study area. in disaggregated manner, 63.9% and 55.1% have no educational qualification and primary education in zone a and zone b respectively while in contrast most (91.9%) in zone c have tertiary education in the study area. the implication of this is that zone c is dominated by educated elites. findings revealed that the yoruba ethnic origin predominates over all other ethnic origins residing in the study area. this accounts for 98.7% of the respondents treated as a group. in disaggregated manner, it accounts for 97.9% in zone a; 100% in zone b and 93.2% in zone c. these figures indicate that zones a and b asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 79 © 2018 by the authors; licensee online academic press, usa – which are the core and intermediate areas, have more respondents of the yoruba socio-cultural origin than zone c (the newly developed area). considering the size of households in the study area, the result indicates that 48.5% of households have an average of six (7) persons or more per family. this value accounts for 78.0% in zone a (high) 71.8% in zone b (medium) while 86.5% in zone c (low) have between 5 and 6 as household size. the values show that zones a and b, which are primarily inhabited by the indigenes and traditional people of the study area, had larger proportions of household size than zone c which is occupied by educated elites table 2. this result essentially provides the basis for the polygamous and extended family structure, typical of the traditional yoruba ethnic group in nigeria. a structure opposed to the nuclear family structure of the western culture – where a household consists of the father, mother and an average of two to three children. this finding thus substantiates earlier assertions by goffman (1959) and muller (1984), indicating the level of importance attached to the extended family structure among the yoruba ethnic group in nigeria. table-2. background information of the respondents’. ratings high density (a) frequency % medium density(b) frequency %e low density(c) frequency % total % sex male 101 42.8 30 38.4 14 18.9 145 37.3 female 135 57.2 48 61.5 60 81.1 243 62.6 age below 20 years 7 2.9 1 1.2 8 2.1 21-30 years 22 9.3 6 7.7 28 7.2 31-40 years 31 13.1 13 16.7 4 5.4 48 12.4 41-50 years 51 21.6 15 19.2 14 19.0 80 20.6 50 years and above 125 52.9 43 55.1 56 75.6 224 57.7 educational status no education 151 63.9 11 14.1 162 41.8 primary school 53 22.5 43 55.1 1 1.2 97 25.0 secondary school 22 9.3 15 19.2 5 6.8 42 10.8 tertiary school 10 4.2 9 11.6 68 91.9 87 22.4 ethnicity yoruba 231 97.9 78 100 74 100 383 98.7 hausa 2 0.8 2 0.5 igbo 3 1.3 3 0.8 household size 1-2 4 1.7 2 2.6 4 1.5 3-4 12 9.3 16 20.5 10 13.5 38 9.8 5-6 36 29.7 56 71.8 64 86.5 156 40.2 7 and above 184 78.0 4 5.1 188 48.5 total 236 100 78 100 74 100 388 100 source: field survey, 2016. physical characteristics findings revealed that the available type of dwelling units in the study area is brazilian types, compound/traditional, bungalow, flats and duplex. the survey revealed that 35.3% resides in compound unit, e study area. further analysis of this result in disaggregated manner showed that the majority (57.6%) of the respondents live in compound house in zone a, 48.7% and 63.5% of the respondents’ lives in storey building in zone b and zone c respectively. age has a significant impact on the structural condition of a building, this is because building become obsolete and worn-out after many years due to wear and tear on its parts. characteristically, buildings in the core of any city are expected to be the oldest in the settlement. as would be expected, the age structure of buildings that fall from 50 years and above according to this study is 67.4% of the building were built between 40 years and above in zone a, 41% represent the number of buildings that were between 20 -29 years ago in zone b while 82.4% represent the number of buildings constructed less than 10years ago in zone c. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 80 © 2018 by the authors; licensee online academic press, usa the noticeable material of construction in this part of the community is mud, sandcrete stones and mud bricks. as shown in table 3, the highest proportion 69.5% of the houses in zone a were built with ordinary mud, 75.6% and 97.3% of the houses in zone b and zone c were built by sandcrete. the implication is that we have more of new buildings in both low and medium densities than high density zone in the study area. findings revealed the general state of roofing materials in the study area. for instance, the most common roofing material turned out to be corrugated iron sheet with 95.3% and 92.3% in zone a and zone respectively, and most of the roofs are not in good condition from personal observation during the course of this study. in contrary, majority (77.3%) of roofing material used in zone c turned to be aluminum. the roof appearance are characterized by rusting galvanized iron sheet, many of which are already leaking and some roofing members are equally falling off from the woods holding them especially in high density zone. condition of the building can be measured by considering whether the wall is rendered with cement, painted, or the building wall has been left un-reconditioned (neglect due to repainting, re-rendering for a very long time). there is low level of maintenance of wall in zone a as shown in the table 3 below. for instance, most (91.1%) of the walls were cracked and indeed calling for immediate repairs in zone a. however, these buildings are regarded as poor. the houses which had cracks that had been mended are classified as fair; this account for 87.2% of the total buildings in zone b. in zone c, majority (89.2%) of the buildings were structurally sound table 3. table-3. physical characteristics. ratings zone a (high density) frequency % zone b (medium density) frequency %e zone c (low density) frequency % total % type of dwelling compound 136 57.6 1 1.3 137 35.3 brazilian 68 28.8 6 7.7 3 4.1 77 19.8 bungalow 21 8.9 23 29.5 15 20.2 59 15.2 storey 11 4.7 38 48.7 47 63.5 96 24.8 duplex 10 12.8 9 12.2 19 4.9 age of the buildings less than 10 years 1 .4 1 1.3 61 82.4 63 16.2 10-19 20 8.5 9 11.5 5 6.8 34 8.8 20-29 27 11.4 28 35.9 4 5.4 59 15.2 30-39 159 67.4 32 41.0 3 41 194 50.0 40 years and above 29 12.3 8 10.3 1 1.4 38 9.8 materials for construction ordinary mud 164 69.5 4 5.1 168 43.9 brick mud 63 26.7 15 19.2 2 2.7 80 20.6 cement 9 3.8 59 75.6 72 97.3 140 36.1 roofing materials iron sheet 225 95.3 72 92.3.3 3 4.1 300 77.3 asbestos 11 4.6 4 5.1 15 20.3 30 7.7 aluminum 2 2.6 56 75.7 58 15.0 condition of wall good 1 .4 1 1.3 66 89.2 68 17.5 cracked 20 8.5 9 11.5 29 7.5 patched 215 91.1 68 87.2 8 10.8 291 75.0 total 74 100 78 100 236 100 388 100 source: field survey, 2016. adequacy of building facilities in order to examine these, respondents were to express their opinion using likert scales of ‘regularly’; ‘inadequacy’ and ‘not available for building facilities. to arrive at “rating value”, a weighted eight value of 3, 2 and 1 were respectively attached. the rating value was arrived at by dividing the summation of rating value (srv) by the total number of responses. the srv for each factor was obtained through the addition of the product of the number of responses to each factor and the respective weight value attached to each rating. this is mathematically expressed as: asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 81 © 2018 by the authors; licensee online academic press, usa  = 3 1i srv =xiyi …………….. (1) where: srv= summation of rating value; xi = number of respondents to rating i; yi = the weight assigned to a value (i=1, 2, 3). the index for each thus takes a value of between 3 and 1. rating = ……………….. (2) therefore, the details of the findings are summarized below. from the summary presented in table 4, findings showed that the most adequate building facilities in the study area were toilet facility. the adequacy rating computed was 3.64. next to this was kitchen facility with adequacy rating of 3.55. the least in adequacy was septic tank (2.69) and next to this was a drainages facility (2.90). respondents were of the opinion that bathroom and soak way pit were moderately available or adequate. adequacy of building facilities somehow varies from one density to the other. from the analysis presented in table 4, while the most adequate facility in the high density was bathroom, findings showed that it was toilet and kitchen, respectively in the medium and low density residential areas. however, findings revealed septic tank as the least adequate in the high, medium and low densities. similarly, drainage was rated second to the least adequate in these three residential densities. furthermore, soak away pit was appraised third to the least adequate in these three residential densities (a, b and c) table 4. table-4. adequacy of building facilities. high density medium density low density ede town sources rating sources rating sources rating sources rating bathroom 3.64 toilet 3.56 kitchen 3.62 toilet 3.64 kitchen 3.57 bathroom 3.54 toilet 3.56 kitchen 3.55 toilet 3.44 kitchen 3.31 bathroom 3.32 bathroom 3.38 soak away pit 3.05 soak away pit 3.07 soak away pit 3.01 soak away pit 3.04 drainage 2.91 drainage 2.91 drainage 2.91 drainage 2.90 septic tank 2.67 septic tank 2.64 septic tank 2.70 septic tank 2.69 source: field survey, 2016. however, in determining the relationship between household-size and overall housing quality, the proposed null hypothesis stating that “there is no significant relationship between users’ household -size and housing quality in ede was tested using the analysis of variance (anova). by comparing the mean values for these variables, the test yielded an f-ratio of 14.55 at less than 0.05 level of significance (i.e. p = 0.000), table 5. this result indicates that household-size has a significant influence on the overall housing quality in ede. significantly, this finding rejects the null-hypothesis and validates the hypothesis that there is a significant relationship between household-size and housing quality in ede, nigeria. while substantiating muller (1984), onibokun, (1985), jiboye (2010), yoade (2012) and several others, on the imperativeness of socio-cultural parameters to housing, the finding justifies the need to consider the structure of families and size of households of the different sub-cultures when deciding on qualitative housing provision in nigeria. table-5. relationship between household-size and overall housing quality in ede. source of variation sum of square df mean squares f sig between group within groups total 345.22 42561.89 47463.91 3 489 495 921.08 95.65 14.55 .000 *significant (p<0.05). asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 82 © 2018 by the authors; licensee online academic press, usa a further attempt was made using a multiple comparison (post hoc) test to determine the zone having the highest variation in the pattern of housing quality. the findings revealed that zone a has a greater mean value of 49.63 than zones b and c (43.16 and 42.19) while that of zones a and b are not statistically different from each other table 6. table-6. multiple comparison of mean values of pattern of overall housing quality among three residential zones in ede. pattern of housing quality n x sd mean difference std error p zone a zone b zone c 78 74 43.16 42.19 6.32 5.12 -4.43* -1.95 1.037 1.008 .000 .362 zone b zone a zone c 236 74 49.63 42.19 8.19 5.12 -5.43* 1.95 1.782 1.008 .000 .362 zone c zone a zone b 236 78 49.63 43.16 8.19 6.32 5.43 4.43* 1.782 1.037 .000 .000 *significant (p<0.05). 6. conclusion and recommendation this study examined the incidence of poor housing quality in nigeria and the negative effects emanating from it. it notes the occurrence of rapid rate of urbanisation occurring in the country, the consequences of which have been severely degenerated urban environment. the study concluded that household size of families is paramount when deciding on qualitative housing providing and sustainable urban growth and development. however, the study recommends that the overall quality of the existing housing stock and environment could be improved through government intervention in the form of compulsory rehabilitation and urban renewal programs. this will invariably improve the quality of life of residents in the study area. also, a periodical review of the master plan of study area is advocated. reviews of master plans are necessary to monitor the growth of towns and cities, thereby control spontaneous developments that are detrimental to the well-being of residents and the estates. this should be implemented to update and regularize changes in the master plan to incorporate uses that are hitherto absent in the plan due to their significances. references abloh, f. a. 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(1959). the presentation of self in everyday life. garden city, n. y.: doubleday. gyuse, t. t. (1993). socio-cultural dimensions of public housing in urban development in nigeria planning, housing and land policy. edited by robert w. taylor (1993). montclair state, new jersey, u. s. a. published by ave burry, u. s. a. pp: 154. hanmer, l., booth, d. & lovell, e. (2000). poverty and transport: a report prepared for the world bank in collaboration with dfid. overseas development institute. ilesanmi, a.o. (2005). an evaluation of selected public housing schemes of lagos state development and property corporation, lagos nigeria. thesis submitted for the award of phd in architecture at the http://www.hmtreasury.gov.uk/media/092fe/239.pdf asian themes in social sciences research 2018, vol. 1, no. 2, pp. 76-83 83 © 2018 by the authors; licensee online academic press, usa department of architecture, faculty of environmental design and management obafemi awolowo university(oau) ile-ife, nigeria jiboye, a. d. (2004). an assessment of the influence of socio-cultural factors on housing quality in osogbo, osun state, nigeria. an unpublished m.sc. thesis, department of urban and regional planning, obafemi awolowo university, ile-ife. jiboye, a. d. (2009a). the challenges of sustainable housing and urban development in nigeria. journal of environmental research and policies, 4(3): 23-28. jiboye, a. d. 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(2006). effect of socio-cultural factors on housing quality in osogbo, nigeria. a paper presented at the international symposium on construction in developing economies: new issues and challenges, working commission w107 construction in developing countries, 18 – 20 january 2006, santiago, chile. olayiwola, l. m., adeleye, o. a. & ogunshakin, l. (2005). public housing delivery in nigeria: problems and challenges, world congress on housing: transforming housing environments through the design, september 27 – 30 2005, pretoria, south africa. olotuah, a. o. (2006). housing quality in suburban areas: an empirical study of oba-ile, nigeria. dimensi teknik arsitektur, 34(2): 133 – 137. onibokun, p. (1985). socio-cultural constraints on urban renewal policies in emerging nations. the ibadan case. in: housing in nigeria. p.onibukun (ed.). a book of reading (nier), ibadan. pp: 393-405. onibokun, a. g. (1982). issues in nigerian housing, niser, ibadan. sholamith, k. (2000). united nations committee on economic, social, cultural development and commitments made at earth summit in rio. the people’s movement for human right education (pdhre). un-habitat, (2006). regulatory framework and strategic urban planning and management . a paper presented at the african ministerial conference on housing and urban development in nairobi, april 3 – 4, 2006. available from: http://www.unhabitat.org. [assessed october 3, 2008]. united nations, (1996). the right to adequate housing. centre for human rights, geneva. unicef, (2001). state of the world’s children. unicef, new york, 2001.p.16 yoade, a.o. (2012). socio-cultural challenges to urban renewal in ile-ife, nigeria; an unpublished m.sc. thesis, department of urban and regional planning, obafemi awolowo university, ile -ife, nigeria yoade, a.o., olayiwola, l.m. & popoola, k.o. (2013). socio-cultural challenges to urban renewal in ile-ife, nigeria. online journal of african affairs; 2(1): 10-18. yoade, a.o. & adeyemi, o.o. (2015). influence of inner-city decay on residents’ health in ile-ife, nigeria. journal of environment and earth science, 5(18): 137-145. http://www.housingcorp.gov.uk/ http://www.unhabitat.org/ asian themes in social sciences research issn: 2578-5516 vol. 3, no. 1, pp. 1-10 2019 doi: 10.33094/journal.139.2019.31.1.10 © 2019 by the authors; licensee online academic press, usa 1 © 2019 by the authors; licensee online academic press, usa the influence of social commerce factors on customer intention to purchase abdul kadir othman1* --lailatul faizah abu hassan2 --muhammad iskandar hamzah3 -- amirun razin razali4 --mohamad amir shah saim5 --mohd safwan ramli6 -- muhammad amir osman7 --mohamad amirul anbia azhar8 1,2,3,4,5,6,7,8faculty of business management, universiti teknologi mara 40450 shah alam, selangor, malaysia. abstract the rapid development in social commerce creates a new opportunity for businesses. with the use of social technologies they are able to create an environment that is on a socially interactive platform. these social bonds can drive online social support in e-commerce, the result is shown by trusts created and increased intention to use social commerce. this article will examine the factors that triggered consumers’ intention to purchase using social commerce. a total of 184 respondents were chosen for this study to investigate factors that might contribute to customers’ purchasing intention. the findings provide a better understanding on factors that contribute to intention to purchase, which comprise shopping enjoyment, perceived usefulness, trust, security, perceived quality, perceived value, ease of use and transaction convenience. it also suggests that online firms should consider these contextual factors in order to facilitate consumers' adoption behavior. keywords: ease of use, security, trust, perceived value, purchase intention. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no financial support. competing interests: the authors declare that they have no competing interests. acknowledgement: the authors would like to acknowledge the contribution of those involved in the preparation of this paper. 1. introduction the internet population has grown tremendously since its commercial introduction in 1991. the past decade has seen tremendous growth in retail transactions using electronic commerce platforms. information technology and online platforms have stimulated impulse purchasing behavior by increasing consumer access to products and service. this is partly due to the easy process of purchasing and payment (chen, su and widjaja, 2016). social commerce provides consumers the opportunity to shop online and consequentially creates customers’ intention to purchase via click-and-mortar platforms. social commerce is defined as “any commercial activities facilitated by or conducted through the broad social media and web 2.0 tools in consumers’ online shopping process or business’ interactions with their customers” (lin, li and wang, 2017). it is common for social commerce platforms to utilize sophisticated computer algorithms that could understand and respond to customers’ behavioral patterns. this allows companies to offer the right products that match the exact needs of customers through electronic channels. social commerce (s-commerce) is rapidly expanding worldwide, and it has various models including flash sales, group buying, social shopping, purchase sharing and personal shoppers (kim and eastin, 2011). among these models, the most popular type of social commerce is group buying. the internet and social networking sites or sns (facebook, youtube, and https://www.doi.org/10.33094/journal.139.2019.31.1.10 asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 2 © 2019 by the authors; licensee online academic press, usa twitter) are evolving day by day. in tandem with the rapid growth of online sns users, the number of online suppliers is also expanding to cater the needs of the users. due to easy accessibility of the internet, customers feel free to create and share information regarding brands and products on social commerce and thus create value (yadav, 2015). currently, social commerce is rapidly gaining acceptance among consumers in developing countries including malaysia, as a platform to shop online. the upward trend is expected to continue in the future. this positive outlook is mainly driven by several pull factors such as convenience, speed of transaction and accessibility. other than that, consumers are increasingly shifting their focus from desktop computer to mobile platforms. the availability of various types of shopping applications and mobile payment systems means that there are a lot of options that customers can choose from. luan and teo (2009) claimed that the acceptance of new technology influences an individual’s attitude and perception which result in adoption of new technology. nevertheless, one of the main problems with social commerce is that certain people might feel insecure in accepting attractive deals offered in social media. besides, not much is known on the factors that influence purchase intention over social commerce platforms within the context of malaysian consumers. this is owing to the fact that some research has shown that the variance explained in behavioral tendency of using social commerce is still considered low (hew, et al., 2016; ng, 2013). therefore, this paper is meant to identify factors that contribute to social commerce adoption to facilitate online purchase intention among malaysian consumers. 2. literature review 2.1. customer online purchase intention online customer purchase intention can be characterized as the client’s willingness to pay for a certain product after evaluating the available choices, and the risks and benefits of each of the options. according to george (2004) customers are willing to search, select and purchase products via the internet but the advertisement must be creative enough to attract customers. this includes sharing of positive testimonies and user experiences by social media influencers and online celebrities. organizations need to meet the requests of the buyers in order for purchase intention to build (fortsythe and shi, 2003). the online purchase is the result of purchase intention (lee and lee, 2015). online purchase intention is a noteworthy indicator of actual purchase (pavlou, 2003). customers' genuine purchasing conduct is dichotomous on the grounds that shoppers either need to buy or not buy the product. in addition, online purchase goal is influenced by the buyers' assurance to buy from a web based business (salisbury, pearson, pearson and miller, 2001; ling, chai and phew, 2010). 2.2. shopping enjoyment the first factor that is expected to influence customers’ online purchase intention is shopping enjoyment. potential announcement of internet shopping comes from substantial online shopping knowledge. “online shopping is a wilful and hedonic action, besides clients take an interest since they are characteristically spurred" (shen, 2012). consumers who appreciate shopping accomplish joy from shopping and investing energy perusing for items (seock and bailey, 2008). the feeling of delight felt while going to a site can expand the online purchase expect ation among purchasers by adding a charming shopping background, henceforth it is of extraordinary significance for organizations working on the web to perceive the effect of pleasure the site has to offer. according to kim and niehm (2009) a few items require a more top to bottom depiction and consequently it is proposed that 3d virtual models could be utilized. that sort of innovation on a site may prompt a more elevated amount of shopping delight among the buyers which at that point will upgrade the customers’ purchase expectations. 2.3. perceived usefulness the second factor that affect customers’ online purchase intention is perceived usefulness of the online store. in the late 1990s to the early 2000s, buying goods online could be regarded as a static and transactional affair. a decade later saw online commerce platforms started to embed dynamic and user-generated contents that allow users to rate their products and provide feedback in a transparent process. consumers find themselves to be increasingly connected and engaged with each other by sharing their purchase and ownership experiences, which are highly useful for potential buyers to make the right purchase decisions. since the perception of other user reviews can potentially shape consumers’ expectation, the use of dynamic and shared content in social commerce platforms is expected to benefit them in assessing the values and risks associated with the particular product (plotkina and munzel, 2016). perceived usefulness is one of the key variables in the classical technology acceptance model (tam) framework (davis, 1989; venkatesh, et al., 2003). within the malaysian context, perceived usefulness was found to influence consumers’ intention to use mobile social commerce (hew, et al., 2016) and purchase via social networking sites (sin, nor and al-agaga, 2012; leng et al., 2011). 2.4. trust the third factor that is expected to contribute to customers’ online purchase intention is trust. one of the most challenging issues of social network is building trust among users before they make purchases from the asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 3 © 2019 by the authors; licensee online academic press, usa seller. according to hajli (2015) to build customer trust for consumers is crucial. there are countless online sellers appearing every day advertising their products. an accurate website and frequent interaction enhances confidence toward the seller. consumers gain trust and confidence by current customer reviews, ratings, and recommendations shared in the forums and communities. if the recommendations are positive, the level of trust would be higher towards the vendors. trust is the willingness to accept the unpredictable consequences brought about by the third party behaviors. the context of trust is divided into three. first is the ability of vendors to portray their capability to deliver according to customer expectations. second is the integrity to meet and produce an output that satisfies customers. lastly is benevolence which is empathy towards customers to fulfil their extraordinary expectations of the organization. according to wright (2016) creating trust among consumers is the ultimate objective of social network provided by the organization as well as establishing a personal interaction and face to face contact. in a situation where the level of trust is high in the intention of purchase in social network, the consequences of perceived risk will be reduced by buying online. 2.5. security the fourth factor that is expected to influence customers’ online purchase intention is security. when discussing online security, there are a lot of assumptions among users regarding their reluctance to share their personal information and use electronic transaction to avoid any misuse of information. in order to capture consumer confidence on security, sellers must provide secure approach that governs data protection such as identity verification and security policy. when sellers have implemented all possible security measures, consumers will have more confidence and make repeat purchases from online sellers, and if there is any issue such as late delivery or faulty product the sellers should provide a return and cash back guarantee (ponte, carvajal-trujillo and escobar-rodríguez, 2015). 2.6. perceived quality and value the fifth factor that might affect customers’ online purchase intention is perceived quality and value. yen and lu (2008) mentioned that customer expectation of the seller's service quality can be defined as the importance of the quality, including responsiveness, fulfilment of transaction, contact with seller and after sales service. there is some agreement to that statement where some studies on the effects of product quality, service quality and price fairness on customer loyalty found that service quality provides added value and leads to customer loyalty through customer satisfaction (giovanis, athanasopoulou and tsoukatos, 2015). good product and service quality are very important in today’s competitive environment where many sellers offer the same type of service and product. therefore, the first impression to customers on product and serv ice quality is crucial in building a long term relationship with them. tahir and guru (2017) mentioned that perceived product quality and perceived fair price affect perceived value equally whereby perceived value in turn, strongly affect online purchase intention. this relates to purchasing behavior where most customers will look up for the price tag first to ensure price reasonability. tahir and guru (2017) also added that perceived value is a measure between the quality of the product once customers really received the item and the price they actually paid. it can be concluded that, customer satisfaction is affected by the price perception, whereby it is an indirect outcome of the perception of price fairness (bamfield, 2013). 2.7. ease of use and transaction convenience the sixth factor that might affect customers’ online purchase intention is ease of use and transaction convenience. social commerce enables people to have the convenience to shop online. according to jiang and rosenbloom (2005) among the technology characteristics, website performance, product information, product selection, ease of ordering, and shipping/handling have positive influences on customer perception of shopping convenience. previous studies (gupta and kim, 2010) supported the idea that customers consider convenience as critical in adopting or conducting online shopping. widely accepted literature suggests that the likelihood of customers to accept or use new technology will increase when the technology is considered easy to use, useful and convenient (devaraj, et al., 2002). according to assael (2005) this is because people nowadays are living in an era of hectic and busy working lifestyles, and thus it has become very difficult for most people to go shopping outside their home. moreover, based on a survey of over 5000 internet users, assael (2005) suggested that heavy users of the internet are somewhat younger, growing up in the age of technology and taking advantage of it, and more likely to be workaholics and working more than 50 hours a week. in the same study, assael (2005) also mentioned that heavy internet users are categorized as a multitasking group that tends to do more jobs or activities and seek to do more than they currently have on their plate. they may be “time st arved’’ and are constantly exploring ways to reduce the time taken to complete various tasks to manage their busy schedules (vijayasarathy, 2004). according to poon (2008) the convenience of online shopping is that consumers are free to shop at different web sites and they are able to switch from one website to another with just a click. the ease of access or accessibility refers to the degree to which a customer believes that accessing the internet via a mobile phone will be of little effort. in computer-related research, many studies have asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 4 © 2019 by the authors; licensee online academic press, usa investigated ease of use but not ease of access. several studies showed that users’ perception on ease of use significantly influences users’ intrinsic motivation (enjoyment or playfulness) (hsu and lu, 2007). mobile shopping service (mss) is easier to access on the mobile internet and would be less intimidating to customers. therefore, ease of access is expected to have a positive impact on customer’s perception of enjoyment in mobile shopping context. ease of use has been shown to play an important role in determining the intention to use (mao, et al., 2005; pijpers and van montfort, 2005). davis (1989) identified that freedom of effort in using a system is an important predictor for its adoption and subsequent usefulness. much research has confirmed that the construct of freedom from effort has a strong effect on usefulness (igbaria, et al., 1997; luarn and lin, 2005; mcfarland and hamilton, 2006). very little research has looked into the effect of ease of access or accessibility from which an individual obtains a connection to mobile internet and their intention to purchase. 3. conceptual framework figure-1. conceptual framework of the study figure 1 above shows the conceptual framework of the study that explains the connection between each independent variable (social commerce factors) and the dependent variable (customer intention to purchase). 3.1. hypotheses below are the research hypotheses highlighting the relationship between social commerce factors and customer intention to purchase. h1: there is a significant relationship between shopping enjoyment and customers’ online purchase intention h2: there is a significant relationship between perceived usefulness and customers’ online purchase intention h3: there is a significant relationship between trust and customers’ online purchase intention h4: there is a significant relationship between perceived value and customers’ online purchase intention h5: there is a significant relationship between ease of use and customers’ online purchase intention h6: there is a significant relationship between security and customers’ online purchase intention h7: there is a significant relationship between perceived quality and customers’ online purchase intention h8: there is a significant relationship between transaction convenience and customers’ online purchase intention 4. methodology the purpose of this study is to investigate the relationship between social commerce factors and customers’ online purchase intention. this section includes research design, the instrument used for data collection, population and sample and data analysis. 4.1. research design the research used non-experimental research approach that is a correlational research design. correlational research involves the study of the relationship that exists between two or more variables without attempting to manipulate them and describe the degree to which those variables are related to each other. according to salkind (2013) correlational research is used to identify how one or more variables relate to one another. 4.2. research instrument during the data collection period, the instrument used was a questionnaire. they were distributed directly to each of the respondents involved in this study. the questionnaire was designed precisely to answer the research question. the questionnaire was adapted from lin (2017) to meet the requirements and verified by associate professor dr abdul kadir othman, a lecturer from universiti teknologi mara, shah alam. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 5 © 2019 by the authors; licensee online academic press, usa 5. results and discussion 5.1. response rate in this study, a total of 184 questionnaires were distributed via google form. the questionnaires were sent via facebook and whatsapp application. the distribution and collection of responses took one week to complete. there were 184 respondents from various ages and from different educational backgrounds. table-1. respondents’ profile. variable description frequency percentage gender male 90 48.9 female 94 51.1 age 20 30 years old 152 82.6 31 40 years old 16 8.7 41 50 years old 12 6.5 51 years old and above 4 2.2 education spm or below 16 8.7 diploma 42 22.8 bachelor’s degree 102 55.4 master’s degree 24 13.0 doctorate 0 0 marital status single 138 75.0 married 46 25.0 table-2. the results of factor analysis of the independent variables. component 1 2 3 4 5 pv2 .882 pq2 .830 pv3 .776 pq4 .773 pq3 .703 pv4 .689 pv1 .688 pq1 .677 eo4 .871 eo1 .760 eo3 .725 eo2 .666 tc2 .617 tc3 .609 s3 .912 s2 .884 s4 .879 s1 .776 t2 .863 t1 .772 t3 .727 se2 .817 se3 .737 se1 .732 % variance explained (76.626%) 23.273 16.471 15.668 10.904 10.611 kaiser-meyer-olkin measure of sampling adequacy. .880 bartlett's test of sphericity approx. chi-square 4161.238 df 267 sig. .000 msa .814.929 table 1 shows that the number of female respondents was slightly higher than male respondents which were represented by 94 (51.1%) female and 90 (48.9%) male respondents. in terms of age, table 1 shows that the majority of the respondents were in the age range of 20-30 years old comprising 152 (82.6%) respondents. this was followed by those between 31-40 years old at a total of 16 (8.7%) respondents and those who were asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 6 © 2019 by the authors; licensee online academic press, usa between 41-50 years old at 12 (6.5%) respondents. the remaining four (2.2%) respondents were 51 years old and above. in terms of educational background, it was found that majority of the respondents possessed bachelor degree qualification which summed up to 102 (55.4%) respondents, followed by those who had diploma qualification which comprised 42 (22.8%) respondents. meanwhile, 16 (8.7%) respondents had spm qualification. in addition, 24 (22.8%) respondents had master’s degree. table 2 shows the principle component factor analysis conducted in order to test the factor structure of the social commerce factors. the analyzed data signified a promising result where it had contributed to the creation of the five factor structure and in this case, it explained 76.626% of the total variance. the kmo measure of sampling adequacy projected a value of 0.880 which gave a clear indication that the items were interrelated. apart from that, the bartlett’s test of sphericity offered a significant value in the sense that the approx. chi-square value was to 4161.238, p<. 001. hence, the analyzed results show the significance of the correlation matrix for factor analysis to be conducted. initially, there were eight independent variables but due to the similarities of the variables, the data had been merged into smaller number of variables. perceived quality was merged with perceived value to become perceived quality and value. ease of use was merged with transaction convenience and became ease of use and convenience. perceived usefulness was removed due to high cross loadings. other variables such as security, trust and shopping enjoyment remained as originally conceptualized. table-3. the result of factor analysis of the dependent variables. component 1 pi3 .868 pi2 .780 pi4 .753 pi1 .667 % variance explained 59.387 kaiser-meyer-olkin measure of sampling adequacy. .673 bartlett's test of sphericity approx. chi-square 220.657 df 6 sig. .000 msa .652-.623 table 3 shows the result of factor analysis for the dependent variable that is customers’ online purchase intention. the result shows that the kmo value of .673 is sufficient for factor analysis to be conducted. similarly, the msa values between .652 and .623 show that the sampling is adequate for each item in the factor. looking at the loadings of items, they are higher than .05 , which indicate strong relationship between each item and the underlying factor. all four items were retained to represent purchase intention. table-4. the results of correlations and reliability analyses. no variables mean sd 1 2 3 4 5 1 perceived quality value 3.51 .70 (.941) 2 ease of use convenience 3.81 .73 .719** (.911) 3 security 2.34 .97 .478** .295** (.938) 4 trust 3.20 .90 .485** .467** .540** (.866) 5 enjoyment 3.66 .88 .516** .573** .365** .410** (.805) 6 purchase intention 3.55 .73 .665**. .676** .253** .446** .578** notes: **. correlation is significant at the 0.01 level (1 -tailed). n=184. cronbach alphas in parentheses along the diagonal . table 4 shows the correlation analysis between social commerce and purchase intention. there was a positive relationship between independent variables and dependent variables. the results show that the highest correlation is between purchase intention and ease of use (r=.676; p<01), followed by the correlation between perceived quality and value and purchase intention (r=665; p<01). security has the lowest correlation with purchase intention (r=.253; p<.01). the results indicate the existence of concurrent validity of the factors measuring social commerce and online purchase intention. the correlation between one independent variable with another independent variable ranges from low (r=.295; p<.01) for ease of use/convenience and security, to high correlation for ease of use and convenience and perceived quality and value (r=.719; p<.01), indicating convergent validity of the factors constituting social commerce. all items are relible to measure the intended variables, which can be seen from the cronbach’s alphas that range from .805 to .958. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 7 © 2019 by the authors; licensee online academic press, usa table-5. the results of multiple regression analysis. variables standardized beta perceive quality and value .365** ease of use and convenience .257** trust .135** security -.160 enjoyment .245** r .760 r2 .578 f value 48.728 sig. f value .000 durbin watson 2.196 notes: **. significant at the 0.01 level . table 5 shows the result of regression analysis which explains the percentage of variance in the dependent variable (customers’ online purchase intention), which was explained by the social commerce factors. the r squared value of .578 indicates that 57.8% of the variance was explained. the f value is significant showing that the regression model is good at explaining the dependent variable. durbin watson value of 2.196 denotes the absence of auto correlation in the model. looking at the contribution of the individual independent variable in explaining customers’ online purchase intention, four out of five factors are significant. the strongest predictor is perceived quality and value (β=.365; p<.01). it is followed by ease of use and convenience (β=.257; p<.01), enjoyment (β=.245; p<.01), and trust (β=.135; p<.01). interestingly, security has no significant influence on purchase intention (β=-.160; p>.05). 6. discussion this study has several key findings; first, the results confirm the significant positive impact of perceived quality and value, ease of use and convenience, enjoyment and trust on purchase intention in the context of social commerce. a substantial degree of quality, convenience in using the social commerce, enjoyment and trust are needed by online buyers before making purchase decisions. thus, this study upholds the claim that these factors are important in social commerce and it is extended to the context of e-commerce. second, the results did not support the hypothesis on the role of security in relation to purchase intention. although studies have claimed that security is the most pertinent factor in affecting purchase intention, this present study failed to provide the evidence required to support it. in social commerce, where the exchange of sensitive information is not required, the aspect of security has become irrelevant. customers use social commerce to get the required product information, reviews and feedback before advancing to the next stage of purchasing the product. therefore, the finding is well-justified. finally, by looking into buyers’ behavior in online commerce marketplace, it was learned that social commerce poses the biggest effect that influences purchase intention that deserves more attention in future studies. social influence in purchase intention has been overlooked or simplified in prior literature; however, the mushrooming of social commerce has called for more attention to the social perspective of purchase intention. 7. implications of the study this study is expected to provide theoretical, practical, methodological implications for further studies. these five aspects are expected to provide a scientific understanding of related responsibilities in an effort to develop theories according to the field of study which are the responsibility of the researcher. moreover, the implications of this study are also expected to provide recommendations to marketers regarding efforts that should be linked with the studied problems. theoretically, this research provides the foundation or framework depicting the influence of social commerce factors on customers’ intention to purchase online. it is based on the uniqueness in this research that gives a different perspective from previous studies. the uniqueness can be seen from the identified variables that have been modelled and adjusted to research setting in malaysia. furthermore, this research is also expected to be discussed further, so that it can be developed and tested in different research settings. practically, this study is valuable for marketers because it is expected to provide insights associated with the concept of social commerce factors toward customers’ intention to purchase online. understanding the concept of social commerce factors can provide a broader perspective on the purchase intention that can be used to design strategies to increase sales for online retailers. in addition, this study can be used as a reference for online marketers to customize the marketing strategies according to what customers want. it is expected that this study could enrich theoretical understanding on the role of social commerce. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 1-10 8 © 2019 by the authors; licensee online academic press, usa online retailers or business owners should take proper steps in investing some of their capital to enhance their services for example in website performance, products information, product selection, ease of ordering, and shipping/handling which are related to quality, ease of use or convenience, enjoyment and trust in creating purchase intention, so that they can attract more customers to engage in online purchase and subsequently generate more income. furthermore, the experience of customers while interacting with retailers must be desirable so that they will be excited in prolonging the relationship with the retailers. 8. limitations and suggestions for future research while this study contributes to extending the body of social commerce on purchase intention research, several limitations should be recognized. first, the sample was limited to university students; thus the results may not represent the malaysian population in general. the majority of the respondents consisted of universiti teknologi mara students of the faculty of business and management located in shah alam, therefore the results may not characterize individuals from diverse backgrounds and other specific regions of the country. extending the study to other regions of malaysia would contribute greatly to the understanding of consumer intentions to use social comme rce while shopping for fashion products. second, the present study focused on an investigation of millennial consumers’ perceived ease of use of social commerce, usefulness, and enjoyment, which influenced their attitudes and intentions to use social commerce when shopping for fashion products. a majority of the participants were 20 to 30 years of age (82.6%), whereby the lifestyle of the participants and their previous experiences with social media may affect the findings of this study. third, this study examined the relationships among perceived ease of use, usefulness, enjoyment, trust, and customer purchase intention to shopping for fashion products. the focus on shopping for fashion products affects the generalizability of the results on other product categories. to increase the validity of the model, future research should be conducted for other product categories. further investigation is needed to explore other factors (e.g., perceived risks and ease of use) that affect product purchase through social commerce. 9. conclusion the general purpose of this study was to identify the social commerce factors affecting customers’ online purchase intention. the conclusion deliberates the overall overview of the findings discussed in the results. the result of the study shed insights on online purchasing intention; specifically, the significant key factors affecting customers’ online purchase intention. the findings contributed to the conclusion that perceived quality/ value, ease of use/ convenience, trust and enjoyment are the significant factors that affect customer’s intention to purchase. it can be explained that millennials especially are more concerned about purchasing products in an efficient and timely manner with the least effort. however, security gave a non-significant result in the study. this can be explained given that social commerce is in it preliminary phase of online shopping where the exchange of sensitive or confidential information has yet to happen. although non-significant, the role of security on social commerce is well-explained. finally, it is expected that this research may provide information that would be useful to online retailers and marketers, to customers and also large organisations. references assael, h. 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(2008). effects of e-service quality on loyalty intention: an empirical study in online auction. managing service quality: an international journal, 18(2): 127-146. asian themes in social sciences research issn: 2578-5516 vol. 3, no. 1, pp. 14-17 2019 doi: 10.33094/journal.139.2019.31.14.17 © 2019 by the authors; licensee online academic press, usa accepted: 3 may 2019 | published: 14 may 2019 14 © 2019 by the authors; licensee online academic press, usa youtube as the learning media to improve the speaking skill in expression orale course nurilam harianja1 --hesti fibriasari2* 1french education departement, faculty of language and arts, universitas negeri medan, indonesia. 2jalan willem iskandar pasar v medan estate, medan, sumatera utara, indonesia. abstract this research aims to improve the speaking skill for the students who take the oral expression course. the objects of this research are the students in the french department, especially who take the expression oral course 3. it is found that the previous class couldn’t improve the speaking skill of the students very well. most of the students were not very interested in the learning process. from the questionnaire given, it is found that they were bored because nothing was interesting and exciting in the class. the media they used was only a book from the lecturer. so, the making learning media of expression orale by using youtube aims to help learners to understand french with the local cultural situation. making learning media of speaking using youtube based on local culture is very important to improve the learning abilities of french. this video will also be handy for french tourists who visit indonesia, especially medan because this video will present the real situation in medan. the research method uses research and development which is carried out in the french language education study program. the results of this research show that the students are enthusiastic in the learning process, their ability in speaking is also improving, and the media supports the learning process very good. keywords: learning media, speaking skill, video, youtube, french. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction in this millennium era, information and computer technology (ict) is used by foreign language learning by creating paid learning platforms until free of charge. the use of ict in the world of education is extensive. the teaching and learning process becomes more creative and does not use conventional media. the purpose of ict in foreign language learning is with an unlimited range, so the learning process is not always in the classroom, but it can be done anywhere and anytime. teachers use this situation by creating creative ideas to make learning materials by utilizing ict that can add treasures of foreign language learning. teachers of foreign languages seek to make ict-based learning media as an effort to improve the ability of foreign language learners in the competence of reading, writing, speaking and listening. four-language competencies in french consist of comprehension orale, expression orale, comprehension, and production script. french is a language that is studied by indonesian people formally and informally. the teaching and learning process aims to enable teachers to convey information that can be understood and applied to daily life. teachers try to create learning situations that are not monotonous by involving learners in the learning process. based on the results of interviews with learners and instructors in french language study program unimed, the ability of students to speak still has difficulties in vocabulary problems and the https://www.doi.org/10.33094/journal.139.2019.31.14.17 asian themes in social sciences research 2019, vol. 3, no. 1, pp. 14-17 15 © 2019 by the authors; licensee online academic press, usa creative ability of learners to describe a situation. learners imagine a position that is not true as if the learners are in france even though they have never visited france and know french culture only through cyberspace and literature. one example when a learner is going to do the buying and selling process in a traditional market, the learner will find difficult to apply the theories obtained in the class about buying and selling conversations in the market which are not suitable to indonesian culture. the situation and culture of traditional mark ets in indonesia are undoubtedly different from traditional markets in france. therefore it is essential to make learning media based on local culture. making this learning media aims to help learners understand french with the domestic cultural situation by using learning media of youtube. a. formulation of the problem the formulation of the issues in this study is: 1. which suitable media that can be applied to the production orale course? 2. how can students improve their speaking skills by using media based on local culture? 3. how is the application of learning media by using youtube in production orale courses? b. research objective the research objectives of this study are: 1. to know the media following the learning of indonesian culture that can be applied in the production orale course. 2. to see the improvement of students' speaking skills by using media based on local culture. 3. the application of learning media by using youtube is at the production orale course. 2. literature review a. learning media the teaching and learning process with the existence of two-way communication is between instructors and learners by using learning tools. learning tools in the form of teaching material, media, model and method become a facilitator to deliver messages or learning material. learning material which is given to learners is strongly influenced by the ability of learners with the existence of learning resource that can make learners can learn independently following visual, auditory and kinesthe tic abilities possessed by learners. the determination of the right method selection should consider the right aspects to be achieved, namely referring to the outline of the learning program which is divided into two types: 1. the learning process is able to encourage students to organize and to fill new experiences with guidance on the past that has been experienced. examples: question and answer exercises, interview, consultation, sensitivity exercises, etc. 2. the learning process is designed to increase the transfer of new knowledge, new experiences, and new skills so that they can encourage each of them to achieve the maximum expertise they want, what they need, and the skills required. example: learning to use a computer. b. youtube the use of ict-based learning media is beneficial for learners to learn foreign languages online. learning media are such as blogs, e-learning, and youtube. along with the development of the era that made the competition in term of information technology, youtube comes with all the conveniences provided. youtube is a website in the form of a popular video sharing service that allows users to load, watch and share video clips for free. since being launched in december 2005 and acquired by google in 2006, youtube users have continued to increase to more than one billion per day. the latest statistic shows that more than 4 billion youtube videos are watched every day. this media is prevalent because it can function as a source of information, entertainment, and self -expression that can be widely accessed in 24 hours in 39 countries in 54 languages. in 2011, youtube showed more than 1 trillion or nearly 140 views for each person on this earth. (www.youtube.com). youtube is a web -based file sharing service that allows individuals to build public profiles, to determine a list of other users to share videos and to see a list of connections/content made by others. c. previous research learning model based on information and communication technology is beneficial in the process of learning french because praat software is available to improve the speaking skills of french students in audition pronunciation course so that they can have articulation like native speakers do (fibriasari, 2015). to see mistakes that are often made by students is when connecting the word liaison when reading the text. enhancing the ability of unimed french students to understand thoroughly and correctly should be following applicable rules. french language study program unimed presents comprehension écrite i course at the beginning of the semester and is adjusted to the european standard curriculum (cecr) delf a1 (fibriasari, 2016). the use of information and computer technology in learning aims to improve vocabulary mastery. by asian themes in social sciences research 2019, vol. 3, no. 1, pp. 14-17 16 © 2019 by the authors; licensee online academic press, usa using the tv5 monde website, it is expected that learners will find it easier to learn french vocabulary (fibriasari, 2017). 3. research method this study uses the r & d (research and development) approach. research on r & d is a necessary research activity to obtain information on user needs (needs assessment), then development activities are carried out to produce products and test the effectiveness of the products. this study uses the r & d approach because in this study will deliver products in the form of interactive learning media on static promotion course. borg and gall revealed that there are 10 steps in the development research process, according to borg and gall can be done more merely involving 5 main steps, namely: (1) analyzing the products to be developed; (2) developing the initial product; (3) expert validation and revision; (4) small-scale field trials and product revisions; (5) large-scale field trials and final products. the steps in the development procedure can be described as follows. the research was conducted at the french language education study program unimed. the time of the study was done in june-november 2018. the research subjects in this development research consisted of 2 media experts, two material experts, ten students in small-scale field trials and in large-scale field trials comprised of all students who were taking production oral 1 courses consist of 30 students. data collection techniques used in this study are observation, interviews, and questionnaires. observations were made when the research was carried out to obtain data as a basis for conducting research and development. interviews were conducted with production lecturers and students to gather data on needs in research and development. questionnaires were used to obtain assessment data on the quality of media feasibility which is developed according to media experts, material experts and students in small-scale field trials and large-scale field trials. 4. discussion a. data collection in this step was conducted a preliminary study with a documentation method to find materials which are available for the third semester. the data obtained included the material contained in the third semester. for the needs analysis, questionnaire and interview methods were used — survey for needs analysis distributed to french students. a short interview was conducted on french lecturers who taught expression orale course at french language study program unimed. this thing is intended to obtain information about the needs of lecturers and students on the third-semester french language learning video media on speaking skills. b. product design in this step, it starts with designing the appropriate material that will be included in the expression orale learning video and then designing the product that will be created, namely media of learning videos for french expression orale in the third semester. at this stage, the researcher makes a synopsis, script or production script, and scenario. after that, it is proceeding with the process of shooting and editing video. next is processing video and graphics into learning display of french expression oral. c. validation in the validation stage, it is selected french linguists who are considered capable of knowing the suitability of the product design that has been made. this thing is done to find out the weaknesses and lack. according to sugiyono (2010) design validation is an activation process to assess whether the product design, in this case, the new work system will be rationally more effective than the old or not. from the opinion above, it was concluded that the educational products resulting from development must go through an assessment process before being implemented into the field. also, product validation can be done by presenting several experienced experts to assess the newly designed product. in validating a product according to sugiyono (2010) each expert is asked to evaluate the design, so that the weaknesses and strengths can be identified. a validation sheet will be used to test the product. this validation test sheet can help determine the media model created. this validation sheet contains aspects of french learning video of expression orale course during the third semester on speaking skills. this validation test sheet is filled by expert lecturers. in addition to providing corrections, this expert lecturer is also expected to provide input and suggestions for improvement of the speech evaluation tool that has been made. so the products which are produced have better quality and feasibility than before. d. design revision after knowing the weaknesses and some inputs from media experts, the researcher conducted a design revision according to the advice of these experts, resulting in a design that was ready to be implemented. 5. conclusion based on the result of product research and development concluded: asian themes in social sciences research 2019, vol. 3, no. 1, pp. 14-17 17 © 2019 by the authors; licensee online academic press, usa 1. based on the needs analysis through questionnaires for students and interviews with french lecturers, it can be seen that the french learning video media for semester three is needed as a medium for learning to sp eak. the videos needed are in the form of videos which are short and based on local culture. 2. the result of this media research and development are learning videos of french expression orale for the third semester consisting of several themes: faire des achats, transportation with a duration of three to five minutes. references fibriasari, h. (2015). the audition prononciation learning based on multimedia in french section of unimed . proceeding on edicational creativity and innovation in prespectives of the asean-china relations. 5-6 november.2015, kang ming hotel, beijing. hal. pp: 299-307. fibriasari, h. (2016). improvement of the learning model of hearing pronunciation. proceeding on international conference on french french: in games linguistic, political, economic and culture. november 3, 2016. upi. bandung. fibriasari, h. (2017). prosodic frequency in signaling linguistic distinctions at unimed first year non-native french students. international journal of humanities and social science, 6(10): 118-124. sugiyono, p. d. (2010). research and development methods. bandung: alfabeta. asian themes in social sciences research issn: 2578-5516 vol. 3, no. 1, pp. 18-21 2019 doi: 10.33094/journal.139.2019.31.18.21 © 2019 by the authors; licensee online academic press, usa accepted: 6 may 2019 | published: 16 may 2019 18 © 2019 by the authors; licensee online academic press, usa presupposition in “barbie and the magic of pegasus” movie anna riana suryanti tambunan1* --fauziah khairani lubis2 --nurhayati purba3 -- martina girsang4 --elita modesta br. sembiring5 1,2universitas negeri medan, indonesia 3,4,5universitas methodist indonesia abstract this research paper used descriptive qualitative, which described the types of presuppositions in the movie “barbie and the magic of pegasus.” the research questions of this paper were what types of presupposition found in the movie “barbie and the magic of pegasus” were and the dominantly used. to analyze the data, the writer applied yule’s theory which divided presupposition into six types: existential presupposition, factive presupposition, lexical presupposition, structural presupposition, non-factive presupposition, and counterfactual presupposition. the data of the research were the conversations in the movie “barbie and the magic pegasus.” the results of this study showed that there were nine presuppositions. two existential presuppositions or 22, 2 %, one lexical presuppositions or 11, 1%, two structural presuppositions or 22, 2 %, three factive presuppositions or 33, 4 %, and one counterfactual presupposition or 11, 1 %. keywords: descriptive qualitative, “barbie and the magic of pegasus,” movie, presupposition, types of presupposition, yule’s theory licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction a presupposition is something assumed by speakers as an event before producing a speech (yule, 2000). one can identify the statement as information that is understood correctly and will be connected with the knowledge it has. through communication, the information conveyed by the speaker to the speech partner will be the initial assumption that will be obtained by the speech partner. information in the form of a premise or temporary assumption is accomplished through an interaction that occurs in human life one to another human. the presupposition is in the form of a speaker's say that the speech partner can know for sure the person or object being discussed. the speech partner will understand or recognize something that the speaker communicates. communication between speakers and speech partners can run without obstacles. understanding of presuppositions by speech partners is due to the utterances that preach. speakers stated speeches are presenting it. the prescribed statement is what is called presupposition. presupposition chosen by researchers for research is caused first, in the process of interpreting a speech the speaker and the speech partner must be observant in verbalizing each utterance uttered so tha t the message delivered is more directed. if a presupposition is understood correctly, it will lead to the correct interpretation of the purpose of the conversation so that the storyline is adequately captured and intact. second, presuppositions can help interpret speech between speakers and speech partners in the process of https://www.doi.org/10.33094/journal.139.2019.31.18.21 asian themes in social sciences research 2019, vol. 3, no. 1, pp. 18-21 19 © 2019 by the authors; licensee online academic press, usa delivering information. third, in a conversation interaction, speakers and speech partners do not only share information, but assumptions and expectations also appear in it as interpretations of speeches that will result. yule (2000) says that a presupposition is something that the speaker assumes to be the case before making an utterance. presupposition must be mutually known or considered by the speaker and the hearer so that the context of the statement can be understood. presupposition can also be found in a movie. the sample of the film which is going to be analyzed is “barbie and the magic of pegasus” released in 2005 and directed by greg richardson. 2. theoretical framework and related literature 2.1. presupposition a presupposition is something the speaker assumes to be the case before making an utterance. speakers, not sentence, have a presupposition. for example “mary’s brother bought three horses.” in producing the statement in the sentence, the speaker will generally be expected to have the presuppositions that a person called mary exists and that she has a brother. the speaker may also hold more specific presupposition that mary has only one brother and that he has a lot of money. all of these presuppositions are the speaker’s, and all of them can be wrong (yule, 2000). types of presupposition according to yule (2000) in the analysis of how speakers’ assumptions are typically expressed, presupposition has been associated with the use of a large number of words, phrases, and structures. yule (2000) stated there are six types of presupposition: (1) the existential presupposition, is assumed to be present either in possessive constructions (such as: your car presupposes (») you have a car) or in any definite noun phrase as in using expressions like: the king of sweden, the cat, etc. in which the speaker presupposes the existence of the entities named. (2) the factive presupposition, since some words are used in the sentences to denote facts, such as know, realize, regret, glad, odd and aware. for example, everybody knows that john is ill presupposes that john is sick. (3) the non-factive presupposition, which is assumed not to be true. verbs like a dream, imagine and pretend are used with the presupposition that what follows is not true. e.g., john dreamed that he was rich presupposes that john was not productive. (4) the lexical presupposition, there are forms which may be treated as the source of lexical presupposition, such as manage, stop, and start. in this type, the use of one way with its asserted meaning is conventionally interpreted with the presupposition that another (non-asserted) meaning is understood. when one says that someone managed to do something, the asserted purpose is that the person succeeded in some way. but when one says that someone did not control, the affirmed meaning is that the person did not achieve. however, there is a presupposition (non-asserted) that the person tried to do that something. so, managed is conventionally interpreted as asserting 'succeeded' and presupposing 'tried.' (5) the structural presupposition, in this case, specific sentence structures have been analyzed as conventionally and regularly presupposing that part of the structure is assumed to be true (yule,2000). one might say that speakers can use such compositions to treat information as presupposed (supposed to be e xact) and hence to be accepted as valid by the listeners. for instance, the whforms (i.e., when, where, etc.) can be used in this type, as in when did john leave? it presupposes that john went. (6) the counter-factual presupposition, in which what is assumed is not only true, but is the opposite of what is right, or contrary to facts. for example, the sentence: if you were his friend you would have helped him presupposes that you are not his friend. a conditional structure of this sentence presumes tha t the information in the if-clause is not accurate of the time of utterance. 3. method 3.1. research design this study used a descriptive qualitative where it is designed to describe the case of the survey by words or sentences rather than numbers. nazir (2003) states that the descriptive qualitative method was one used to make descriptive of the situation, even or accumulate the primary data. this statement means that this research found the pieces of evidence to prove the truth of specific theory but didn’t intend to see a new approach. the analysis explained the presuppositions according to yule’s pragmatic theory. qualitative research is a form of a study conducted by analyzing data obtained from the results of research. this research produces data, in the form of words or utterances and excerpts of sentences in the films barbie and the magic of pegasus. moleong (2014) states, qualitative research methods are research that intends to understand the phenomenon of what is experienced by the subject of studies such as behavior, perceptions, motivations, actions, and others. this research, in the end, produced descriptive data, in the form of writing, words, and sentences. 3.2. data source the source of data was the movie “barbie and the magic of pegasus” released in 2005 and directed by greg richardson. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 18-21 20 © 2019 by the authors; licensee online academic press, usa 3.3. the instrument of data collection this study analyzed the presuppositions that used in barbie and the magic of pegasus movie with all of their richness as carefully as possible to the form in which they were read and transcribed, and the written result of the research contains a quotation from the data to illustrate and substantiate the presentation. 3.4. the technique of the data analysis data collecting technique in this research applied the documentary method. the documentary technique is documenting all required data in this study based on its purpose, which finds the utterances which contained presupposition. therefore, the researcher collected utterances data that related to six types presupposition based on the pragmatic theory which found on barbie and the magic pegasus movie. after the data were collected, they performed data reduction, whereas data which considered unimportant for the study had been eliminated and the researcher only focuses on information related to the study. 4. results and discussions some findings could be seen after the researchers analyzed the data. the findings were separated into kinds of speech function, and the research findings of the study of the type of speech function were presented in the table 1. table-1. types of pressuposition in “barbie and the magic of pegasus” movie. no. types of presupposition frequency percentage 1. existential presupoositions 2 22, 2 % 2. factive presuppositions 3 33, 4 % 3. non-factive presuppositions 0 0 % 4. lexical presuppositions 1 11, 1 % 5. structural presuppositions 2 22, 2 % 6. counter-factual presuppositions 1 11, 1 % total 9 100 % source: “barbie and the magic of pegasus” movie. the table above shows that the total number of presuppositions are 9. the dominantly use in the movie is factive presuppositions (3) and then followed by existential presuppositions and structural presuppositions (2), and the last lexical presuppositions and counter-factual presuppositions (1) while there are no non-factive presuppositions that can be found in the movie. from percentages above, the highest proportion in the use of presuppositions is factive presuppositions (33 , 4 %), then followed by existential presuppositions and structural presuppositions with the same percentage (22, 2 %), last is lexical presuppositions and counter-factual presupposition (11,1 %). examining the form of presuppositions found in the barbie and the magic of pegasus films the researcher uses the yule theory which has divided the presuppositions based on their types into five existential, factive, non-active, lexical and structural models. every utterance spoken by the characters in the films barbie and the magic of pegasus contained the five kinds of presuppositions. understanding of presuppositions by speech partners because of the utterances that preach. speakers stated speeches are presenting it. pre-understanding understanding involves two primary participants, namely speakers and speech partners. pre-assessment is obtained from the statement conveyed by the speaker to the speech partner and refers to the actual report. presuppositions can be understood through conversations between speakers and speech partners. it can be identified through a process of meaning utilizing a provisional assumption of speech that occurs by speakers and speech partners. based on this description, the following pre-assessment findings are contained in the films barbie and the magic of pegasus. based on the result above, there are five types of presuppositions that will be explained below table 2: table-2. explanation on presuppositions found in “ barbie and the magic of pergasus” movie. no. types sentence presupposition 1. existential i am wenlock-your future husband he is wenlock he is anika’s future husband. there's giant down the road much bigger than you. there’s a giant 2. factive when she refused him, wenlock turned her into a flying horse. turned her into a flying horse. i think i'll call you shiver call you shiver. if you need help, use this bell to call me this bell 3. counterfactual if i had the wand of light, i could make life better for everyone she didn’t has the wand of light 4. lexical we don't want you to wander from the castle again. she has ever wandered from the castle before 5. structural shiver, what do you say we go to a party? they go to the party. don't you know by know that nobody tells me what to so? nobody tells him source: ”barbie and the magic of pegasus” movie. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 18-21 21 © 2019 by the authors; licensee online academic press, usa some researchers have conducted studies of presupposition. the writers took two of them. the first research was the article by ricco and havid (2013) entitled “an analysis of presupposition used in novel harry potter and the deathly hallows” has stated that as a kind of linguistic study, the study of presupposition in novel is one of interesting topic to discuss, because this topic able to make people see the presupposition in a different way. usually, presupposition often found in communication between two or more person. and it makes the writer easier to analyze the presupposition. as an interesting topic, presupposition has many aspects which can be analyzed such as the types and meaning of presupposition like existential presupposition, factive, lexical, structural, nonfactive and counterfactual. the second study was conducted by oktoma and mardiyono (2013) entitled “the analysis of presupposition in the short stories of silvester gordius sukur.” this study aims to find out the types of presupposition and the dominant kind of presupposition used in the short stories by silvester gordius sukur. the result of this study is the predominant type is commonly used in the short stories by silvester gordius sukur is existential presuppositions. the findings of the study are the same as what has been found in this current study. 5. conclusions the analyzed data of this study were utterances that were from the movie “barbie and the magic of pegasus,” in which consist of nine sentences those using presuppositions which selected randomly from data that obtained from this movie. from data collected, the researcher found the most dominant type of presupposition that used on “barbie and the magic pegasus” movie is a factive presupposition, it is shown from the data that there are two existential presuppositions, three factive presuppositions, one counterfactual presupposition, 1lexical presupposition, and two presuppositions for structural presupposition. the story of this movie is straightforward to understand and teach how struggle never lies the result. annika as a stubborn girl but has a significant will, even many people against her and doesn't believe that her dream to save all people by the wand of light. references moleong, l. (2014). qualitative research methodology. andung: pt. teenager rosdakarya. nazir, m. (2003). research methods. jakarta: ghalia indonesia. oktoma, e. & mardiyono, s. (2013). the analysis of presupposition in the short stories of silvester goridus sukur. english reiew: journal of english education, 2(1): 73-83. ricco, f. & havid, a. (2013). an analysis of presupposition used in novel harry potter and the deathly hallows. available from: http://ejournal.unp.ac.id/index.php/ell/article/view/1827/1564 . yule, g. (2000). pragmatics. bristol: oxford university press. http://ejournal.unp.ac.id/index.php/ell/article/view/1827/1564 asian themes in social sciences research issn: 2578-5516 vol. 1, no. 2, pp. 34-43 2018 doi: 10.33094/journal.139.2018.12.34.43 © 2018 by the authors; licensee online academic press, usa 34 © 2018 by the authors; licensee online academic press, usa mitigating cyber sexual harassment: an insight from india deepa sethi1* --sanchita ghatak2 *1associate professor, indian institute of management, kozhikode, india 2assistant professor, jaipuria institute of management, lucknow, india abstract cyber sexual harassment (csh) can be defined as the use of the internet to make uninvited advances, communications or interactions with another person or entity. this can be in various forms like unsolicited posts and comments on social media sites, emails, texts, graphic images and posts directed at the victim, instant messaging etc. this study mainly focuses on finding out the awareness about gender based cyber sexual harassment so that the perception of women on cyber-crime with reference to indian psyche and their awareness level can be understood. it tries to find gaps between the perception and reality of these incidents and finally develop a preliminary self-help model to follow before pursuing legal action. the findings of the research will draw a path for women to understand that they should not ignore the harasser if they fall a prey to csh and be sensitized with the action to be taken in such cases. keywords: cyber sexual harassment, internet, victim. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction staying connected with geographically distant friends and relatives had never been so easy. the advent of internet as a technology to enable easy and quick communication, has brought in big snags along with it. while we are happy to find our lost friend after 2-3 decades, communication with some new ones, we sometimes fall prey to some strangers who by their obnoxious online behavior tend to seize our mental peace, self-esteem and even leave us wondering if the incident that happened was really worth it. it gets us to a feeling of embarrassment and humiliation. this has become a very common problem all the more with coming up of web 2.0 technology which basically promotes synchronous communication and interactivity. web 2.0 platform has given rise to very important advances in communication these days, the social media sites and apps like facebook, twitter, whatsapp etc. which if used in a constructive way improve efficiency and effectiveness but have a deleterious side too. these promotes sexual harassment on the internet which is predominantly called cyber sexual harassment (hereinafter to be mentioned as csh). csh can be defined as the use of the internet to make uninvited advances, communications or interactions with another person or entity. this can be in various forms like unsolicited posts and comments on social media sites, emails, texts, graphic images and posts directed at the victim, instant messaging etc. this has been identified to be of the following types: 1. gender harassment: it can be of verbal and graphic types. it is described unsolicited verbal and visual comments and remarks that abuse individuals because of their gender or is a stimuli to invoke negative sentiments. https://www.doi.org/10.33094/journal.139.2018.12.34.43 asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 35 © 2018 by the authors; licensee online academic press, usa 2. unwanted sexual attention: it happens when the harasser uses personal communication for conveying sexually inclined messages like: • victim’s sex organs • victim’s sex life • intimate subjects • sex-related images or sounds • hint upon or offer sex-related activities. further, a harasser who uses unwanted sexual attention to harass a victim online, intends to solicit sexual support from his/her victim either on the internet or in person. 3. sexual coercion: this is a very common form of sexual harassment on internet. in this, the victim is forced or pressurized to provide sexual cooperation. this is done by various means like putting threats on family members, of victim’s social status etc. 2. literature review some different form of sexual harassment on net are virtual rape via cyberspace, cyber morphing, cyber pornography, cyber defamation (halder and jaishankar, 2009; calvete, orue,estévez, villardón and padilla, 2010; agarwal 2013; beckman, hagquist, and hellström, 2013; bastiaensens et al., 2014; citron, 2014; fenaughty and harré, 2013).it has been found that violence against women specifically sexual abuse on women are becoming grave day by day. internet adds up to this form of crime against women. united nation describes sexual harassment as "any act of gender-based violence that results in, or is likely to result in, physical, sexual or mental harm or suffering to women, including threats of such acts, coercion or arbitrary deprivation of liberty, whether occurring in public or in private life (empowering women against cyberviolence 2011). further to this, majumdar (2003) suggested that violence against women is neither cultural nor region specific, rather it spreads across all class and community. it has also been observed that women as compared to men face more of online sexual harassment simply because of gender issue (nussbaum, 2010; citron, 2014; cross, 2014). according to halder et al (2010), it has been observed that many such crimes are the result of women sharing their personal details, passwords etc. sometimes due to less awareness of such crimes or due to pressure from family (spouse) or friends(specially boyfriends or exmates). such cases are increasing all the more because people are aware that there is no clear law against such crime as compared to law against rape or physical violence (walia 2013). in a very interesting study by meyer and cukier (2006) with some fake male and fake female ids of facebook, it was found that female ids get more sexually explicit and offensive comments as compared to male, which shows that it’s because of the gender issues that such crimes are getting patronage. so gender becomes an important aspect to consider while studying cyber sexual harassment (chen, zhou, zhu, and xu, 2012; yang, kiang, chen, and li, 2012; dadvar and de jong, 2012; dinakar, reichart, and lieberman, 2011; dinakar, jones, havasi, lieberman, and picard, 2012; ptaszynski et al., 2010; reynolds, kontostathis, and edwards,2011; dadvar,jong de, ordelman, and trieschnigg, 2012) because in any case maximum victimization has been on women only. some studies have recently reported that these are some common crimes women face on internet specifically on social media sites flaming(displaying hostility by insulting, swearing or using otherwise offensive language) on youtube (moor, heuvelman, and verleur,2010) , less accountability by means of anonymity ((lapidot-lefler and barak, 2012; rowe, 2014; santana, 2014), discourteous comments (hmielowski, hutchens, and cicchirillo, 2014). apart from these mentioned above some major researches on technology based sexual harassment are listed in table 1. thus it becomes all the more important for the women to know what are the do’s and don’ts while interacting on internet, which will help them to protect themselves from such incidents. not much research has been done on the field of csh more specifically in the indian context. in fact, there is a dearth of l iterature on measurement of magnitude of harassment and also type of harassment and the initial strategy of tackling the issues. this study mainly focuses on finding out the awareness about gender based cyber sexual harassment so that the perception of women on cyber-crime with reference to indian psyche and their awareness level can be understood. it tries to find gaps between the perception and reality of these incidents and finally develop an action plan to follow before pursuing legal action. the findings of the research will draw a path for women to understand that they should not ignore the harasser if they fall a prey to csh and be sensitized with the action to be taken in such cases. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 36 © 2018 by the authors; licensee online academic press, usa table-1. related studies. technology-facilitated sexual violence victimization dimensions studies identified online sexual harassment ballard and welch ;baumgartner, valkenburg, and peter (2010), burke, wallen, vail-smith, and knox (2011), dreßing, bailer, anders, wagner, and gallas (2014), and staude-mu¨ller, hansen, and voss (2012) genderand sexuality-based harassment ballard and welch cyber-obsessive pursuit ballard and welch , burke et al. (2011), dreßing et al. (2014), and thompson and morrison (2013) image-based sexual exploitation burke et al. (2011), dreßing et al. (2014), drouin and tobin (2014), drouin, ross, and tobin (2015), ga´mez-guadix, almendros, borrajo, and calvete (2015), and thompson and morrison (2013) the use of a carriage service to perpetrate a sexual assault or coerce an unwanted sexual experience baumgartner, valkenburg, and peter (2010), ga´mez-guadix et al. (2015), and thompson and morrison (2013) adopted from: henry and powell 2016. 3. research methodology qualitative methods are useful to investigate little known facts and cognize peoples’ complex existence (morrow, 2007). with this view, we employed an inductive and exploratory qualitative approach, grounded in the experiences of women, to obtain initial insights as to how women can proceed when handling cyber sexual harassment. researchers using quantitative value studies, that apply random and statistically representative sampling so that results can be generalized to populations. however, researchers doing qualitative analysis value the complexity of meaning provided by smaller, information-rich samples (morrow, 2007; sandelowski, 1995). consequently, qualitative research is carried out with smaller sample sizes and relies on purposeful sampling methods. the number of a qualitative sample size is less important than the quality of the data gathered in connection with the aim of the research. thus, the sample size of the present work was fitting because of the exploratory nature of the study, the limited focus of the study, the information rich nature of the sampled individuals, the in-depth nature of the interviews, and the triangulation of the data sources and analytic approaches (sandelowski, 1995). therefore, data collection concluded when it reached a level of saturation and started creating redundancy (corbin and strauss, 2014). thirty-two persons were identified for the study based on purposeful sampling. each participant was asked if he/she was aware of cyber sexual harassment. twenty persons agreed and hence they were chosen for further probing. among the participants, ten were professionals from the age group 30-50 while ten were students from the age group 20-30. having done so, an attempt was made to explore the responses to csh by females and to find if there was any difference in the way the working-women responded as compared to those by female students. for this, 2 structured questions were asked to each participant. participants were asked the following 2 main questions. 1. what is cyber sexual harassment according to you? 2. have you faced cyber sexual harassment? if yes, what was your reaction? if no, how would you react if you ever face it? the participants were also asked to explain the effects of csh on the victims. 4. data collection, analysis, and writing in qualitative studies, the major concerns are: adequacy of data, including sufficient time in the field, in addition to sufficient volume and variety of evidence used as data, to substantiate the explanations made in analysis (morrow, 2005). the data were composed of over 7 hours of individual interviews collected over a 1month period. we transcribed the interview verbatim. at first, interviews were analyzed using mcleod’s (2014) five-stage method. stage one: immersion required reading and listening to interviews, to be sensitized to the respondents’ covert meanings and overt meanings. the next stage: categorization comprised coding sections of the transcripts that highlighted meaning relevant to the study. further the stage: phenomenological reduction consisted of reducing meaning units into important the mes. stage four: triangulation involved comparison of themes with one another and to raw data to isolate the more important themes from the less important ones. in stage five: interpretation, themes were compared with existing literature. the investigation began with immersion, probing each detail of the data to develop a strong foundation in the data (corbin and strauss, 2014). next, in open coding, raw data were broken down into convenient analytical fragments to enable the identification of basic concepts (corbin and strauss, 2014).codes were developed on the basis of words used by the participants. thereafter, axial coding was done and the data were put back together again by linking the codes to one another and forming categories. to understand the asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 37 © 2018 by the authors; licensee online academic press, usa categories better, data and codes were systematically compared. lastly, selective coding was carried out, in which a core category was selected and its relationship with the major categories was extrapolated. core category related to all other categories, it occurred frequently in the data, it related to other categories, and it was generalizable to other phenomena. thus it was done as per suggested by corbin and strauss (2014). a visual model of the plan of action was developed to represent the participants’ responses to csh. as is typical of grounded-theory methods (glaser and strauss, 1967), the authors searched for disconfirming evidence within the data for the analytical framework and evolving model. 5. findings participants’ responses were mainly focused on csh faced by them or known to them on social networking sites. the responses were studied for common word usage, similar ideas, and shared meanings to discern emerging themes. when enquired what cyber sexual harassment is according to them, 75% of the respondents stated that posting of lewd comments, obscene photographs, images and videos without permission in order to cause mental abuse referred to cyber sexual harassment. table 2 highlights a few indicative statements by the respondents: table-2. responses. r3 corporate hr another form of this can be imposing sexual images, referring private body parts or sex organs, sending indecent images etc. r4 doctor offensive and bad posts and photographs. r8 corporate trainer in my view, cyber sexual harassment is targeting an individual and exerting abusive comments in the form of voice or video. r11 student as much as i know, there have been instances of men passing lewd comments in a chat and of them sending vulgar messages, pictures and videos through social media sites. r14 student posting obscene-morphed pictures of people. people who perpetrate this act, steal photographs of victims from social media websites, edit it and circulate it online. r20 student cyber sexual harassment, for me, means for example someone uploading someone’s nude pictures without permission. source: responses from respondents. the remaining 25% believed that cyber sexual harassment is every activity which is sexual in nature see table 3. table-3. responses. r10 freelancer according to me, if any gender makes any unwanted sexual advance towards the opposite gender on net like chat rooms, facebook or whatsapp, it is cyber sexual harassment. r19 student according to me it's unwelcome use of information technology for sexual violence and cyber stalking which is sexual in nature. source: responses from respondents. they were further asked if they have ever faced csh, what their reaction was or if not, how they would react. to this it was found majorly the following three actions are generally taken or thought about as a step see table 4. table-4. actions taken by respondents. 1. blocked the person 38% 2. reportedabuse/reportedtocyber cell or police 52% 3. too legal action 10% source: responses from respondents. 6. discussion the study clearly indicates that most of the participants understood csh as an act of posting comments, pictures and videos, lewd and offensive in nature; while a few others also stated that cyber sexual harassments was any kind of sexual advance online. experts in the field were consulted and their understanding of csh was made note of. when a practicing advocate was requested to opine on her views on what csh is, she stated, “the recently enacted "the sexual harassment of women at workplace (prevention, prohibition and redressal) act, 2013 defines “sexual harassment” (section 2 (n) as it includes any one or more of the following unwelcome acts or behaviour (whether directly or by implication) namely:{i) physical contact and advances; asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 38 © 2018 by the authors; licensee online academic press, usa or (ii) a demand or request for sexual favours; or (iii) making sexually coloured remarks; or (iv) showing pornography; or (v) any other unwelcome physical, verbal or non-verbal conduct of sexual nature; therefore, any such act when committed with the help of computer or technology could be cyber sexual harassment. further, the information technology act, 2000 (amended in 2008) also relates to cyber offences. cybercrimes relating to women includes: harassment via emails, cyber-stalking, cyber pornography, defamation, morphing, email spoofing. we had section 66a of this act recently being struck down by the hon'ble supreme court in shreya singhal’s case.”if somebody is booked under section 66a, the person can face up to 3 years of imprisonment along with a fine. but section 66a has some problems. section 66a is unclear and has some undefined terminology. the definition of • what is ‘insulting’ or ‘injurious’ is not clearly defined. • is a rape threat a comment about physical appearance or maligning of public op inions? • is ‘annoyance’ the same as ‘criminal intimidation’ or ‘enmity’? • under whose purview does the defining of these ambiguous terms fall? thus internet advocates along with others who talk about freedom of expression as a human right find section 66a directly contradiction these rights. in such a case the following sections can be used. section 509: word, gesture or act intended to insult the modesty of a woman. section 499: defamation: harming the reputation of a person through words, signs, or visible representations. many women bloggers and tweeters say that the violent sexist slander they receive goes on to create an irrecoverably negative message for them within their communities, societies, etc. section 503: criminal intimidation: one of the most widespread incitements to violence against women on the internet is through the form of rape threats. section 507: criminal intimidation by an anonymous communication : rape threats – and other threats of violence – where the harasser is unknown (useful in a cyber world of ‘trolls’ and fluid identities) can be addressed under this section. section 228a: disclosure of the identity of victims of certain offences: disclosure of the identities of rape victims is prohibited by law. images of rape victims as well as images and videos of rape are sometimes published on the internet to silence victims and intimidate other women – this is not legal. another advocate described csh as, “according to me any sexual advances through cyberspace are sexual advances through online chatting, recording online audio/video or chatting history of private conversation between the parties, and later on using the same for any kind of emotional torture, blackmail, etc. even now a day’s one, hacking of social media accounts and sending morphed pics, video and sexual contents are different kind of sexual harassment incidences. many times when the any individual by using fake identity on social media, develops intimacy and thereafter start blackmailing or sending sexually coloured communications is also covered under cyber sexual harassment.” he shared his experience related to csh in the words, “one of my clients faced such a harassment from his own husband with whom he was having very strained relationship and were fighting criminal cases against each other. and the husband started sending the video clips and pics which they shares online or online video chatting between them during courtship, which was nothing but private moments between the engaged couple. we had very hard time to get th e criminal case registered but in vain even the so called cyber cell of the police was also of no help. finally we could not register any fir for cyber sexual harassment and under i.t. act. in between however when we started pursuing the matter, few times police personal had called the husband to ask his version, which put him under pressure and finally the matter was mutually settled and the divorce was done. the young girl, decided not to pursue the matter. that was the only experience i have, which i encountered with the administration and the experience was very bad. if at all i face such an act, i will definitely take the issue to its conclusion, by moving to court by filing criminal complaint, and would not prefer fir.” the district child protection officer of a state shared, “when any words, pictures, movies or something disturb/harass mentally or psychologically through the content of any cyber media including whatsapp, mail or any other digital media considered as csh. the help of cyber cell is taken in cases of csh.” the study also found that each participant, irrespective of whether she is a working woman or a student would respond to cyber sexual harassment in a no-nonsensical manner. following major themes emerged from the participants’ responses on what they do in cases of csh: 6.1. identifying the act of csh most of the participants (90%) stated that it is necessary to understand the undesirable advances of an individual right in the beginning. the moment the initial “innocent” compliments on one’s beauty turn into comments related to one’s physical stats, one should beware and strictly communicate one’s discomfort to the sender. this has also been identified in studies by harriot 2010, shaw 1990. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 39 © 2018 by the authors; licensee online academic press, usa 6.2. blocking the person participants opined that if it is found that merely communicating discomfort is not working, the contact can very well be blocked to avoid further annoyance. blocking the contact gives an opportunity to the sender to own up for one’s mistake (if it is) and apologize. moreover, it is also an attempt of a female to follow a procedure to escalate the matter in future, if need arises. thesis a reiteration of what simons, r.n. (2015) in his study said. 6.3. reporting abuse & seeking assistance from cyber cell/police reporting abuse is the next step to ensuring virtual safety from lecherous comments. it sends an indication that the sender has been annoying one and that an action is needed to keep the sender’s actions in check. seeking assistance from the cyber cell/police facilitates in bringing the culprit to task. ways of responding to such incidents also appear in a website by robinson and segal (2016) the study found that whether the female is working or studying, she agreed to involve the cyber cell/police in handling matters related to csh without any intimidation. a respondent – a student, said, “i have personally never faced cyber sexual harassment but i came pretty close to it once. my immediate reaction was to block all my data in social networking sites from the outside world. i researched on the dark side of internet and how the world of cybercrime works. i will be very upfront about it. with so much data in cloud and so many means of distorting data prevalent in modern times, i would certainly try to stop the crime from happening to other victims.” her statement clearly indicates the courage with which she would face the situation by not only taking the right measures to combat it but also to make others aware by exposing such acts of lewdness. 6.4. taking legal action there were varied views related to the existing laws in india to take care of csh. only two participants (participant 6 & 8), both professionals, indicated the importance of legal action in dealing with cases of csh. however, according to participant 10, a professional woman in the age group of 30-50, who had faced an act of csh, “cyber law is not as strict as we read and it has lots of loose ends.” the study also highlights the effects of csh on victims. probing into the issue of csh and reviewing the literature, it was found that though there is some awareness level but often the intensity and seriousness is undermined (sheryl, michelle , aneta and jessica, 2014) following are the two crucial effects as identified by the victims: 1. mental torture when there was a probe into the effects of csh, the experiences narrated were quite painful to make note of. how much mental torture can a person undergo is quite evident from what was shared by participant 1, a dentist by profession, now working with a multinational . she stated, “yes. i had no time to react but undergo third degree torture by my extended family for all possible worst case scenarios they could imagine. i had to undergo dope test, gynaecological examinations, and psychiatry trials to be certified as "good". anyway my body has been tough enough to take all this non sense and mentally dint break down and give up. anyway i would say this has helped me develop a never give up attitude. people who knew every bit of what i went through today think maybe they were wrong. on a lighter note i now have a fb account. but this time any harassment by any one in any form my family has promised me that they will definitely ensure that the necessary price is borne by whoever does so.” a review of various studies strengthened that cyber sexual harassment is always not sexual in nature. it creates other kind of mental and psychological trauma as well (blumenfeld and cooper, 2010; finn, 2004; hinduja and patchin, 2008; lindsay and krysik, 2012). 2. damage to relationship and trust csh surely contributes in damaging relationship and trust. it has been reconfirmed in the literature idris et al (2012). in the current survey one of the participants said, “another incident that i would like to quote here is of a friend, a couple of years older. she had just got engaged when her ex-boyfriend hacked her fb account (he had the password), put up a profile pic of the girl and the guy sitting together intimately, messaged all her friends and relatives from her account that she was getting married forcefully. we reported her profile as spam and the account was blocked by fb. the girl’s family filed a complaint, and the guy was tracked and put behind bars. the girl’s engagement, however, fell off.” it was not the falling off of the engagement that tormented her and her family but the irreparable damage caused to their trust in relationships. 7. conclusion & recommendations based on the study, the researchers propose the following action plan as an initial strategy to combat csh before taking a formal legal action see figure 1: asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 40 © 2018 by the authors; licensee online academic press, usa figure-1. primary action plan (ibr). source: model developed by researchers. identify it is imperative to identify acts of csh in the nascent stage. women, in particular, girls, often ignore or delete the unwanted posts, photographs, and videos. this generally encourages the abuser and makes them bold enough to post more of these and with even more intensity. it is advisable not to react or respond t o any such material. block one needs to remember that most of the social networking sites are equipped with the ‘block’ action, by way of which the abuser can be blocked from one’s account. “blocking is a strategy that deals with the abuse on an individual basis, rather than bringing out its structural foundations” (kovacs, padte and shobha 2013). report there are mechanisms to report abuse on the social networking sites. to be specific, facebook has a mechanism in place that permits users to report abuse, whether it is for harassment on chat or if abusive comments are being posted on the wall or if any content is considered inapt. it is further suggested that in case the victim is skeptical about reporting the abuse to legal authority as police due to various reasons like fear, perception that no action is taken or any other negative perception, saving face in society etc. the other option is to file a public interest litigation ( pil). pil is a way of using the law strategically to effect social change. the benefits of pil can be listed as: 1. provide access to justice: many people are simply not in a position to take legal action themselves. this may be due to personal, financial or time issues, or they may not be aware of their rights or who to take their complaint to, or they may not have the capacity to advocate for themselves. such individuals can get access to justice by filing a pil. 2. hold government to account: pil can be used to challenge government policies and procedures that violate human rights or equality standards and to provoke the political system into responding to a problem it has hitherto ignored. in doing so, it can help provide a check on government, statutory and public bodies, holding them to account for failures to uphold domestic and international human rights and equality standards to which they are bound. 3. raise awareness: as well as providing legal redress, pil is a useful way of raising awareness of issues. a high profile case can prompt public debate and bring about pressure for social and legislative change outside the court room. 4. save costs: costs are a major factor for most people considering litigation. by taking strategic cases, pil can create a positive impact for a wide group of people without each of them having to go before the courts themselves, thus saving time and money for both victims and the courts though filing pil can also be matters of public importance but as mentioned in literature the matters of private nature: may include: • threat to or harassment of the petitioner by private persons, • seeking enquiry by an agency other than local police, • seeking police protection, • early hearing of matters pending in high court and subordinate courts and are not considered matters of public interest. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 34-43 41 © 2018 by the authors; licensee online academic press, usa although it is convenient for women to ignore the abuse and the abuser, and further to shy away from the social networking sites to be safe from csh, it is far from being advisable. one needs to understand one’s rights and act accordingly. some non-legal actions have also been identified in a study by phadke, 2010. 8. limitations and implications justlike the other qualitative studies, the conceptual action planresulting from this study is not proposed to generalize to large populations of persons. in fact, the conceptual action p lan is a unique combination of the participants, investigators, and the research context. readers need to examine critically the evolving conceptual action plan proposed here in the context of their distinctive settings to decide if it transfers to their specific circumstances. the most obvious limitation of this study is the narrow geographic diversity of the participants. accordingly, future research should include diverse expressions and which might address specific csh perspectives to gain deeper insights into the topic. the researchers feel that variety of respondents based on culture will enhance the understanding of the issue. the study could provide holistic global insights if the respondents are from diverse backgrounds and different countries. the study records the responses of only female participants. the responses from males and the other gender may further add inputs to the current research. despite the limitations of the present study, many implications exist for future research, practice, and training. most of the past scholarly work related to csh has been conceptual rather than empirical. future studies may contribute to a growing knowledge base by providing women with empirically based guidelines for combating csh. moreover, a strong qualitative groundworkaims at providing a foundation for mixed methods research and quantitative-outcome research. this study addressed a question that had yet to be examined in the current literature on csh: how do victims of csh integrate the action plan proposed in the study. the conclusion and recommendations have valuable implications for research and training. references agarwal, r. 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(2012). artificial immune system for illicit content identification in social media. journal of the american society for information science and technology, 63(2): 265-269. ballard, m. e. & welch, k. m. (2015). virtual warfare cyberbullying and cyber-victimization in mmog play. games and culture. haruna, i., adaja, j., samson, a. & aye, g.a. (2016). analysis of the causes and effects of sexual harassment on the performance of female employees in some selected organizations in kogi state, nigeria. international journal of democratic and development studies (ijdds), 2(2): 31 -39. http://www.helpguide.org/articles/abuse/cyberbullying.htm http://dx.doi.org/10.1002/nur.4770180211 http://www.ohrc.on.ca/en/book/export/html/10245 http://hdl.handle.net/2142/73743 asian themes in social sciences research issn: 2578-5516 vol. 3, no. 1, pp. 22-27 2019 doi: 10.33094/journal.139.2019.31.22.27 © 2019 by the authors; licensee online academic press, usa accepted: 25 june 2019 | published: 8 july 2019 22 © 2019 by the authors; licensee online academic press, usa verb valency in listening comprehension practice of the toefl test sisila fitriany damanik1* --mulyadi2 1universitas negeri medan, indonesia. 2universitas sumatera utara, indonesia. abstract this article is about verb valences which discuss the link of elements in language. it is the relationship between verbs and elements or constituents around them in their capacity as basic constituents of building sentences. the basic constituents include the transitivity and verb assignment to the surrounding arguments so that there are one-valent (monovalency), twovalent (bivalency) and even three-valent (trivalency) forms found. the data analysis method used is a referential equivalent method with the basic technique of powering it to differentiate referents. the basic technique used is the technique of determining the determinant elements by powering them to differentiate the referents. this technique is used to sort or classify the valency structure of verbs in the matter of listening comprehension practice of the toefl test. the source of data is from the complete guide to the toefl test written by bruce rogers. as the result, there are verb with one, two and three valences. a mono-valent verb in a sentence or clause is a verb form which is only compounded with one dependent element and is the subject of that clause. the verbs with two valences are also found in the exercise. the verbs that can bind two arguments at once and usually the argument is the subject and grammatical object of the sentence, and both must be attached simultaneously. a three-valent verb appears in a sentence or clause that has a syntactic / periphrasis causative construction. keywords: valency, monovalency, bivalency, trivalency. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. acknowledgement: the authors would like to acknowledge the contribution of those involved in the finishing of this article 1. introduction essentially, the term valency or valence is used in chemical terminology as a statement about the capacity of elements combined with other chemical elements. likewise, in linguistics, the term valency is also used to express the relationship of compounding elements in a chemical compound, but in linguistics the compound element is the compounding of clauses or sentences building elements in a language intended to provide syntactic relationships (whaley, 1997). valency of verbs of all languages, basically, can be described the form of existence and its compounds with verbs that are compounded or bound to it. this compounding is universal for all languages in the world. the link of elements in language is the relationship between verbs and elements or constituents around them in their capacity as basic constituents of building sentences, namely grammatical subjects and objects which are attached to or combined with these verbs. the basic constituents include the transitivity and verb assignment to the surrounding arguments so that there are one-valent (monovalency), two-valent (bivalency) and even three-valent (trivalency) forms found. https://www.doi.org/10.33094/journal.139.2019.31.22.27 asian themes in social sciences research 2019, vol. 3, no. 1, pp. 22-27 23 © 2019 by the authors; licensee online academic press, usa in verb valency, there are two forms of verb assignments – transitive and intransitive verbs forms. although it seems that these two forms are the same, but in fact they are indeed completely different. the term transitive and intransitive refer to the presence or absence of a combination of verbs with a subject or grammatical object that can be attached to it. although the terms transitive and valency are different, the use of the term transitive is still needed in this discussion of valency because the use of the term transitive is caused by the existence of relations with matters concerning the subject and grammatical objects in clauses or sentences. in this article, the valency of the verbs which will be analyzed is the valency of the verbs in listening comprehension practice of the toefl test. as mcnamara (2000) said, when someone has reached the aspects of a language, and combines these aspects with their language skills, we can measure how great they are with language tests. language tests can be accepted to determine someone’s language skills as long as they are appropriate with the tests chosen. the toefl test is one of the standard language proficiency tests that measures a person's skills in language. the fame of this test increases with the number of english language students who use english as a foreign language. if setyawan and wiratmaja (2018) analyze the toefl test in semantic and pragmatic contexts, and they find several types of semantics and pragmatics on the test, then in this article the author will analyze valency verb aspects as objects of study that are expected to help students or the community in studying the toefl test as a standard language proficiency test. the problems that will be discussed in this study relate to the valency structure of verbs in the listening comprehension practice of toefl test. 2. literature review aisen in hopper and thompson (1982) suggests that valency is used to refer to the nominal number of arguments in a clause at any level. while katamba (1993) states that valency is the number of arguments in the syntactic framework associated with verbs caused by grammatical functions. the same thing was declared by van vallin and lapolla (2002) the number of capable and common arguments bound or taken by verbs is called valency. they distinguish between valency syntax verbs and valency semantic verbs. valency of syntax verb is the number of arguments morphosyntactically implied and it is needed by the verb. meanwhile, the valency semantic verb is the number of semantic arguments taken by certain verbs. both types of valency are somewhat different. the word rain in english, for example, does not require an argument semantically, but syntactically the word requires one argument because each english clause requires a subject, for example, it rained or it is raining. in english, the clause rained or is training is not acceptable because those clauses have no argument. furthermore, the notion of valency is generally associated with transitivity. herbe rt in hopper and thompson (1982) alludes to the issue of transitivity structurally and traditionally. according to him, structural transparency is a structure related to a predicate and two non-oblique arguments; subject (s) and direct object (do). traditional transitivity is overall transitive in clause; refers to bringing or moving actions from agent to patient. basically, valency is determined by verb behavior. therefore, the verb can be called a transitive verb (intransitive, transitive and ditransitive). transitivity can also be seen and understood as the number of components relating to the different aspects of the effectiveness or intensity with which action is carried out (see hopper and thompson, 1982). the study of valency (syntax) which is equated with transitivity is also stat ed by van vallin and la polla (2002) in which they stated that verbs which take one core argument in syntax are called intransitive verbs, which take two arguments called transitive, and which takes three arguments called ditransitive. this is in line with the opinion of verhaar (2012) which explains that verbs in languages can be verbs that have one two or three valences. verbs with one valency are marked with verb forms which can only be compounded or followed by just one argument. furthermore, the verb which has two valences are the verbs that can bind two arguments at the same time. then the three-dimensional verb is a verb that can bind three arguments at once. the abbreviations used in this article are: abreviation original form pro pronoun sg singular pl plural v verba trans transitive intrans intransitive ditrans ditransitive pre preposisi pass passive vls valency asian themes in social sciences research 2019, vol. 3, no. 1, pp. 22-27 24 © 2019 by the authors; licensee online academic press, usa 3. method of analysis the method is a way of approaching, observing, analyzing, and explaining a phenomenon (kridalaksana, 2001). the data analysis method used is a referential equivalent method with the basic technique of powering it to differentiate referents. according to sudaryanto (2015) in the method of matching, the outside determinant is detached, and does not become part of the language (langue) concerned. the method is used because the thing analyzed in this article is the valency structure of the verb in the matter of listening comprehension practice of the toefl test. matching method techniques are basic techniques and advanced techniques (sudaryanto, 2015). the basic technique used is the technique of determining the determinant elements by powering them to differentiate the referents. according to sudaryanto (2015) the types of determinants will be separated or divided into various elements. the power of the sort is called the referential sorting power which then used to determine the structure and variation of the review text structure that meets the superstructure . this technique is used to sort or classify the valency structure of verbs in the matter of listening comprehension practice of the toefl test. the source of data is from the complete guide to the toefl test written by bruce rogers. 4. discussion as it is discussed earlier, verb valency requires a dependent in designing sentence structure. the dependent number is very varied, so there will be found verbs with one, two and three valences. 4.1. one-valent verb (monovalency) a single valent or monovalency verb in a sentence or clause is a verb form which is only compounded with one dependent element and is usually the subject of that clause. this verb can also be referred to as an intransitive verb where its appearance does not require a dependent function as a grammatical object. here is an example of one valence in the toefl practice questions: (1) she went to the center with her friend. pro 3 sg v vls intrans (2) they can’t leave until the rain is stopped. pro 3 sg v intrans verbs went and leave are intransitive verb because these verbs can only be compounded with only one element she as it is shown in clause (1). she is a pronoun that functions as the subject of the clause. even though the clause can be extended to she went to the center with her friend and so on, but the element to the center with her friend was not the valency of the verb went. it is similar with the element they in clause (2) they can't leave, where the element of they is also a pronoun that functions as the subject of the clause, and this clause can also be extended to they can't leave until the rain is stopped, etc. however, it does not mean that the phrases are positioned as valency verbs leave. the phrase leave until the rain is stopped grammatically is only the complement of the speech and is not located as the valency verb. 4.2. two-valent verb (bivalency) a verb with two valences is a verb that can bind two arguments at once and usually the argument is the subject and grammatical object of the sentence, and both must be attached simultaneously. a two-valent verb can also be called a bivalency verb or a transitive verb, for example, the verb read in english is a bivalency verb because grammatically the verb absolutely binds two arguments together as in the following cl ause example: (3) the young man reads the book. pro 3 sg v vls trans vls the young man and the book valency must be attached simultaneously to the verb reads, therefore the form : a. * the young man reads b. * reads the book can be considered as incomplete and not grammatically acceptable because in form (a) there will arise a question what does the young man read? while in form (b) the question will be who reads the book? so the two forms above are not perfect because they are only supported by one valency. it is similar with the following clause found in the toefl practice questions: asian themes in social sciences research 2019, vol. 3, no. 1, pp. 22-27 25 © 2019 by the authors; licensee online academic press, usa (4) eugene missed a lot of class last week pro 3 sg v vls trans vls eugene and a lot of class must be attached simultaneously to the verb missed, therefore the form: c. *eugene missed d. *missed a lot of class are not a grammatically acceptable form, because it can be seen from the form (c), there will be questions about what did eugene miss?, and (d) who missed a lot of class?. so, both forms (c) and (d) cannot be considered as complete form because they are only supported by one valency. this also happens in the example of the following toefl practice exercise; (5) they can park their car at the zoo pro 3 sg v vls trans vls the verb can park is included in the verb category with two valences which are compounded with arguments and attached directly to him, so the form: e. *they can park f. *can park their car are not categorized as a grammatically acceptable form: (6) she is making steady progress pro 3 sg v vls trans vls the verb is making is categorised as a verb with two valences which are compounded with the argument and attached simultaneously to it, so the form: g.*she is making h. *is making steady progress are forms that cannot be considered perfect and are not grammatically acceptable. in other case, although the questions (a) what can they park? and (b) who can park the car? are commonly used in a non-formal form of conversation, but those verb syntactically is still considered as a two-valent verb. 4.3. three-valent verbs (trivalency) a three-valent verb in english depends only on the type of verb, as can be seen in the verb wrote in the clause as follow: (7a) she wrote a letter to her friend pro 3 sg v vls ditrans vls prep vls or (7b) she wrote her friend a letter pro 3 sg v vls ditrans vls vls clause (7a) and clause (7b) are two grammatical structures that contain the same meaning. in clause (7a), she, is a valency that is located as a grammatical subject of the clause while the valency of a letter and her friend are arguments that function as a grammatical object namely a direct object and an indirect object connected by a preposition (to). in clause (7b), the valency position of she remains as a grammatical subject, while the valency of her friend and a letter occupy a position that exchange, and at the same time the preposition (to) is no longer needed. it also can be seen in the following example: (8a) he offered his help to darlene pro 3 sg v vls trans vls prep vls or (8b) he offered darlene his help pro 3 sg v vls trans vls vls asian themes in social sciences research 2019, vol. 3, no. 1, pp. 22-27 26 © 2019 by the authors; licensee online academic press, usa in english, it is not all forms of verbs have three valences. the three-valent examples that appear dominantly in the toefl practice questions are the verbs in causative construction. the concept of causative construction is expressed by goddard (1998) which states that causative construction is an expression in which it contains an event caused by one's actions or because something happens. almost every language has its own way of forming or expressing causative constructions. in general, causative construction describe events that consist of (1) the causee, that causes an event to occur (causing event) and (2) the caused the event that occurs or the result that is caused by the cause of the cause (causee) (see shibatani 1976, comrie, 1985 and song, 2001). furthermore, typologically, according to comrie (1983), causative construction can be distinguished into: 1. morphological causative construction, 2. syntactical causative/ periphrasis construction, and 3. semantical/lexical causative construction. morphological causative construction is the relation between causative predicates and non-causative predicates through morphological markers. in the morphological causative construction, the verb is indicated by affixes, for example in bahasa indonesia : “shinta menyenangkan bunda. the affix -kan is a marker of morphological causative construction in which the ' menyenangkan ' verb has a direct effect to the object. whaley (1997) also stated that the degree of causativity is the movement from indirect to direct. it is increased by following the order of morphological-lexical analytical causative constructions. syntactical causative/ periphrasis construction is a construction with two different predicates in expressing the cause and effect ideas. peripheral causative construction, according to whaley (1997), is a construction in which various verb forms are used to express what is generally expressed by a verb in conjunction with affixes. in english, the example of "he caused / compelled / forced me to do it, shows a construction which has a variety of verb forms, such as compelled + to do, used to indicate causes that are often referred to, therefore it is called peripheral causatives, or in other words, it is indirect cause and effect. semantical / lexical causative construction is the relation between the ideas of causes and ideas which are inclusive in one predicate. according to comrie (1989) and whaley (1997) if a lexical form that expresses causation is used at once, then the construction is lexical, for example: i killed the snake. syntactical causative construction / periphrasis is a construction that has a three-valent verb. in the toefl practice question the verb is categorized as special verb. the examples of verbs which are used are have, get make and let, as in the following example: (9) dave had the machanic fix his car pro 3 sg v vls trans vls v vls (10) jerry got his cousin to cut his hair pro 3 sg v vls trans vls v vls (11) cathhy made her son do his homework pro 3 sg v vls trans vls v vls (12) the boss let us go home pro 3 sg v vls trans vls v vls the verb have, get make and let indicate that someone causes another one to do something. when a sentence contains a causative verb, it must be understood who performs the action. as it is shown in example (9) the verb have indicates that one person asks or pays another to do something. the subject of the sentence, dave, does not perform the action. the one who does it is the mechanic. in other words the sentence means dave had his car fixed. in example (10) the causative verb get usually means to persuade someone to do something. in this case, again it is clear that jerry, as the subject, is not the one who performs the action. the one who does it is his cousin. . in other words the sentence means jerry got his hair cut. the causative verb make, in example (11) means to force someone or compel someone to do something. it is cathy’s son who is compelled to do his work. in example (12) the verb let means permit or allow. the boss, as the subject of the sentence, gives permission; we go home. 4.4. valency reduction valency reduction occurs as a result of one of the valences being broken because its existence in the clause is not too important or optional. valency reduction usually occurs in passive sentences, such as; (13) some important details were omitted vls v pass (14) almost every word was misspelled vls v pass asian themes in social sciences research 2019, vol. 3, no. 1, pp. 22-27 27 © 2019 by the authors; licensee online academic press, usa the valency of some important details in the example (13), and almost every word in (14), are the valences that function as the agent. the two valences are deleted because their existence in the two clauses was not really needed, so that the appearance is optional. another example of the valency reduction in the toefl test exercises can be seen as follows: (15) mobile homes were not caounted as permanent house until the 1960 census. vls v pass 5. conclusion in toefl practice exercises, there are verb with one, two and three valences. a single valent or monovalent verb in a sentence or clause is a verb form which is only compounded with one dependent element and is the subject of that clause. this verb can also be referred to as an intransitive verb where its appearance does not require a dependent function as a grammatical object. furthermore, verbs with two valences are verbs that can bind two arguments at once and usually the argument is the subject and grammatical object of the sentence, and both must be attached simultaneously. a two-valent verb can also be called a bivalent verb or a transitive verb. meanwhile, a three-valent verb appears in a sentence or clause that has a syntactic / periphrasis causative construction. in addition to the existence of one, two and three valency verbs in the toefl practice exercises, there was also a form of valency reduction. it is obtained in passive sentences which occur due to the justification of valency deletion that function as agents because their existence in the clause or sentence is only optional. references comrie, b. (1983). language universals and linguistic typology. oxford: basil blackwell publisher limited. comrie, b. (1985). causative verb formation and other verb-deriving morphology’ in t . shopen (ed.). language typology and syntactic description. vol. 33. cambridge: cambridge university press. comrie, b. (1989). language universals and linguistics typology, syntax and morphology. uk: oxford & cambridge usa. goddard, c. (1998). semantic analysis – a practical introduction. oxford: oxford university press. hopper, p.j. & thompson, s. a. (1982). syntax and semantics: studies in transitivity. new york: academic press inc, 15. katamba, f. (1993). morphology. london: the macmillan press. kridalaksana, h. (2001). dictionary of linguistics. jakarta: pt gramedia. mcnamara, t. (2000). language testing. oxford: oxford university press. setyawan, r. & wiraatmaja, t. (2018). the analysis of semantic and pragmatic context in toefl test simulation on listening section: celtic: a journal of culture, english language teaching, literature & linguistics , 5(2): 4557. shibatani, m. (1976). syntax and semantic: the grammar of causative construction. new york: academic press. song, j.j. (2001). linguistic typology: morphology and syntax. london: longman. sudaryanto, (2015). methods and various language analysis techniques. yogyakarta: duta discourse university. whaley, l.j. (1997). introduction to typology, the unity and diversity of language. california: sage publications, inc. van valin, j., robert, d. & randy, j.l. (2002). syntax: structure, meaning, and function. cambridge: cambridge university press. verhaar, j.w.m. (2012). asas-asas linguistik umum. yogyakarta: gajah mada university press. asian themes in social sciences research issn: 2578-5516 vol. 3, no. 1, pp. 11-13 2019 doi: 10.33094/journal.139.2019.31.11.13 © 2019 by the authors; licensee online academic press, usa 11 © 2019 by the authors; licensee online academic press, usa language style in the legendary book les plus belles histoires et les legendes de france hesti fibriasari1* --nurazizah2 1,2department of french language education, universitas negeri medan, medan, indonesia. abstract language style is a way of expressing thought in language so that the character and capacity of an author are implied in using language. so the purpose of this study is to analyze what style of language was used in the traditional book entitled "les plus belles histoires et les légendes de france" edition of morena and to find out the type of language style which is most widely used by the authors in the book. the types of language styles that will be analyzed are the type of repetition, hyperbole, metaphor, personification, and comparison. this study used the descriptive qualitative method which means that the conclusion of this study will be written in sentences form. the source of this study is a legendary book entitled "les plus belles histoires et les légendes de france." based on the results of the research that has been done, all types of language styles analyzed were found in that book, namely: repetition 7, hyperbole 15, metaphor 17, personification 11 and comparison 34. from the results of this study, it can be concluded that the type of language style which is most widely used by the author is the comparison type. keywords: france book, language style, legend, metaphor, repetition, hyperbole, personification, comparison. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction language style or figure of speech is part of the language that does not become so important when the language is parole, but it can be a marker given by an author in his writing to make his work has its style or character. literary works writers use the figure of speech in writing to express their ideas in exciting ways. nasution (2014) says that the figure of speech causes literary works to attract attention, create freshness, live more, and create clarity of imagination. this means that the figure of speech can create an impression that it looks new to make it more interesting to read. writing or literary works that use a lot of figures of speech to lull the reader as if they are in it and feel that the story exists in the real world where the story was told because of an evident imagination, such as poetry, tales, legends, stories of society, and history. in indonesia, there is the story of sangkuriang or the history of giliraja, and in france, there are par exemple la légende de la belle madeleine, la coquette punie, le curé avisé, etc. although it becomes more interesting, if a reader does not know the concept of interpreting a message, it will create a bias for him when understanding the story or increasing false impressions on the writing. therefore, in this research, the author will explore the concept of direct figures of speech through traditional books. the legendary book used as the object of study was a typical french book entitled "les plus bel les histoires et les légendes de france" edition of morena. this book was chosen because this book is a well known book and has high expectations from the author, when the learner, in this case, is french students, understanding how to interpret figure of speech will increase their reading interest in history and add knowledge about the use of language forms or figure of speech. https://www.doi.org/10.33094/journal.139.2019.31.11.13 asian themes in social sciences research 2019, vol. 3, no. 1, pp. 11-13 12 © 2019 by the authors; licensee online academic press, usa 2. language style language style is the process of managing language to show its peculiarities, to highlight its efficiency, or to create courage or resentment with more or less strongly depending on the choice of words used, sentence setting, selection of a term or combination of certain words (beth, 2005). one characteristic of human language can find itself, through the style of language that is used as a possible measuring tool because the language style is used every day, for example when someone says «j'ai dix mille chooses à faire», ou «il nous a quittés» according to raymond queneau's research, there is a different way to define the sentence. this condition shows unlimited language interpretation, and how the form is chosen can have an impact on the perception and understanding that will be made by the reader. 2.1. comparison this thing is the figure of speech that is used to compare two elements. this figure of speech makes it possible to establish a relationship between two terms together with the assistance of conjunctions. a comparison is like a reflection of two elements (words or phrases) that both of them are used to pre sent a more concrete, explicit, and more sensitive state of affairs for compelling et un terme les reliant, appelé comparative (tel, comme, ainsi que ...). par exemple: si je le théâtre essentiel est comme la peste, ce n'est pas parce qu'il est contagieux, mais parce que comme la peste il est la révélation, la mise en avant, la poussée vers l'extérieur d'cruauté latente par lequel as local as possible, individual, un peuple toutes les possibilites perverses de l'esprit (beth, 2005). in the example above, artaud used a comparison between la peste et le théâtre. he used the connotation associated between plague and drama to release a very real description from the part of the shadow that he projects to come to the theater. 2.2. metaphor the metaphor is a figure of speech which compares two elements without comparison tool. this term is taken figuratively. the metaphor compares comparators with those compared. this case cannot be called a comparison like the first type because metaphor creates links that implicitly unite. example: my courage, don’t forget that little emotions are the great captains in our life and they obey them without realizing it (beth, 2005). in this quote from a letter to his brother théo, van gogh uses a military image to illustrate the power of emotion although it is small <ces petits émotions>. this thing is an implicit comparison: there is no comparison compared. it only implies a metaphor: because of the power of contrast with the military situation, which means the little emotion becomes an indisputable grip of our life. (even the smallest feeling to fight will lead us to face the war that will make the opponent unconsciously follow our role. same with life, emotions must be used as courage to face life without others know they will support our desires). 2.3. repetition repetition is sound repetition, syllables, words, or parts of words that are considered essential to put pressure in the right context (keraf, 2007). according to axelle beth when we talk about repetition when the word is repeated several times and the repeated words are separated in sentence or text, so the repetition is used to show the quantity, or show the main idea or idea as well as aesthetics.exemple : la justice sans la force est impuissante ; la force sans la justice est tyrannique. la justice sans force est contredite, parce qu’il y a est tyrannique. la justice sans force est contredite, parce qu’il y a toujours des méchants ; la force sans la justice est accusée. il faut donc mettre ensemble la justice et la force ; et pour cela faire que ce qui est juste soit fort, ou que ce qui est fort soit juste. 2.4. personification personification is the process of presenting an object or idea as a human being, namely a figure of speech that closes inanimate objects with humans. this thing represents something or an idea in someone's guise. it means that personification is an allegory that uses the human character with non-human objects. par exemple : un soir j’ai assis la beauté sur mes genoux. et je l’ai trouvée amère, et je l’ai insultée (beth, 2005). the personification of la beauté: this presents a living concept (using capital letters). this process, in addition to poetry discourse, also shows the familiarity of the poet with la beauté and his iconoclastic desire to destroy existing moral values. there are also some who interpret it as a woman's image and heterosexual disappointment from rimbaud. 2.5. hyperbole hyperbole is excessive. this case is a theme that is used to produce a strong impression. hyperbole uses terms whose meaning is too strong concerning the reality being offered. par exemple: je t’ai appelé mille fois. (pramuniati and sa’dah 2011) the word mille fois is impossible for someone to be able to say it for a thousand times, but this implies that he has said it many times, but no one listens to it. asian themes in social sciences research 2019, vol. 3, no. 1, pp. 11-13 13 © 2019 by the authors; licensee online academic press, usa 3. methodology the researchers used methods in research to find out how to do this research and what ways can be done in this study. widodo (2002) stated a qualitative methodology as a research procedure that produces descriptive data in the form of written or oral words from people and observable behavior. therefore, this study will use the writing sentence to explain the data obtained in this study. the object of this study uses french legends and analyzes some forms of language style contained in them. this study uses library search methods or data obtained by reading literature books that are suitable for this problem. analyzing data in this research is needed to solve research problems. the analysis technique used is descriptive qualitative technique. the research procedure is as follows. first of all, find out what type of language was found in the book "les plus belles histoires et les légendes de france." then, read the book "les plus belles histoires et les légendes de france carefully". after that, search fo figures of speech contained in the book "les plus belles histoires et les légendes de france ", analyze the figures of speech found, identify the type of figures of speech that were found, then classify them, after that conclude the figures of speech the book" les plus belles histoires et les légendes de france ". 4. results and discussion this chapter will show the results of research that have been done to answer the problem formulation in the first chapter. in this study, the author has identified five forms of figures of speech. ce sont l'hyperbola, la répetition, la métaphora, la personification et la comparison. the result of the analysis can be summed up on the table 1: table-1. five forms of figures of speech in france legendary book no the analyzed style figures frequence percentage (%) 1 la répétition 7 8 2 l’hyperbole 15 17 3 la métaphore 17 22 4 la personification 11 13 5 la comparaison 34 40 total 84 100 the figures of speech that have been classified in the table above are 7 cases in la répétition, 15 cases in l'hyperbole, 17 cases in la métaphore, 11 cases in la personnification and 34 cases in la comparaison. 5. conclusion based on the research carried out in the history books "les plus belles histoires et les légendes de france," there are all types of figures of speech identified therein. figures of speech which have been classified in the table above are 7 cases in la répétition, 15 instances in l'hyperbole, 17 cases in la métaphore, 11 cases in la personnification and 34 cases in la comparaison. the most common type of figure of speech is the comparison, with 34 cases. this happened because in the legend there are many comparisons between the life that is told and the actual life today, including the use of comparison between animals and humans, human activities with the wind, a rich king in the sea, a poor man who shakes leaves, etc. this indirectly imagines how history happened. references beth, a. & marpeau, e. (2005). figures of style. paris: e.j.l. keraf, g. (2007). language and language style. jakarta: pt gramedia main library. nasution, h.t. (2014). analyzes the figure of speech on the novel of s.o.s., jura in danger. memory. medan: unimed. pramuniati, i. & sa'dah, w. (2011). text study. medan: unimed. widodo, j. (2002). research methodology. public policy: reading. new york: new jersey. asian themes in social sciences research issn: 2578-5516 vol. 5, no. 1, pp. 1-12 2021 doi: 10.33094/journal.139.2021.41.1.12 © 2021 by the authors; licensee online academic press, usa accepted: 22 january 2021 | published: 10 february 2021 1 © 2021 by the authors; licensee online academic press, usa economic community of west african state’s (ecowas) controversy: wither a need for single currency by 2021? opue job agba1* --ifeoma stella madueme2 1,2university of nigeria, nsukka, nigeria. abstract the business cycles in the west african monetary zone (wamz) as well as west african economic and monetary union (waemu) using real gdp growth within 1980-2019, detrended by hodrick–prescott filters were analyzed. the pearson correlation analysis on the computed z-scores was employed to examine the level of synchronization of business cycles, the level of symmetry in macroeconomic policies and the level of symmetry in trade flows. it was evident that business cycles synchronization was on the whole increasing, but with higher intensity within waemu region than within wamz region where only ghana-guinea, ghana-nigeria, guinea-gambia as well as guinea-nigeria as pairs were significantly synchronized. symmetry in macroeconomic policies was on the whole minimal within ecowas region. the flow of trade however within ecowas region was asymmetric between cote d’ivoire and other waemu countries and between nigeria and other wamz countries, but was symmetric between other ecowas countries, indicating that these economies rely more on transaction with other developed economies. the empirical results provided a direction for countries with synchronized business cycles such as ghana, guinea, gambia and nigeria to consider proceeding in the creation of the second west african monetary union (swamu) while also creating an enabling environment for other countries within wamz to join in due course. the study recommended among others that any country under waemu without strong similarities with other countries as pairs should disengage from waemu. on the converse, countries with strong similarities as pairs should unilaterally realign their exchange rate. keywords: trade-flows, macroeconomic policy, business cycles, synchronization, symmetry. jel classification: c32; c51; e32; f15; f42; f53. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. acknowledgement: authors sincerely wish to thank all the lecturers of the department of economics, university of nigeria, nsukka for painstakingly proofreading this work and making valuable suggestions. may the almighty god grant you all your hearts’ desire. 1. background to the study the year 2020 had been slated for the commencement of the second west african monetary union and the conditions for being part of the body was succinctly endorsed as the ecowas macroeconomic convergence criteria. these criteria, which are simply similarity targets, have been violated several times, resulting to subsequent postponements of the commencement dates for the creation of the monetary union. as reflected in appendix a, no country was able to satisfy all the primary convergence criteria between 2001 and 2005, hence, the postponement of the launch of the monetary union to december 2009. between 2006 and 2008, gambia satisfied all the four criteria, while nigeria met all the four criteria in 2006 and 2007. in 2009, only liberia https://www.doi.org/10.33094/journal.139.2021.41.1.12 asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 2 © 2021 by the authors; licensee online academic press, usa satisfied all the four criteria following its accession to the wamz programme. thus, the launch date for the monetary union was again shifted to on or before january 1, 2015, and consequently to january, 2020 and it was still not realistic. while some countries of the zone were negatively affected by civil conflicts, the situation was compounded by severe terms to trade experienced by many countries in the last few years. a major militating factor was expansionary fiscal policies, which tended to weaken relatively tight monetary policies pursued by the sub-region’s central banks. the poor state of infrastructure was also unconducive to investments and economic growth (sanusi, 2003). the upsurge of covid-19 pandemic further drowned most economies in west africa and heightened barriers on the creation of a monetary union in 2020. for waemu region, the current estimates and projections from imf (2018) shows that on overall fiscal balance to gdp ratio, eight countries violated it, while on tax revenue to gdp ratio, seven countries violated it in 2016. some purported hindrances to successful implementation of the second west african monetary union included: lack of political will and commitment; non-similarity in the flow of trade and in the level of fluctuations of business cycles; and non-similarity in macroeconomic policy coordination and harmonization between wamz and waemu (franken., fort, & parrado, 2011; sanusi, 2003; tarawalie, ahortor, adenekan, & conte10, 2012). following the non-achievements of the convergence criteria, there is need to therefore investigate further on the various levels attained so far in these similarities targets and examine if these levels could synchronize regional business cycles given that a sufficient degree of business cycles synchronization is a prerequisite for the creation of a monetary union. however, previous research findings are of the view that the stronger the level of synchronization of business cycles between countries of the same region the greater the need for monetary cum economic integration (calderón, chong, & stein, 2002; fiess, 2005; kappel, 2015). but statistical trends of afdb (2018) reveals that the dignity of west african states has been grossly eroded in recent past despite her numerous resources. recessions and booms were experienced at diverse intervals: the recession of gambia was in 2 014, that of liberia in 2016, sierra leone in 2015, cote d’ivoire in 2011, guinea bissau in 2012, mali in 2012 and nigeria, the so-called giant of africa experienced her recession in 2016. the gross domestic product growth from afdb (2018) in figure 1 and figure 2 captures this for both wamz and waemu between 2010 and 2017. it is indicative of the wide disparities in business cycles fluctuations within each region and offer clues of asymmetries in business cycles. it is therefore not certain if the level of synchronization of business cycles between pair of countries within wamz and waemu could be adequate for the formation of a second west african monetary union. figure-1. real gdp growth (annual %) for wamz. source: afdb (2018). another important objectives of integration attempts most especially in west africa, is to work towards symmetry in trade flows (maruping, 2005) because asymmetry in trade flows may adversely affect macroeconomic policies (e.g., monetary and fiscal policies as well as exchange rates) and hinder business cycles synchronization (akin, 2006; baxter. & kouparitsas, 2005; bordo & helbling, 2003; chang, 2011; darvas & szapáry, 2004; de haan, inklaar, & jong-a-pin, 2005; fidrmuc, 2001; frankel & rose, 1998; grigoli, 2011; jules-armand, 2007; juvenal & monteiro, 2012; kose, prasad, & terrones, 2003; mendoza, 1991; mendoza., 1995; nzimande & ngalawa, 2017; pundit, 2011; rana, 2007a; rana., 2007b; shin & wang, 2004). asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 3 © 2021 by the authors; licensee online academic press, usa figure-2. real gdp growth (annual %) for waemu. source: afdb (2018). nevertheless, the various similarity targets of the ecowas macroeconomic convergence criteria were silent on regional trade, which was duly emphasized in the optimum currency area theory. this stipulates that countries within the same region must intensely trade with each other. the trade statistics from unctadstat (2018) reveals that: countries within ecowas region traded intensely with countries outside the region and minimally with countries within the same region; the flow of trade between 2005 down to 2017 as shown in figure 3 and 4 were all in deficit, that is, countries within ecowas region imported more than they exported; and the flow of trade from nigeria alone was two times that of other ecowas countries put together. these disparities in trade trends offer clues of asymmetries in the flow of trade within west african states. language and multiple currencies most especially within the wamz region are a major factor impeding the flow of trade within these economies. another factor is the undue restrictions in currency convertibility as well as production patterns. most countries within west africa only export raw materials such as crude oil and agricultural products like cocoa, oil palms, groundnuts, etc., to countries outside africa and thereafter import finished goods that are not within the reach of countries within west african sub regions. these trends in the pattern of trade flows could result in strong asymmetries in the level of trade flows and could inhibit the level of synchronization of business cycles within west african regions. figure-3. total trade balance in goods and services (us dollars at current prices in millions) for wamz. source: unctadstat (2018). asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 4 © 2021 by the authors; licensee online academic press, usa figure-4. total trade balance in goods and services (us dollars at current prices in millions) for waemu. source: unctadstat (2018). events during the last decade have revealed significant defects in the fiscal and monetary operations in west africa. it is anticipated that as one of the primary macroeconomic convergence criteria the ratio of fiscal balance to gross domestic product growth must be less than or equal to 4%. the optimum currency area criteria also prescribed from a political standpoint that countries in an integration area must be ready to share the burden by compensating each other whenever there are emerging distortions or shocks. however, all countries within wamz and waemu had wide disparities in fiscal balance (as percentage of gdp) between 2015 and 2017 (afdb, 2018; world bank, 2018). these figures were all in deficits and clearly indicate that these economies survive on borrowing and must borrow to sustain each other during crises. it does not in any way offer clues of adequacy in their compensatory capacity to sustain a steady growth and hence ensure an adequate level of synchronization of business cycles within west africa. consequently, this study in its quest on regional integration in west africa attempts to unravel the level of symmetry in trade flows, optimal macroeconomic policy and business cycles synchronization in west africa. 1.1. research objectives the broad objective of this study is to examine trade flows, optimal macroeconomic policy and business cycles synchronization in west africa. the specific objectives are as follows: (1) to evaluate the level of symmetry in trade flows and the level of symmetry in macroeconomic policies between pairs of countries in west africa. (2) to evaluate the level of synchronization of business cycles between pairs of countries within west africa. 2. empirical literature review the empirical literatures expound on the effects of trade-integration/bilateral-trade/trade-intensity and macroeconomic policy on business cycles synchronization in europe, asia and america. in africa, and above all west africa, research work in this area is still rare. most of the findings resulted from different methodologies such as the hp filters, the bp filters, the generalized method of moment, the var, svar, favar and dsge models as the case may be. most of the studies came to a conclusion that increase in tradeintegration/bilateral-trade/trade-intensity increases business cycles synchronization (akin, 2006; bordo & helbling, 2003; chang, 2011; darvas & szapáry, 2004; de haan et al., 2005; fidrmuc, 2001; grigoli, 2011; jules-armand, 2007; juvenal & monteiro, 2012; mendoza, 1991; mendoza., 1995; pundit, 2011)). in the same vein, calderón et al. (2002) were of the view that a positive relationship between trade intensity and cycle correlation could potentially be due to both variables being explained by a third factor, namely, the formation of a currency union. and that the impact of trade intensity on cycle correlation is smaller the greater the production structure asymmetries between countries. however, for artis and zhang (1999) increased monetary integration was positively related to business cycles synchronization, while krugman (1993) opined that integration was likely to support specialization according to the comparative advantage. however, kumakura (2005) deviated from the point of view of the traditional oca theory given the speed of globalization among the asia-pacific countries by arguing that a monetary union enhances trade and business cycle co-movements among its member countries sufficiently as to obviate the need for national monetary policy. according to his result, although trade was relevant to the business cycles of individual countries, the main determinant of their international correlations was not the geographical structure of their asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 5 © 2021 by the authors; licensee online academic press, usa trade but what they produce and export more specifically and the extent to which their output and exports were concentrated on electronic products. his work was one of the first of the kinds that proffered clues on similarities in trade patterns as a determinant factor for the synchronization of business cycles. jules-armand (2007) argued that the impact of african bilateral trade on bcs was positive and robust. he tested for the 53 african countries over the 1975-2004 periods the hypothesis suggesting that monetary integration adds force to bilateral trade intensity which in turn, improves conditions for the practice of common monetary policy throughout business cycles synchronization. in addition to macroeconomic convergence criteria, the promotion of bilateral trade by dropping tariff, non-tariff and infrastructures barriers would accelerate the synchronization of african business cycles and facilitate african monetary integration. more trade thus brings african business cycles closer together and could add force to various projects of monetary integration in progress. finally, he opined that those results did not take into account other possible controls mentioned in recent papers such as similarity of trade and of productive structure, and that such data were very difficult to collate for african countries. so far, his paper had remained an optimistic view on african monetary integration. it provided some insights on the fact that african mus could be self -validating through bilateral trade but the aspect of the effects of macroeconomic policies, that is, monetary and fiscal policies on business cycles synchronization were not taken into consideration. his work did not also consider the aspect of the effects of the level of symmetry in trade flows on business cycles synchronization. coleman (2011) contributed to the discussion on the long-term sustainability of the embryonic second monetary union in africa, the west african monetary zone (wamz). he analyzed the level of economic and monetary integration in west africa by analyzing the degree of growth cycle synchronization between the five candidate countries over the past thirty years. his empirical approach improves on t he standard pearson correlation between trend and cyclical components of gdp by analyzing a measure of co-movement at higher frequencies between computed z-scores for all possible pairings of the candidate countries. his results indicated a lack of a consistent pattern of synchronized growth cycles, which raises concerns about the economic sustainability of the wamz, as it implies that members may face significant stabilization costs. no investigation was made on issues in trade flows and macroeconomic policies holistically. on the effect of macroeconomic policies, most research works reviewed revealed that the convergence of macroeconomic policies such as fiscal and monetary policies were systematically linked to business cycles synchronization (böwer & guillemineau, 2006; crespo-cuaresma, pfaffermayr, fernández-amador, & keppel, 2010; jidoud, 2012)). however, of all the works reviewed, including the trade theories, none emphasized or addressed the issue of industrialization of udcs and ldcs in west africa through introduction of cyclical thrifts scheme and incentives from reserves/savings from regional countries, to stimulate investment and production, to cushion anticipated distortions/shocks before, during and after monetary integration for symmetry in trade flows and business cycles synchronization this work intends to cover this gap by analyzing the level of symmetry in trade flows, level of symmetry in macroeconomic policies and the level of synchronization of business cycles between pairs of countries within wamz and waemu separately with the aid of pearson correlation coefficient on computed z-scores. 3. theoretical framework the theoretical framework of this study anchors on the theory of optimum currency areas (oca) to show the relevance of establishing a monetary union in west africa as a developing nation. 1961 was the year mundell published a revolutionary paper in which he first developed the concept of oca. important contributions to expound the theory were later made by mckinnon (1963) and kenen (1969). in general, the decision to join a currency area involves the abandonment of an independent national monetary policy to follow a unified one. this might involve the creation of a new single currency by a new independent central bank or the fixity of the national mutual exchange rates. in the latter case, a common reserve will be needed for countries to supplement their external positions vis-à-vis other member countries (cohen, 1992). if the currency area chooses to peg its unified currency (single or multiple) to a key currency (such as us dollar or euro), it abandons the area's monetary independence for the sake of the key currency's country. towards th is decision, the oca theory emphasizes on economic integration, that is, the synchronization of business cycles of regional countries as the main aim to join a currency area. for regional countries to be economically integrated, that is to synchronize the ir business cycles, the following conditions were prescribed: there has to be free flows of goods and services within the region, i.e., production and export are widely diversified and of similar structure between countries and countries are very open to trade and trade heavily with each other, hence, there should be symmetry in trade flows; there has to be free flows of financial capital (assets) and physical capital; free flows of workers/labour i.e., there exist immigration and emigration; likewise, countries must agree to compensate each other for adverse shocks, currency union member countries must share a wide consensus on the way to deal with shocks and when the common monetary policy gives rise to conflicts of national interests, the countries that form a currency area need to accept the costs in the name of a common destiny (baldwin & wyplosz, 2009; kenen, 1969; mckinnon, 1963; mundell, 1961). asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 6 © 2021 by the authors; licensee online academic press, usa 3.1. definition of variables (i) business cycle synchronization (bs) to measure this variable, the time series correlation coefficient between de-trended real gdps growth of country i and j is used as follows (akin, 2006; calderón et al., 2002; shin & wang, 2004): the positive coefficient indicates the business cycle synchronization between two counties i and j while its negative sign is an indication of non-synchronization. however, to avoid correlation coefficient to be bounded in the [-1: 1] interval, the correlation was computed over 3-year interval with non-overlapping window, so that the error term in a regression model with those correlation coefficients as dependent variable would be normally distributed. this is aimed at making the inference on estimated results to be unbiased. this also conforms to studies on duration of business cycles: burns and mitchell (1946) define the duration of a business cycle for the united states of america between a minimum of 16 and 22 months and a maximum of 100 and 106 months. for the united kingdom the values lie between minimal 16 and 22 months and maximal 135 and 141 months. baxter and king (1999) refer to burns and mitchell, but declare the minimum and maximum duration of a business cycle to be 6 and 32 quarters respectively. where is the pair-wise correlation coefficient of the cyclical components of real gdp growth of country i and country j. represents de-trended real gdp growth, i.e., the i cyclical component of real output y for country i, while is the j cyclical component of real output y for country j and t is the time span. the measure of the cycle will be obtained by hodrick-prescott (hp) filtering of real output data, where 𝜆 = 100 since annual frequencies in the data was used. the values for each variable would be computed over the period 1980 to 2017. 3.2. trade flows similarity index (tf) regarding the independent variables, to measure the level of symmetry in trade flows, a correlation coefficient of external trade balance in goods and services of two countries are calculated. for this, the trade flow in each country in the given time period is calculated first and the correlation coefficient between them is then estimated as follows: the correlation was computed over 3-year interval with non-overlapping window, so that the error term in a regression models would be normally distributed. (iii) monetary policy similarity index (mp) the first measure of macroeconomic policy is the similarity in monetary policy. a correlation coefficient of broad money supply growth of two countries is calculated based on the study of shin and wang (2004). for this, the growth rate of broad money supply in each country in the given time period is cal culated first and the correlation coefficient between money growths is then estimated thus: the correlation was computed over 3-year interval with non-overlapping window, so that the error term in a regression models would be normally distributed. (iv) fiscal policy similarity index (fp) the second measure of macroeconomic policy is the similarity in fiscal policy. fiscal shocks have strong, persistent and positive impact on output. several papers in the literature have measured similarities in fiscal policy, using correlation coefficient or mean absolute difference of budget deficit to gdp ratios of country i and j for period t. this paper measures similarity index of fiscal policies by looking at the correlation of central government fiscal balance as a percentage of gdp for country i and j: the correlation was computed over 3-year interval with non-overlapping window as well. 3.3. sources of data the dataset used for this research contains yearly observations dating from 1980 to 2019 due to lack of availability of monthly and quarterly series. the missing observations in the available series were interpolated with the aid of tramo/seats environment following gomez and maravall (1996). data were sourced from world development indicator (wdi) of the world bank (2018), united nations conference on trade and development (unctadstat) (2018), world economic outlook, country database and afdb (2018). asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 7 © 2021 by the authors; licensee online academic press, usa 4. result of pearson correlation analysis for west african monetary zone (wamz) table-1. pearson correlation analysis for west african monetary zone (wamz). country pairs variables synchronization/ symmetry level bs tf mp fp ghana-guinea 0.500* 0.465** 0.053 0.015 + + 0 0 ghana-gambia 0.389 0.864* 0.360 0.250 0 + 0 0 ghana-liberia -0.227 0.818* -0.094 0.166 0 + 0 0 ghana-nigeria 0.508* -0.505* 0.529** 0.313 + + 0 ghana-sierra leone -0.020 0.455** 0.246 0.409 0 + 0 0 guinea-gambia 0.591* 0.362 0.340 0.120 + 0 0 0 guinea-liberia -0.350 0.748* 0.332 0.474** 0 + 0 + guinea-nigeria 0.499** -0.810* -0.061 0.144 + 0 0 guinea-sierra leone 0.272 0.555* 0.171 0.108 0 + 0 0 gambia-liberia -0.323 0.791* -0.045 0.154 0 + 0 0 gambia-nigeria 0.367 -0.524* 0.135 0.371 0 0 0 gambia-sierra leone 0.080 0.449** 0.052 0.144 0 + 0 0 liberia-nigeria -0.230 -0.760* 0.403 0.672* 0 0 + liberia-sierra leone -0.270 0.660* 0.083 0.223 0 + 0 0 nigeria-sierra leone 0.124 -0.702* 0.056 0.128 0 0 0 note: (+) synchronous/symmetric; (-) asynchronous/asymmetric; (0) insignificant; (*) 1 percent level of significance; (**) 5 percent level of significance; bs – business cycles; tf – trade flows; mp – monetary policy; fp – fiscal policy 4.1. interpretation of the result on business cycles for wamz as indicated in table 1 only four pairs of countries’ business cycles were significantly synchronous and these includes ghana-guinea, ghana-nigeria, guinea-gambia as well as guinea-nigeria with correlation coefficient of (0.50), (0.51), (0.59) and (0.50) respectively. the other countries’ correlation coefficients were all statistically insignificant and this goes to support the views of coleman (2011) that raised concern on a lack of a consistent pattern of synchronized business cycles, which could be inadequate for the economic sustainability of the wamz, as it implies that members may face significant stabilization costs. 4.2. interpretation of the result on trade flows for wamz as further shown in table 1, trade flows between pairs of countries within wamz were all significantly symmetric with correlation coefficients ranging between (0.47) to (0.86) except in the case of countries’ pairs with nigeria where all values of correlation coefficients were significantly asymmetric. the correlation coefficients on trade flows between ghana-nigeria, guinea-nigeria, gambia-nigeria, liberia-nigeria and nigeria-sierra leone as countries’ pairs were (-0.51), (-0.81), (-0.52), (-0.76) and (-0.70) respectively. the significant level of asymmetry in trade flows between nigeria and all other countries within wamz could firstly be attributed to the fact that these regions are developing economies and are also import dependent. their only source of export is raw materials which are exported to developed economies. secondly, nigeria alone accounts for two times the volume of exports/imports to and from countries outside wamz. this supports the findings of mendoza (1991); mendoza. (1995) that goods produced within by developing economies are not competitive enough to satisfy the needs of the region. these economies need to intensify production by dwelling on their areas of expertise and high proficiency so as to satisfy the needs of the ir economies. another reason advanced for this is language disparities which is also a threat to trade. ecowas launched a trade liberalization scheme (etls) in 1990, and planned to move to a customs union with a common external tariff (cet) by 2008. despite some implementation challenges, a free trade area (fta) has been achieved, with tariffs on products from member states abolished within the community. however, complex procedures regarding rules-of-origin, discordant customs systems and procedures, difficulties with insurance and bond guarantees for transit cargo, and other non-tariff barriers (ntb), including roadblocks and demands for informal payments, have frustrated the objectives of the fta. 4.3. interpretation of result on monetary policy for wamz monetary policy between ghana-liberia, guinea-nigeria as well as gambia-liberia were insignificantly asymmetric with correlation coefficients of (-0.09), (-0.06) and (-0.05) respectively. however, apart from the correlation coefficient of monetary policy between ghana-nigeria that was highly symmetric with a value of (0.53), the rest of other pairs of countries all had insignificant coefficients. the reason advanced for this is that wamz region has multiple currencies and multiple central banks, hence, divergent monetary policies. the similarity targets of the convergence, growth and solidarity pact under enforcement is yet to propel wamz to the desired level of symmetry in monetary policy. this finding supports the view of fiess (2005) that if shocks are predominantly country-specific, then the ability to conduct independent monetary and fiscal policy is usually seen as important in helping an economy adjust to a new equilibrium. asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 8 © 2021 by the authors; licensee online academic press, usa 4.4. interpretation of result on fiscal policy for wamz fiscal policies between pairs of countries within wamz were all insignificantly symmetric with correlation coefficient ranging between (0.01) to (0.41) except in the case of guinea-liberia and liberianigeria with significant correlation coefficients of (0.47) and (0.67) respectively. the reason for this weak symmetry in fiscal policy within wamz may be as a result of the fact that the bulk of the revenue generated by individual countries might have been misappropriated, mismanaged or even channeled into foreign economies as a result of corruption. this finding also supports the view of fiess (2005) that if shocks are predominantly country-specific, then the ability to conduct independent monetary and fiscal policy is usually seen as important in helping an economy adjust to a new equilibrium. 4.5. result of pearson correlation analysis for west african economic and monetary union (waemu) table-2. pearson correlation analysis for west african economic and monetary union (waemu). country pairs variables synchronization/ symmetry level bs tf mp fp benin-burkina faso 0.817* 0.674* 0.399 -0.227 + + 0 0 benin-cote d’ivoire 0.846* -0.243 -0.305 0.381 + 0 0 0 benin-guinea bissau 0.256 0.563* 0.013 -0.129 0 + 0 0 benin-mali 0.816* 0.700* -0.157 0.209 + + 0 0 benin-niger 0.714* 0.843* 0.319 0.754* + + 0 + benin-senegal 0.857* 0.859* 0.238 -0.036 + + 0 0 benin-togo 0.732* 0.864* 0.366 0.546* + + 0 + burkina faso-cote d’ivoire 0.772* -0.484** -0.565* -0.285 + 0 burkina faso-guinea bissau 0.245 0.425 -0.581* 0.299 0 0 0 burkina faso-mali 0.680* 0.755* 0.114 -0.335 + + 0 0 burkina faso-niger 0.870* 0.734* 0.345 -0.338 + + 0 0 burkina faso-senegal 0.790* 0.879* 0.730* -0.247 + + + 0 burkina faso-togo 0.847* 0.775* 0.277 -0.496** + + 0 cote d’ivoire-guinea bissau -0.102 -0.321 0.468** -0.139 0 0 + 0 cote d’ivoire-mali 0.841* -0.566* 0.017 0.087 + 0 0 cote d’ivoire-niger 0.826* -0.582* -0.302 0.322 + 0 0 cote d’ivoire-senegal 0.883* -0.445 -0.355 0.250 + 0 0 0 cote d’ivoire-togo 0.892* -0.519* 0.097 0.648* + 0 + guinea bissau-mali 0.243 0.650* -0.223 0.135 0 + 0 0 guinea bissau-niger 0.227 0.583* -0.410 0.064 0 + 0 0 guinea bissau-senegal 0.228 0.593* -0.252 -0.722* 0 + 0 guinea bissau-togo 0.079 0.652* 0.188 -0.421 0 + 0 0 mali-niger 0.781* 0.838* 0.104 0.135 + + 0 0 mali-senegal 0.925* 0.845* -0.015 -0.330 + + 0 0 mali-togo 0.818* 0.818* -0.265 0.033 + + 0 0 niger-senegal 0.855* 0.855* 0.015 -0.160 + + 0 0 niger-togo 0.939* 0.877* -0.046 0.484** + + 0 + senegal-togo 0.857* 0.903* 0.538** 0.448 + + + 0 note: (+) synchronous/symmetric; (-) asynchronous/asymmetric; (0) insignificant; (*) 1 percent level of significance; (**) 5 percent level of significance; bs – business cycles; tf – trade flows; mp – monetary policy; fp – fiscal policy 4.6. interpretation of the result on business cycles for waemu as shown in table 2 within the west african economic and monetary union (waemu), it is indicative that benin republic was synchronous with guinea-bissau, burkina faso, cote d’ivoire, mali, niger, senegal and togo with correlation coefficient within the range of (0.26) and (0.86) respective ly. burkina faso was also synchronous with guinea-bissau, cote d’ivoire, mali, niger, senegal and togo within the range of (0.24) and (0.87) respectively. cote d’ivoire was strongly synchronous with mali, niger, senegal and togo within the range of (0.83) and (0.89) respectively, but asynchronous with guinea-bissau with a coefficient of (-0.10). mali was synchronous with guinea-bissau, niger, senegal and togo within the range of (0.24) and (0.93) respectively. niger was also synchronous with guinea-bissau, senegal and togo within the range of (0.23) and (0.94) respectively. also, guinea-bissau was weakly synchronous with senegal and togo with coefficients of (0.23) and (0.08) respectively, while senegal was strongly synchronous with togo with a coefficient of (0.86). the reason why the level of waemu business cycle is that synchronous is because all the waemu countries, with the exception of guinea-bissau, share a common french heritage in their legal and administrative systems. in addition, they have maintained the common currency inherited at the time of independence, which is the cfa franc. they have a common monetary policy, which is implemented by the asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 9 © 2021 by the authors; licensee online academic press, usa common central bank, the banque centrale des etats de l’afrique de l’ouest (bceao). the french treasury guarantees the convertibility of the common currency. largely reflecting these commonalities, the waemu countries have been able to make more progress towards economic integration than the rest of ecowas. this supports the view of artis and zhang (1999) that increased monetary integration was positively related to business cycles synchronization. 4.7. interpretation of the result on trade flows for waemu as shown in table 2 trade flows were strongly symmetric between benin republic and burkina faso, guinea-bissau, mali, niger, senegal and togo with correlation coefficients ranging from (0.56) to (0.86), but benin republic had trade flows asymmetry of (-0.24) with cote d’ivoire. trade flows was also strongly symmetric between burkina faso and guinea-bissau, mali, niger, senegal and togo, with correlation coefficients ranging between (0.43) and (0.88) respectively, but was asymmetric between burkina faso and cote d’ivoire with a coefficient of (-0.48). between cote d’ivoire and guinea bissau, mali, niger, senegal and togo the flow of trade was asymmetric ranging from (-0.32) to (-0.58). it was also asymmetric between togo and guinea-bissau with a coefficient of (-0.65), but between guinea-bissau and mali, niger and senegal, the flow of trade was strongly symmetric within the range of (0.58) and (0.65) respectively. also, trade flow was strongly symmetric between mali and niger, senegal and togo with coefficients ranging from (0 .82) to (0.85). it was also strongly symmetric between niger and senegal, niger and togo and senegal and togo with coefficients of (0.86), (0.88) and (0.90) respectively. it is evident that trade flows between cote d’ivoire and all other countries under waemu were all asymmetric. this is as a result of the fact that the total trade balance in goods and services within waemu reveals an overall deficit down to 2017 except in the case of cote d’ivoire with an overall surplus down to 2017. these regions are developing economies and are also import dependent. their only source of export is raw materials which are exported to developed economies. this supports the findings of mendoza (1991); mendoza. (1995) that goods produced within by developing economies are not competitive enough to satisfy the needs of the region. likewise, it corroborates the argument put forward by chang (2011) that business cycle synchronization has not increased trade integration. however, given that the level of trade flows within wamz is less symmetric than within waemu, the reason for this could be deduced from the fact that the currency within waemu region, the cfa franc, is tied to the euro and they already have an established monetary union whereas the reverse is the case in wamz with lots of disparities in currencies. waemu countries have, in the meantime, formed their own customs union, with the adoption of a cet in january 2000 and an inter-state road transit convention, which made possible the creation of a cross-border insurance system. waemu also achieved progress in the harmonization of domestic taxation with the vat ranging from 18%-20% and excise duty. these achievements notwithstanding, the waemu customs union faces implementation challenges, with its member states failing to agree to the collection of the cet at the point of entry into the community, instead of each country doing so at its border. in order to boost intra-ecowas trade, ntbs hindering the free flow of goods should be removed, and negotiations on the cet should come to closure. in an effort to check these obstacles, a regional observatory of bad practices has recently been established. above all these challenges, incentives through cyclical thrift schemes should be injected at proportional rate depending on the degree of preparedness of the domestic industries within the ecowas region to intensify production. 4.7.1. interpretation of result on monetary policy for waemu as shown in table 2 monetary policy was significantly asymmetric between burkina faso-cote d’ivoire and burkina faso-guinea bissau as pairs of countries under waemu with correlation coefficients of (-0.57) and (-0.58) respectively. however, between burkina faso-senegal, cote d’ivoire-guinea bissau and senegaltogo as pairs, their correlation coefficients were significantly symmetric with values of (0.73), (0.47) and (0.54) respectively. aside from these, all other pairs of countries’ coefficients were statistically insignificant. despite the fact that these economies’ currency, the cfa franc is tied to the euro the level of disparities in monetary policy could be attributed to their differences in demographic, geographic and economic weights. therefore, in line with fiess (2005) if shocks are predominantly country-specific, then the ability to conduct independent monetary and fiscal policy is usually seen as important in helping an economy adjust to a new equilibrium. 4.7.2. interpretation of result on fiscal policy for waemu as shown in table 2 fiscal policy was significantly symmetric between benin-togo, cote d’ivoire-togo and niger-togo as pairs of countries under waemu with correlation coefficients of (0.55), (0.65) and (0.48) respectively. likewise, benin-niger was also significantly symmetric with a correlation coefficient of (0.75). conversely, the fiscal policy of burkina faso-togo and guinea bissau-senegal as pairs were significantly asymmetric with correlation coefficients of (-0.50) and (-0.72) respectively. aside from these, all other pairs of countries’ coefficients were statistically insignificant. the reason for this disparity in symmetry and asymmetry in fiscal policy within waemu may be as a result of the fact that the bulk of the revenue generated by the individual countries might have been misappropriated, mismanaged or even channeled into foreign economies as a result of corruption. for waemu, given that their currency is tied to the euro makes asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 10 © 2021 by the authors; licensee online academic press, usa the regulation of their budgets simpler. but on the whole, strategies must be put in place to check diversification of funds. therefore, in line with fiess (2005) if shocks are predominantly country-specific, then the ability to conduct independent monetary and fiscal policy is usually seen as important in helping an economy adjust to a new equilibrium. 5. summary of findings the essence of this study was to examine trade flows, optimal macroeconomic policy and business cycles synchronization in west africa. the pearson correlation analysis provided evidence that the business cycles of nine (9) pairs of countries out of fifteen (15) were synchronized and out of the nine (9) pairs only four pairs, ghana-guinea, ghana-nigeria, guinea-gambia and guinea-nigeria were significantly synchronized. but in the case of waemu, out of the 28 pairs of countries, 21 pairs were significantly synchronized which comprise benin-burkina faso, benin-cote d’ivoire, benin-mali, benin-niger, benin-senegal, benin-togo, burkina faso-cote d’ivoire, burkina faso-mali, burkina faso-niger, burkina faso-senegal, burkina faso-togo, cote d’ivoire-mali, cote d’ivoire-niger, cote d’ivoire-senegal, cote d’ivoire-togo, mali-niger, mali-senegal, mali-togo, niger-senegal, niger-togo and senegal-togo. on the level of symmetry in trade flows, the pearson correlation analysis revealed that 9 pairs of countries under wamz were significantly symmetric and these were ghana-guinea, ghana-gambia, ghana-liberia, ghana-sierra leone, guinea-liberia, guinea-sierra leone, gambia-liberia, gambia-sierra leone and liberiasierra leone. but within the waemu region, 20 pairs were significantly symmetric. these include beninburkina faso, benin-guinea bissau, benin-mali, benin-niger, benin-senegal, benin-togo, burkina fasomali, burkina faso-niger, burkina faso-senegal, burkina faso-togo, guinea bissau-mali, guinea bissauniger, guinea bissau-senegal, guinea bissau-togo, mali-niger, mali-senegal, mali-togo, niger-senegal, niger-togo, and senegal-togo. on the level of symmetry in monetary policy, the pearson correlation analysis showed that under wamz, only ghana-nigeria as a pair was significantly symmetric. but within the waemu region only burkina faso-senegal, cote d’ivoire-guinea bissau, and senegal-togo as pairs were significantly symmetric. on the level of symmetry in fiscal policy, the pearson correlation analysis revealed that under wamz, only guinea-liberia, and liberia-nigeria as pairs were significantly symmetric. meanwhile, within the waemu region, only benin-niger, benin-togo, cote d’ivoire-togo, and niger-togo were significantly symmetric. 6. conclusion this work provides an answer on the feasibility of creating a second west african monetary union. it is quite glaring from the foregoing analysis that waemu that was established in the year 1994 does not seem to be thriving exceedingly better than wamz. their flow of trade is more with other nations outside africa and does not in entirety synchronize their business cycles. the circumstance on which waemu was founded via colonization has made it heavily dependent on the conditionality of her founding father, fra nce. the case of wamz on the contrary can never be the same because their decisions to thrive must solely be based on their perceptions, observations, investigations, findings and thus, the relevance of this research. there is a clear-cut indication that most countries within wamz are still far from being merged to form a monetary union. the few with the level of symmetry in trade flows, monetary and fiscal policies that could eventually synchronize regional business cycles comprise of ghana, nigeria, gambia and guinea. 7. policy recommendations from the findings the following policy recommendations are put forward: i. pairs of countries that are highly symmetric under wamz such as nigeria, ghana, gambia and guinea should form the second west african monetary union (swamu) by the year 2021 and create room for others readily available to eventually merge-up. ii. the nigerian naira, ghanaian cedi, gambian dalasi and the guinean franc should continue to thrive but multilaterally tied/pegged to a single currency the wamz-eco while paving ways for the individual currencies to eventually culminate. iii. countries that are strongly symmetric under waemu such as burkina faso-mali, cote d’ivoireguinea bissau, cote d’ivoire-mali, cote d’ivoire-senegal, cote d’ivoire-togo, guinea bissaumali, as well as guinea bissau-senegal should unilaterally realign its exchange rate, while countries without strong similarity ties should disengage from waemu and operate independently, partaking in the cyclical thrift scheme to boost industrialization in preparation to re-merge in due course. iv. trade barriers should to a large extent be relaxed and trade protection/restriction emphasized amongst countries within west africa. countries must trade intensely with each other excepts where the goods and services are lacking. asian themes in social sciences research 2021, vol. 5, no. 1, pp. 1-12 11 © 2021 by the authors; 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(2018). world development indicators: statistic department. washington, dc 20433 usa: publications services. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 2, pp. 50-59 2018 doi: 10.33094/journal.139.2018.12.50.59 © 2018 by the author; licensee online academic press, usa 50 © 2018 by the author; licensee online academic press, usa africa and cultural authenticity ibekwe ephraim u urban university rome: department of religious studies, italy. abstract the media outlets all over the world project africa as inferior and mere notion of the continent brings to mind warhunger, malnourishment, deadly diseases, religious fanaticism etc. these and many other pessimistic notions about africa live a remarkable question ‘can anything good come from africa? hence, this article pays particular attention to the authenticity of african culture. it maintains that amidst ferocious criticisms on the african continent, her cultural values remain inestimable and thus second to none in the whole world. this article exposes the different problems that exist in african culture including the ones caused by africans themselves, those caused remotely by colonialism or recently by the west. hence this article is a call back to cultural authenticity as that would be the only saviour of the african continent. it believes that truly africa can still be authentic and can remain true to her values and cultural heritage. keywords: africa, culture and authenticity. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction africa has had a terrible experience of the destruction of life and community, cultural heritage and cultural values. the peculiar institution of the slave trade was actually an unprecedented enemy of life and community in africa. colonialism and racism targeted life, human dignity and human rights of the africans. since the independence of african nations, life has continued to be destroyed, distorted and harmed in so many cruel ways by our fellow african leaders. hence, africa is seen today in the world community as a continent of misery. many statistics trumpet this reality. ecological disasters, such as flood and drought, bring agricultural production in many regions of the continent to a standstill. warring groups prevent farmers from cultivating fertile land. africa can no longer feed its teeming millions; economic depression of unparallel proportions makes existing authoritarian regimes more repressive. dictatorships and civil wars uproot women, men, and children from ancestral homes to neigbouring countries. in nigeria, sierra leone, somalia, sudan, angola and liberia it is difficult to silence the guns. in rwanda and burundi ethnic strife makes it impossible for bahutu and batutsi to live in peace, in nigeria the activities of the fulani herds men have left many homes displaced and continued to cause security tension. machetes, den-guns and automatic rifles are freely used in the barbaric massacre of hundreds of thousands of children, women and men. even the kukumba and namumba of ghana and togo settle scores which have been simmering since the abolition of the slave trade. refugees in africa number over seven million; that is about 50 percent of the world population of refugee s. intellectuals whose role in the development of culture is irreplaceable are driven away from their homeland or flee the shores of africa for greener pastures abroad [brain drain]. apart from sports and music one hardly hears any positive news item about africa. for their part, when africans narrate their plight in these trying times, they sound even more pessimistic. the marginalized elite who fled their countries to maintain a relatively decent living abroad make uncomplimentary comparisons between their host countries and their fatherland. this is the wounded face of africa frequently portrayed in the mass media. the mere mention of africa reminds everyone of the blackness of the skins of africans, the darkness that hovers around the continent, the war-prone zones of the continent, poverty and malnourishment. the headlines of the media-bbc, cnn, aljazeeera showcases the naked bodies of malnourished african children and the many of them suffering from various degrees of diseases. for many, nothing good ca n come https://www.doi.org/10.33094/journal.139.2018.12.50.59 asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 51 © 2018 by the author; licensee online academic press, usa out of africa. this has been a total misrepresentation of the african nation. it is good to note that the richness of the values and cultural heritages of the continent cannot be compared to any in the universe. the images, pictures and videos in the media are only misrepresentations, unnecessary emphasis and excessive exaggerations of the events in the continent that is only bent in total destruction of the african image. while it is undeniable to say that africa is a victim of marginalization by the west, it is good also to point out unequivocally that the african man has failed in his duty-a duty of elevating africa. one of the root causes of the many anti-life forces, systems and problems in black africa has been our failure to embark on the movement of re-awakening our own cultural, ethical/moral, religio-politico values and to construct the future on them. as it is known that no sane society chooses to build its future on foreign cultures [borrowed culture], values or systems, such society may not succeed. every society is obliged to search deep in its own history and culture in order to discover the values upon which its development and liberation, its civilization and its identity should be based. to do otherwise is nothing less than communal su icide. in rebuilding africa we must put an end to lamentation and the dirge that has formed the headlines and head sentences of our scripts and public speeches. most african writings begin by denouncing the colonial masters and the white man, laying blames on them for a lot of deep rooted issues even to the extent of blaming them for africa’s existence. we do this and fail to seek for ways forward. but at the end of the day we should realize that the colonial masters only contributed about 20 percent of the problems of africa, the rest 80 are not alien but african-self-caused problems. on this basil davidson writes that the problems and solutions of today have to be envisaged within a historical framework, no matter what contribution an external world may have made. this is the legacy the present generation must live behind, a legacy of nonpretence, dedication, and above all that of authenticity, one lived by our founding fathers like mandela, luther etc. however, walter rodney is of the view that citizens of africa should resists all temptations to live their lives life as permanent victims, angry accusers and frowning imitators of europe. he echoes thus, ‘‘come then, comrades, the european game has finally ended…look at them today swaying between atomic and spiritual disintegration…we must find something different. we today can do everything so long as we are not obsessed by the desire to catch up with europe. we have taken the liberty at this point of changing europe to europe/america…the third world faces europe/ america like a colossal mass whose aim should be to try to resolve the problems to which europe/america has not been able to find the answers to. let us not pay tribute to europe and america by creating states, institutions and societies which d raw their inspiration from her…if we want humanity to advance a step further, if we want to bring it up to a different level then we must invent, we must make discoveries…we must turn over a new leaf and we must work out new concepts’’ rodney (2005). the only way to carry out this revolution is not again by guns or ammunitions or by violence but a call to redefine the african geist [the african spirit]. the greatest war has been fought by young men and women of any society who in themselves have awakened the inner spirit and made the decision to be men of quality, resilience, of impeccable character and unwavering determination such that in the difficult times when they sought total emancipation from slavery and poverty, from racism and degradation of the human person, they were able to hold firm to their goals and insist on victory even if it means death. this must be the goal of every african child-old and young alike. one of the ways to achieve this is by revisiting our culture and values. this is because the culture of the african man lies at the zenith of his way of life. in fact culture constitutes the african man and it is in courageous and creative attempts to respond to the magnificent summon of cultural authenticity that the african can begin to break the chains of economy and shake the foundations of all human exploitation. by doing so, the african will be prepared to give up all the deadly games of the last-millennia, seeking out new means of defence, new forms of struggle, new pathways toward revolution, and new visions of what truly human society demands of us-as society whose moral values cannot be compromised with imported morality. in the bid to rebuild the african continent, we seek to rebuild our culture-hence the preoccupation of this article-africa and cultural authenticity. 1.1. africa in discussing the concept of africa in this article, we shall not concern ourselves with the geographical constitution of the continent rather a contextual analysis would be adopted. africa in this article shall refer to black africa, south of the sahara. different ethnic groups and cultures have shaped africa south of the sahara. the region has also been influenced by non-african culture. at the same time, african cultural influences have spread to other parts of the world. africa has remained victim of colonialism and the negative impacts have left scares on the african soil. the serious study of african cultures began several decades ago with a marked emphasis on general conclusions about black africa. black africa has had a terrible experience of the destruction of cultural values. the weird establishment of the slave trade was an enemy of life, values, community and communality in african continent. with colonialism and racism, there was massive exploitation and disrespect for human dignity of africans. since the independence of african nations, life has continued to be destroyed and culture relegated, distorted and harmed in so many cruel ways by our fellow african leaders, often supported by foreign self seekers. to be able to bring back sanity and serenity, to be able to restore and heal africa, there must be reference made to african culture a return back to cultural authenticity. however, magesa (1997) notes that ‘‘the problems and solutions of today have to be envisaged within a historical frame work, an indigenous historical frame work, no matter what contribution an external asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 52 © 2018 by the author; licensee online academic press, usa world may have made’’ one of the root causes of the hydra headed problems with special reference to culture and values in black africa has been our failure to embark on the movement of re-awakening our own cultural values and construct the future on them. thus, ‘‘no sane society chooses to build its future on foreign cultures, values or systems. every society is obliged to search deep in its own history, culture, religion and morality in order to discover the values upon which its development and liberation, its civilization, and its identity should be based’’(magesa, 1997). by searching deep into the cultural values of africa, we discover, the beauty of our language, the dignity of human life and respect for elders, the good sense of hospitality, regard for morality, the genius of our ancestors, the splendor of hard work and the impact of peace and justice. re-discovering these would lead us back to authenticity[not only in respect to culture but also to the personhood and a better and improved african society] 1.2. authenticity in the oxford english dictionary authenticity is first defined as being “in accordance with fact, as being true in substance.” the dictionary defines authenticity again “as being what it professes in origin or authorship; as being genuine.” in this second definition we get the sense that authenticity is rooted in creativity and self expression rather than in conformity to social forces. a third definition offered by the oxford english dictionary characterizes the authentic as that which is “real, actual.” here, the authentic stands against replicas, pretence, and posing—a narrative common in popular culture. synonymously, the word suggests the genuineness of a thing, unique quality, the validity, accuracy and faithfulness of a thing/person to itself and what it represents. what each of these definitions share in common is the reification of authenticity in everyday culture and discourse. authenticity is to be understood as an inherent quality of some object, person or process. as a philosophical concept, it denotes the genuine, original, true state of human existence. the concept arises from the insights that human beings generally live or exist in an inauthentic way and that the genuine sense of self and its relationship with others have been lost, hence the quest for its restoration. beyond our belief that authenticity is a socially constructed phenomenon, we recognize that authenticity is “ultimately an evaluative concept, however methodical and value -free many of the methods for establishing it may be” (lee, 2003). authenticity may be seen as some sort of ideal, highly valued and sought by individuals and groups as part of the process of becoming. alternatively, authenticity is often something strategically invoked as a marker of status or method of social control. authenticity is not so much a state of being as it is the objectification of a process of representation, that is, it refers to a set of qualities that people in a particular time and place have come to agree represent an ideal or exemplar. as culture changes—and with it, tastes, beliefs, values, and practices—so too do definitions of what constitutes the authentic. authenticity is thus a “moving target” (richard, 1997). sociology of authenticity must attend to the socially constructed, evaluative, and mutable character of the concept, as well as its impact on a number of social dimensions with cu lture at the peak. 1.3. the value of authenticity authenticity can refer to a moral identity functioning as a source for normativity, to the impetus of the cultural movement toward self-realization typical of the twentieth century and the force of example and the ideal and practice of exemplarity. authenticity is both a moral quest toward the value and practice of self discovery and an effort to attain identity and stability in the ever-fluctuating and (relatively) anchor-less maelstrom of fleeting trends, panics, and doubts of postmodern society. by de-emphasizing play, irony, pastiche, style, and conspicuous display of taste in subcultures, and by emphasizing instead existential and ideological commitment to a movement’s ideals. any intelligent reflection on the value of authenticity has to be carried out while keeping in mind the importance of its counterpart: inauthenticity. inauthenticity is not only inevitable, but, even desirable at times. this view was championed by dennis waskul. according to him, inauthenticity, insincerity, or simply the necessity to abandon moral struggles and say “to hell with it!” are common features of everyday life, and even of a good life. to explain this important point waskul appropriated a contrived auto-ethnographic exploration, a breaching social experiment, and a flight of fancy. as he tries to stay true to himself and others for a full day waskul finds himself incapacitated by the continuous struggles to define what is authentic and morally honest versus what is inauthentic and socially right. and after angering students, coworkers, and family members with his authentic and sincere ways waskul concludes that not only is inauthenticity necessary, it is often desirable. discussions of authenticity and inauthenticity are legion within the ever-expanding field of cultural studies, and especially within the interdisciplinary subfield of subculture studies, classic ethnographic accounts of music-based subcultures, countercultures, lifestyle enclaves, scenes, or simply peer groups. analysis have shown that concerns with authenticity lie at the roots of group membership, group collective identity and values, personal and social identity formation and maintenance, and status . but aside from the more microsociological concerns with authenticity as congruence to group ideology and with the personal authenticity of group members, the very existence of subcultures and the great diversity of contemporary lifestyle projects of the self bears testament to the widespread preoccupation with individual self-realization, choice, selfexpression, and connectedness with like-minded and like-hearted others, typical of late modern culture and asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 53 © 2018 by the author; licensee online academic press, usa society. systematic discussions on authenticity have become more common within social psychology and the sociology of culture only in the last fifteen years or so. but the topics of tourists’ experiences of authenticity and inauthenticity, of travel as a quest for the authentic and of the authenticity of cultural expressions, rituals, and artefacts produced for tourists have been a staple of research and debates in the interdisciplinary field of travel and tourism studies for quite a bit longer. explorations of authenticity in this field can hardly come into their own without taking into account. this analysis emphasizes the fact that authenticity and culture are closely related. 1.4. authenticity and philosophy the concept of authenticity has remained a reoccurring term or concept in the field of philosophy. the importance of this concept in philosophical history cannot be overemphasized as it is one of those that suggest pragmatism, given the erroneous conception of philosophy as one filled with theories, however authenticity suggests pragmatism-it is action oriented. for example, socrates’s dictums, such as, "unexamined life is not worth living," or "know yourself," can be seen as his attempts to investigate the self as an entity by subjecting it to scrutiny and in the end to lead others to the discovery of the authentic self and way of life. kierkegaard examined the loss of the genuine self in the mass, in society, and tried to present the process of recovering the authentic self within a theistic context. other existential thinkers such as sartre, nietzsche, paschal, heidegger and karl jasper equally discussed the issue of authenticity and developed various ways to deal with the issue. the german term eigentlich (authentic) contains the element of eigen ("one's own"). authenticity, thus, includes the element of "one's own unique self." accordingly, recovery of authenticity implies the recovery of one's own unique identity. this particular concept is of paramount importance to our work. when existential thinkers speak of authenticity, they often include this element and contrast the unique self against the concept of mass, in which the individual is no more than just a number. existential philosophers build the element of authenticity into their own philosophical thought and configure it according to central themes of their works. accordingly, the way each philosopher deal with authenticity is different and expositions of their views of authenticity are not straightforward. our concept use of the term authenticity boarders around kierkegaard, though not limited to him. 1.5. kierkegaard one of the philosophers that occupied themselves with the concept of authenticity is soren kierkegaard. he criticized the philosophical systems that were brought on by philosophers such as hegel before him and the danish hegelians, although kierkegaard respected the philosophy of kant. he measured himself against the model of philosophy which he found in socrates, which aims to draw one's attention not to explanatory systems, but rather to the issue of how one exists. one of kierkegaard's recurrent themes is the importance of subjectivity, which has to do with the way people relate themselves to (objective) truths. in concluding unscientific postscript to philosophical fragments, he argues that "subjectivity is truth" and "truth is subjectivity." what he means by this is that most essentially, truth is not just a matter of discovering objective facts. while objective facts are important, there is a second and more crucial element of truth, which involves how one relates oneself to those matters of fact. since how one acts is, from the ethical perspective, more important than any matter of fact, truth is to be found in subjectivity rather than objectivity (howard and edna, 1975). 1.6. authenticity and individuality kierkegaard emphasized the power of individuality as a call to authenticity. for him, true individuality is called selfhood. becoming aware of true self is the true task and endeavour in life—it is an ethical imperative, as well as preparatory to a true religious understanding. individuals can exist at a level that is less than true selfhood. one can live, for example, simply in terms of pleasures—the immediate satisfaction of desires, propensities, or distractions. in this way, people glide through life without direction or purpose. to have a direction, one must have a purpose that defines for him the meaning of his lives. in sickness unto death, specifically, kierkegaard deals with the self as a product of relations. in this sense, a human results from a relation between the infinite (noumena, spirit, eternal) and finite (phenomena, body, temporal). this does not create a true self, as a human can live without a "self" as he defines it. instead, the self or ability for the self to be created from a relation to the absolute or god (the self can only be realized through a relation to god) arises as a relation between the relation of the finite and infinite relating back to the human. this would be a positive relation. an individual person, for kierkegaard, is a particular that no abstract formula or definition can ever capture. including the individual in "the public" (or "the crowd" or "the herd") or subsuming a human being as simply a member of a species is a reduction of the true meaning of life for individuals. what philosophy or politics try to do is to categorize and pigeonhole individuals by group characteristics instead of individual differences. for kierkegaard, "those differences are what make people who they are"(alexander, 1999). kierkegaard's critique of the modern age, therefore, is about the loss of what it means to be an individual. modern society contributes to this dissolution of what it means to be an individual. through its production of asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 54 © 2018 by the author; licensee online academic press, usa the false idol of "the public," it diverts attention away from individuals to a mass public that loses itself in abstractions, communal dreams, and fantasies. it is helped in this task by the media and the mass production of products to keep it distracted. although kierkegaard attacked "the public," he is supportive of communities. 1.7. authenticity and african culture authenticity has been associated with various cultural activities. for sartre, jazz music, for example, was a representation of freedom; this may have been in part because jazz was associated with african-american culture, and was thus in opposition to western culture generally, which sartre considered hopelessly inauthentic. theodor adorno, however, another writer and philosopher concerned with the notion of authenticity, despised jazz music because he saw it as a false representation that could give the ap pearance of authenticity but that was as much bound up in concerns with appearance and audience as many other forms of art. heidegger, in his later life, associated authenticity with non-technological modes of existence, seeing technology as distorting a more "authentic" relationship with the natural world. most writers on inauthenticity in the twentieth century considered the predominant cultural norms to be inauthentic; not only because they were seen as forced on people, but also because, in themselves, they required people to behave inauthentically towards their own desires, obscuring true reasons for acting. race relations are seen as another limit on authenticity, as they demand that the self engage with others on the basis of external attributes. an early example of the connection between inauthenticity and capitalism was made by karl marx, whose notion of "alienation" can be linked to the later discourse on the nature of inauthenticity. to place authenticity side by side with african culture therefore remains contextual and ad rem. the questions remain how africa can remain authentic to its culture. the african culture has undergone several upheavals and revolutions, and like the israelites lost her identity in colonial exilelanguage, religion, ethics, norms, morals, social life etc have been lost not only to the west but also to africans. the african continent subjects herself daily to self-colonilization. a situation where we see our language, our mode of interaction, our communal responsibilities as ideas that are archaic and ante-modernism and must be discarded. this affected our past, is affecting our present and is likely to mar the african cultural future if care is not taken. failing to work would be an attempt to confirm naipul’s concept that ‘‘africa has no future’’ (naipul, 1979). indeed we have a future and we must work to defend this fact, we must work to defend the responsibilities that our future presents. 1.8. culture culture is the totality of learned, socially transmitted customs, knowledge, material objects and behaviour. it includes the ideas, value, customs and artifacts of a group of people . charles taylor defined it as "that complex whole which includes knowledge, belief, art, law, morals, custom, and any other capabilities a nd habits acquired by man as a member of society"(taylor, 1991). culture is a pattern of human activities and the symbols that give these activities significance. it is what people eat, how they dress, beliefs they hold and activities they engage in. it is the totality of the way of life evolved by a people in their attempts to meet the challenges of living in their environment, which gives order and meaning to their social, political, economic, aesthetic and religious norms and modes of organisation thus distinguishing people from their neighbours. culture comprises material, institutional, philosophical and creative aspects. the process of expanding culture has been under way for many centuries, but technologies have increased the speed and have also broadened the distribution of cultural elements beyond communities and nations’ territorial frontiers. however, culture can be transmitted or acquired through information or symbol. cultural identity according to richard are those ‘‘attributes, behavioural patterns, lifestyles, social structures and norms that distinguish a people from other peoples’’ (richard, 1997). these are passed on literally or inherited from one generation to another (cultural heritage), or horizontally passed on from one society to another through such agent as globalization. 2. issues in culture and the call for authenticity 2.1. cultural relativism cultural relativity is the ability to study and describe another society/culture from its point of view without imposing ones own cultural values on those descriptions and analysis. we have to be able to put aside our own cultural concepts in order to analyse and then describe the society that we are studying. this could prove hard for some, depending on the circumstances. in some cultures, it is considered perfectly normal for the women to be subservient and meek, in most of the modern western world it is not, there are exceptions to this though. to assume pleasure in the somali world for example is equal to pleasure in the western context is to assume a normality or expectation across cultures. if all humans are equal then the direction in which sexual pleasure take in the somali community cannot be compared to those of the western world, which places the female orgasm as being central to the female sexual experience; which parallels the male sexual experience. duelo 1997, posits that the principle of cultural relativity does not mean that ‘‘because the members of some savage tribe are allowed to behave in a certain way that this fact gives intellectual warrant for such behavior in all groups’’. cultural relativity means, on the contrary, that ‘‘…the appropriateness of any positive or negative custom must be evaluated with regard to how this habit fits with other group habits’’ asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 55 © 2018 by the author; licensee online academic press, usa (kinoti, 2007). having several wives for instance, makes economic sense among herders, not among hunters. while breeding a healthy skepticism as to the eternity of any value prized by a particular people, anthropology does not as a matter of theory deny the existence of moral absolutes. a classic example of cultural relativity is what was observed by psychologist gregory bateson, in traditional balinese families, mothers routinely stroke the penises of their young sons, and such behaviour is considered no more incestuous than breast-feeding. incest is also not illegal in israel, perhaps a response to the low population issues. so we see as sam vaknin suggests taboos or in this case lack of taboo, do ultimately respond to necessity. in many african countries woman may gain their satisfaction from her husband’s orgasmic intensity, knowing he has enjoyed intercourse with them. it is not that they cannot also have orgasms, but the value attached to it is different; sex after all is a state of mind. in some parts of somal ia women put special herbs in their vagina to cause tightness for their husbands. some feminist will rush to label this as a form of oppression, but not if cultures are valued as equals and understood in context of plurality. how can a western woman dictate to an african woman how she should experience sexual pleasure? and even within western culture we see complex sexual roles of domination and bondage. and this is why the issue of so-called female genital mutilation becomes an issue as outlined in the groundbreaking work of fuambai ahmadu and wairimu njambi. the only stipulation is choice and access to a full discourse of information from within that culture. but the minute the somali woman leaves somalia she is confronted with a western world screaming “oppression”, she is then forced to review her culture. all the while the western woman is rushing to the designer vagina clinic to get the very procedure done that the somali woman has been doing for centuries. 2.2. africa and corrupted cultures cultural corruption and super-imposition is when elements of a culture are replaced with similar customs which have completely different attachments. traditionally in some african communities alcohol served as a way in which certain ordained spirit people communed with the other realms: alcohol (palm wine) served as a purely "religious" function in the society. a way of specifically relating to another world in specific rituals by specific people. with the coming of the european alcohol began to take on a new function as a social drink. the trade in slaves for alcohol created a commercial grade brew which was shifted out of the religious realm to exacerbate and encourage social drinking. this only increased with the depression from the trauma of slavery and colonialism dug deeper into african communities. some would point to the libation rituals, but the pouring of alcohol became a form of corrupted culture. this became so common. it actually gives the illusion of being part of traditional african culture. however the social drinking was never a mainstay of african culture. the consequences of this alteration to cultural purpose are a form of cultural corruption by superimposing other cultural values in place of pre -existing similar cultures. i.e. usage of alcohol. because alcohol was actually almost never recreational, and only certain people drank it. so we are talking about a cultural/spiritual context for a fermented brew to gain access to the spiritual world, which is now used for fun; just like our african music today. 2.3. changing face of culture if a fish jumps out of the sea and grows wings, feathers and a beak, at some point in that change the fish ceases to be a fish culture is no different ‘we must identify what we are discussing when we saw cultures change. cultural diffusion looks at how cultural changes spread from a small source sample from one society to another. the process by which discrete culture traits are transferred from one society to another, through migration, trade, war, or other contact’ here, some scholars suggests two types of change "off axis change" and "on axis change", where the axis is the core value formation of a culture because we run the risk of making an error of confusion of cultural innovation with radical core changes. for example franz boas viewed culture as consisting of countless loose threads, most of foreign origin, but which were woven together to fit into their new cultural construction. discrete elements which become more interrelated as time passes--blurring their discreetness in the process. now on axis change allows these elements as boas notes to be woven together under the authorship of the people receiving innovations. in the off-axis setup this process is overwhelmed by imposition. christianity has radically "changed" the gikuyu culture in kenya. yet the ancient gikuyu would still recognize gikuyu of today as their relatives. the language, the core customs and rituals, even with the christian faith are still recognizable. while subjective, the same cannot be said for the forced african diaspora who would be unrecognizable to say they are akan people in ghana. in marriage cultures all over africa cows as a dowry gift has been replaced by blankets (especially in southern africa) and money. this is the cultural response to practical changes in world currency. however, that is not a core change since the spirit of labolla/mahr/dowry remains. the principles of a wedding gift remain despite a change in currency. the world has swung left and right but culture of marriage is over 7000 years old. when a culture no longer meets the need of a people or solve the problem confronting a people, notes amos wilson, that culture must transform. technology has altered much of our landscape, people in gambia now go to the mosque by car as oppose to by horse. people talk on mobile phones, but the greetings are still "assalam alaikum." technology has shaped the culture but it has not made a significant change to the core islamic faith, despite the adhan now being called out on a loud speaker and electricity being in every mosque. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 56 © 2018 by the author; licensee online academic press, usa that people now read the bible on ipads is an evolution but not a change which suggests christianity is becoming scientology. between monday and friday every person undergoes "change" it however would be a misrepresentation of the facts to suggest that this "change" means that people become radically different individuals. the cliche which expresses "cultures change they are not static"' is being abused to justify radical alternation to african cultures. so the barriers which protect african identity are now being torn down under the word "cultures are not static." new markets and foreign destructive habits can now nest in african societies under the banner of "cultures change." but cultures even if they change should always change under the process of agency. there is no dispute that cultures adapt and evolve and reply to reality, but they ethics are pretty much rooted in the original foundational paradigm which fostered them. everything changes and there is a degree of subjectivity, but a change must be weighed unless we confuse natural variations and adaptations with some notion of darwinian evolution. and at the end of the day it is called "african" culture for a reason greater than it being a black step-child of european culture. 2.4. cultural imperialism cultural imperialism is the domination of one culture over another other by a deliberate policy or by economic or technological superiority. africa is undoubtedly the victim of cultural imperialism and it s mechanisms today are none other than globalization. the agents of this imperialism are mass media and unfair trade. the consequences of this imperialism are under-development, lost of identity and language and destruction of markets (e.g. where traditional african clothes are replaced with western ones). 2.5. the authentic virtues and values of traditional african society in striving to prove the authenticity of the african culture or in the bid to restoring its authenticity deep considerations must be made on the core ethical or moral roots of the africa. cut away from its core ethical roots the african cultural is stripped of values. in africa’s morality is rooted authenticity. it is an aspect of life that has continued to extol the african man, even in his poverty and political incapacitation. however there seems to be a lacuna. it seems as if something important has disappeared and nothing has replaced it. in traditional africa, a shared morality was the cement of society. some of the values of tradit ional african society include, charity, honesty, hospitality, generosity, loyalty, truthfulness, solidarity, and respect for nature, elders and god. however kinoti notes that ‘‘there were also personal values which assisted the individuals to be integrated, like honesty, reliability, generosity, courage, temperance, humanity and justice and social values that helped society to remain integrated like peace, harmony, respect for authority, respect for and fear of supernatural realities’’(kinoti, 2007). these values inherent in the traditional african society give africa a true prestige more than any other society of the world . majola adds to the lists; ‘‘harmony, peace, friendliness and decency’’(majola, 1988). gyekye included ‘‘kindness, compassion, benevolence, concerns for others’’(gykeye,1998).according to him any action or behavior that is conducive to the promotion of the welfare of others, and also imposes a duty to the community and its members; interdependence, co-operation and reciprocity. inherent in the traditional african concept of virtuous life is ‘‘the ten commandments, like prohibition to steal, murder, commit adultery, tell lies or deceive’’(gelfand,1987). gelfand placed the virtues side by side with their vices. for him the most important virtues are ‘‘respect, love, compassion, kindness, generosity, truth, rectitude, humility, self-discipline, forgiveness, mercy, pity, sufficiency, repentance, trust, giving, strength, patience, courage, hard work, unselfishness and the willingness to share whatever one has, no matter how little it may be’’(gelfand,1987). the vices rejected by traditional society were ‘‘abuse, lying, deceit, stealing, adultery, drinking, violent quarreling, pride, jealousy, covetousness, hatred, ingratitude, anger, negligence, weakness, assault, provocation and selfishness’’(gelfand, 1987). geldfand also mentions different types of sanctions designed to ensure proper behavior. one of them is ‘‘public ridicule to cause shame, guilt and fear and to prevent antisocial behavior’’. he discusses how morality was enforced in detail, and distinguishes between two main types of sanction; religious and social. religious sanctions included the practice of cursing through magic and the fear of punishment by the ancestors and the gods-the policemen of traditional africa. social sanctions included the following 1. praising and honouring the good and brave 2. parental gifts to good and reliable children 3. confidence between parents and children. however, there were negative social sanctions like family or clan renunciation, disinheriting, swearing of oaths and curses, ostracism and public disgrace in notorious criminals, adulterers, seducers etc 2.6. characteristics of traditional african morality having looked keenly into the inherent values of traditional african society, this article goes on to x-ray the characteristics that encapsulates those values as they define the authentic culture of the african society. the morality of the african traditional society is culturally founded as it is communalistic, humanistic or anthropocentric, pragmatistic and utilitarian, tribalistic and shame oriented. this article is consigned mainly with two [communalistic and humanistic] characteristics as they inform the authenticity of the african culture. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 57 © 2018 by the author; licensee online academic press, usa 2.7. communalistic the moral foundation of african culture across the african world is communal based. so fundamental is in informing african ethics that everything; dance, music, marriage is impacted upon. music is communal, harvesting crops is communal, even eating is communal: every ritual and rite is tied into bonding and reaffirming communal bonds. for instance, when people say gay marriage is un-african, despite their inability to articulate it beyond "un-african," they are speaking to the moral communal foundation of african societies which always place the community above the individual. rights also cannot supersede those "rights" ordained in nature; those things which are incompatible with people hood are therefore generally incompatible with african values. and in this communal setting, marriage for example is a coming together of communities, via two individuals, with the promise of people hood. kollman (1988) notes that ‘‘african morality and ethics cannot be conceived outside of the community’’ [59]. however the characteristic of communalisms is not only outstanding but serves as its defining characteristic. thus, traditional african society was characterized not by one’s own rights but by duties towards others. gyekye, notes this distinctly; ‘‘if i carry out a duty to help someone in distress, i would not be doing so because i think a person has right against me, a right i should help to fulfil. i would be carrying out that duty because i consider that person worthy of some moral consideration by me. ...’’ (gyekye, 1988). in affirmation to this wiredu, notes that ‘‘the communalistic orientation means that an individual’s image will depend rather crucially upon the extent to which his/her action benefit others rather than him/herself, not of course, by coincidence, but by design’’(wiredu,1997).here an individual who remained content with self regarding success would be viewed as so circumcised in outlook as not to merit the title of a real person. by this wiredu is also of the opinion that african traditional morality is quintessentially social. motlhabi agrees with wiredu that ‘‘…the central moral norms were the maintenance of harmonious relationships within the community’’(motlhabi,1986). however a communalistic ethics or morality does not only entail that all human behavior should be to the benefit of society. society itself is also the norm for moral behavior. majola is of the strong view that ‘‘the criterion of morality is the community’’(majola,1988). in accordance to this, he pointed out that an act is right if and only if it also conforms to the rules and regulations established by the community. kigongo stresses the fact ‘‘that in a society-like the present african one-where there is rapid and profound social changes and fundamental conflicts in people’s social experience, one’s ability to make choices in respect of moral behaviour is of paramount importance’’(kigongo, 1991). traditional morality did not prepare africans for such choices because it emphasized conformity to the status quo and punished non-conformity. 2.8. humanistic in stressing the authenticity of african culture in relation to morality wiredu points out that african concept of morals are generally of humanistic orientation. according to him at , all ages morality is grounded in conceptual and empirical considerations about human well-being. thus, ‘‘a human person is essentially the center of the thick set of concentric circles of obligations and responsibilities matched by rights and privileges revolving round levels of relationships irradiating from the consanguinity of household kith and kin, through the ‘blood’ ties of lineage and clan, to the wider circumference of human family hood’’ (mojola,1988). mojola however agrees that ‘‘because of its preoccupation with human welfare and well-being, traditional morality was essentially humanistic and ‘man centered’’(mojola,1988). bujo in the same vein describes traditional african ethics as fundamentally ‘‘anthropocentric and humanistic’’ (bujo, 1990). in other words a horizontal african relationship between humans. the concept of ubuntu according to motlhabi ‘placed emphasis on the person as the highest and intrinsic value’(motlhabi, 1986). 3. back to authenticity; re-examining the basic problems inherent in african culture 3.1. africa and moral crises there is the existence of moral crises in the african cultural /traditional society. there has been a shift from the status quo. the west is been accused for this basic problem. the western secular culture spurred by individualism and capitalism has been the sole contributor to the basic moral problem of the african society. the forces involved here are external because they come not from inside africa but from outside. this possesses a question on the authenticity of the african culture. according to mwikamba , whereas in the past, ‘‘africans were much more community -centered, today they are more and more ego-centered’’(mwikamba, 1992). this was captured vividly by bennaars when he said ‘‘in traditional africa, morality was always intrinsically linked to the community. the sole criterion of goodness was the welfare, the well-being of the community. any form of individualism was seen to have a negative value; it was seen as a potential threat and thus regarded as intolerable’’[1993]. but the case today has been a different and controversial one as ‘‘individualism in various forms is increasingly evident in daily life, education, religion; culture imposed from outside have all contributed, not to speak of economics and politics. today, african individualism has largely replaced communalism, as both individuals and nations struggle for survival’’(oruka,1990). hence oruka draws attention to the implication of such bizarre situation. according to him, ‘‘for society so seriously disturbed by invasion of a foreign culture to come back to cultural normality, it needs at least to pass through five generations or a hundred years’’ (oruka,1990).. what this asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 58 © 2018 by the author; licensee online academic press, usa implies to the african society given the modernity crises her culture faces is ‘‘total annihilation of the african culture’’(kigongo,1991) because trying to solve the problem would lead to infinite regress. however, the african culture could regain back its authenticity by laying deep considerations on the issues below. 3.2. materialism one of the clearest influences from the west is the growing materialism in africa. money and material well being have become a semi-god in such a way that the cultural values are been replaced with the mundane. economic activity, success and material gain have become ends in themselves. people are subordinating and exploiting others for economic purpose. materialism and consumerism erode the traditional morals. hedonism has the upper hand. the idols which the african youth imitate are the business, sex, music and football idols from the west. human sexuality becomes a tool to be used and discarded; sexual violence, incest and rape are on the high increase. unfortunately these ills have replaced the cultural values of the traditional african society. the love for hard work that was foundational to the strength of the african is been replaced with get rich quick syndrome [money doubling, kidnapping, ritual], the slang yahoo-boys has been adopted to describe group of boys and young men whose quest for money and wealth is insatiable, the respect for marriage and sex as sacred is been replaced with animalistic desires, the quest for justice and equity is been replaced with bribe and total corruption. thus, the authenticity of the african cultural values is been stripped off its essence on daily bases. 3.3. the mass media/internet technology has made it possible for the average african man to acquire gadgets that serve as means of communication and information. this in a very large extent has continued to help the african man to imp rove his means of livelihood. unfortunately, the adverse effects of the mass media [televisions, videos, and internet] have remained devastating in the recent years. they propagate the secular moral values. young people in africa become die-hard worshippers of western ideals because they are considered to be modern. there are no longer censorships on what goes into the market and on what goes on , on the screens of televisions. nude dances, pornographies are often seen in every channel in cables like dstv, mitv, star tv, or even our local channels. this is been taken to be the modus vivendi of the modern world, while our values are crumbling, the values of respect for the human body and parts, the values for decency. 3.4. character education the impact of education in africa has been enormous. it has gone a long way to give the african man a high sense of intellectual independency and liberated him from the shackles of ignorance at least with regards to the intellect, unlike what use to be the case in movies like ‘the gods must be crazy’, show casing the traditional kenyan society. however kigongo, points out that ‘‘such education only provided intellectual or professional training without any moral education for life’’ (kigongo, 1991). here we are interested in the character education of the african. because it tends at producing an integral personality and authentic society. 3.5. home training the family as it is forms the core of the traditional african society and it is from the family that the child gets his foundational socialization. the child is taught how to do house chores, go to the stream, cook and go to the farm. the child is made to acquire the nubs and values of the society. home training has a cultural undertone to african society, the american parents can never waste time teaching or giving the child home training, because it is of little or no value to him, but it is foundational to the african society, but unfortunately the positive attitude is departing our culture and our society. the respect for elders and sacred things, the taking to heart of counselling of the elders and traditional custodians [nka din a nti], [ntiwunka] , the love for collective responsibilities, the respect for others properties etc. these and many more authentic african virtues and values must be restored lest the african traditional values undergo a re-colonization. 4. conclusion african culture must retain its fundamental ethos while positively interacting with the surrounding economic, social and political landscape each generation finds itself in. the traditions must first be understood in order to be successfully modified to the prevailing challenges of each generation. so as much as cultures are not static there is a moral or ethical thread that must always be preserved. cultures cannot change so much that they become useless in preserving and reflecting a rich african heritage in which the sanctity of life is central. and within pan-africanism the opportunities are plenty for the best applicable traditions to be practiced, absorbed and continued. and who are better to govern that beautiful cultural journey, than african people? this article centers on pressing issues concerning africa, with special emphases on culture. here the statement of the problem remains the possibility of cultural authenticity in africa. obviously authenticity is possible if and only if there is the proper and unbiased re-assessment of values that have for centuries remained the pride of the continent. africa unequivocally, possesses values second to none in the world and these values must be retrieved if africa is to rise again. the study concludes that the key to recovering the asian themes in social sciences research 2018, vol. 1, no. 2, pp. 50-59 59 © 2018 by the author; licensee online academic press, usa african cultural authenticity is by deconstructing colonial experiences [of slavery, economic exploitations, religion imposition, torture, hard labour, harassment etc], re-imbuing her with the strengths of yesterday’s myths [genius of our ancestors], using her culture [way of living and doing things, values, standards, ideals and ethics] as the matrix of restoring her authenticity and constructing her future. this is the only way to save africa and this crusade must be carried out by us-the africans. no one thing on its own will liberate a person. wearing african clothes is important, but wearing african manners is even more important. all these things go together-the names, the socialization, the culture, the god-consciousness, the community. and any step which brings anyone closer to that identity which was ripped away in 500 years of violence is a step in the right direction. we must return to being african, but not "african" 10,000 years ago or even 150 years ago. but a future african, as if our journey was never violently interrupted. references alexander, n. (1999). virtues of authenticity essays on plato and socrates. princeton: princeton university press. naipul, v.s. (1979). an interview with on. available from: www.nytimes.com/books/98/06/07/naipul meeting.html. [accessed 13th may 1979] bujo, b. (1990). african christian morality at the age of inculturation. narobi: st paul. gelfand, (1987). the genuine shona: survival values of an african culture gweru. zimbabwe: mambo. howard, v. & edna, h. (1975). subjectivity/objectivity. søren kierkegaard's journals and papers.indiana university press. kigongo, k. (1991). ethical education in the reform of secondary education in uganda kampala: makerere university. kinoti, f. (2007). the investigation of morality in africa. accra: immason. lee, v. (2003). what is authenticity in discourse studies. switzerland: princetonvil. magesa, l. (1997). african religion: the moral traditions of abundant life. new york: mcgraw. mojola, a. (1988). introductory ethics for college students and teachers in nairobi. nairobi: heinemann. motlhabi, m. (1986). the concept of morality in african tradition. michigan: grand rapids eardans. mwikamba, c. (1992). changing morals in africa. nairobi: kenya. oruka, h. (1990). ethics a basic course for undergraduate studies. nairobi: narobi university press. richard, p. (1997). creating country music: fabricating authenticity chicago: university of chicago press. taylor, c. (1991). the ethics of authenticity. massachusetts: harvard university press. http://www.nytimes.com/books/98/06/07/naipulasian themes in social sciences research issn: 2578-5516 vol. 5, no. 1, pp. 13-19 2021 doi: 10.33094/journal.139.2021.41.13.19 © 2021 by the authors; licensee online academic press, usa accepted: 5 august 2021 | published: 27 september 2021 13 © 2021 by the authors; licensee online academic press, usa social politics and criminal politics of covid-19 response: case in indonesia safik faozi1 --bambang sudiyatno2* --widiyanto tri handoko3 1,2,3university of stikubank (unisbank), semarang, indonesia. 1email: safikfaozi@edu.unisbank.ac.id 2email: bsud@edu.unisbank.ac.id 3email: wthandoko@edu.unisbank.ac.id abstract the handling of covid-19 is a social policy to protect the public from the spread of covid-19 which has endangered the safety of life and the survival of the community, nation, and state. this social policy can be carried out through rational and total efforts to tackle the spread of covid-19. enforcement of the rule of law by imposing sanctions for violators is an implementation of criminal political efforts. the integration of the response is carried out by rationally integrating penal and penal approaches that are based on social protection, such as the use of media to build public awareness, involvement of networks of strategic figures, science-based control management, use of information technology to prevent the spread of covid-19 and the provision of direct assistance. integrated cash, as well as the application of criminal sanctions that function as a subsidiary. keywords: social policy, social-politics, criminal politics, social-protection, covid-19. jel classification: i12, i18, k30, k32. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. background to the study the existence of infectious diseases caused by viruses has existed since hundreds of years ago, and its existence is increasingly complex along with global travel. according to lim (2014) and lindahl and grace (2015) that the level of complexity surrounding emerging and re-emerging infectious diseases has increased with the ease and increasing incidence of global travel, along with greater global social, economic, and political integration. meanwhile, according to kilbourne (2006) with reference to pandemic influenza, but still applies to many infectious diseases and vector-borne diseases, the only certainty is the increasing uncertainty of the emergence of infectious diseases with pandemic potential, their origins, characteristics, and biological pathways. through which they spread (bickley, chan, skali, stadelmann, & torgler, 2021). in the last 2 decades, the world has been re-busy with the covid-19 outbreak which continues to this day. as stated by callaway, cyranoski, mallapaty, stoye, and tollefson (2020) that the coronavirus disease (covid-19) is fueling a global pandemic and economic contraction unlike anything seen for about a century. covid-19 is less deadly than many other new diseases, such as ebola, avian flu, and tuberculosis. this epidemic has not only caused losses in the health, economic, social fields, but has touched the community in the fields of education, culture, worship and even threats in the fields of defense and state security. so worried about the development of the spread of covid-19, the government issued a policy that limits work activities and community activities with the term large-scale social restrictions (psbb). https://www.doi.org/10.33094/journal.139.2021.41.13.19 mailto:safikfaozi@edu.unisbank.ac.id mailto:bsud@edu.unisbank.ac.id mailto:wthandoko@edu.unisbank.ac.id asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 14 © 2021 by the authors; licensee online academic press, usa furthermore, when the covid-19 condition increased, then raised it to an emergency condition with a new term, namely the implementation of emergency community activity restrictions (ppkm). even the results of the evaluation of the implementation of community activity restrictions (ppkm) when this article was written were given levels based on the situation and conditions that took place in each community, namely ppkm level 3 and level 4. the response to the spread of covid-19 is complex because it touches all the basic joints of society, namely public health needs and the fulfillment of community food needs, as well as social, economic, cultural, educational, ideological and public defense in the security sector. the urgency of handling covid-19 has entered the emergency category. for this reason, the prevention approach that has been seen so far in the aspect of economic activity is considered not to solve the problem but instead is increasingly endangering people's lives, considering the spread rate that touches confirmed positive patients is above 55,000 every day (when this article was written) and has threatened the availability of oxygen that had been experiencing scarcity in several large hospitals including dr. sardjito yogyakarta. the complexity of handling the spread of covid-19 is increasingly difficult to deal with with the level of community discipline in complying with health protocols. this condition is an obstacle in the enforcement of strict health protocols in the community, moreover community disobedience is often a cultural fact of the indonesian people (koentjoroningrat's study which describes the cultural disobedience of the indonesian people) is also related to the fulfillment of food needs which is a basic need for people who experience limitations at the time of promulgation (hoefnagles, 1969). the impact of the covid-19 outbreak has caused crises in various sectors of life, including the political, social, cultural and economic sectors. crisis forces leaders to make high-risk decisions under conditions of threat, uncertainty, and time pressure. crises are important because of their humanitarian consequences and political repercussions. they also tend to increase in frequency with economic globalization and climate change (lipscy, 2020). efforts to deal with the crisis are carried out by enforcing the rules for implementing sanctions in the context of preventing the spread of covid-19, both imprisonment, fines, and administrative sanctions. in fact, it is not uncommon for social sanctions to be imposed. coping with covid-19 by imposing criminal sanctions is the implementation of a criminal law policy (law criminal application). however, the application of criminal sanctions on the grounds of causing a deterrent effect for lawbreakers is part of criminal politics, namely a total and rational community effort to tackle crime (read: lawbreakers). in criminal politics, the effort to apply criminal law (criminal law application) turns out to have limitations in criminal law, especially because it involves intersecting social issues, namely public health and community food needs. people's desperation to continue working to meet food needs is a socio-economic problem that cannot be overcome by threatening or punishing violators. although various efforts have been made to provide understanding to the public regarding the dangers of covid-19, there are still many people who dare to violate and even tend to dare to fight against officers. this phenomenon occurs almost every day that we can see through social media, both television, youtube, and other social media. this means that other methods are needed that can be used to complement the limitations of the approach to imposing sanctions for perpetrators that have been carried out so far, namely a criminal political approach to prevent the spread of covid-19. 2. research question i. what is the approach to criminal politics in the perspective of social politics in dealing with the spread of covid-19? ii. what is the approach to criminal politics in the perspectives on the implementation of sanctions for handling covid-19? 3. literature review social policy is a plan or action of government or institutional agencies which aim to improve or reform society. it consists of guidelines, principles, legislation and associated activities that affect the living conditions conducive to human welfare, such as a person's quality of life. the malcolm wiener center for social policy at harvard university describes social policy as "public policy and practice in the areas of health care, human services, criminal justice, inequality, education, and labor" (the malcolm wiener center for social policy, 2015). social policy might also be described as actions that affect the well-being of members of a society through shaping the distribution of and access to goods and resources in that society (cheyne, o'brien, & belgrave, 2005). social policy often deals with wicked problems. the existence of a crime problem that is troubling the community must be prevented and overcome. prevent deviant behavior or crime is criminal policy. this is a part of social policy. in its widest sense, criminal policy refers to all actions that influence criminality. criminal policy includes, for example, decision-making concerning which acts constitute punishable offences, what kind of punishments are imposed for these offences, and how severe these punishments are. in addition to criminal law measures, alcohol policy measures, social and education policy measures, health care service arrangements and urban planning, among other things, affect criminality. https://en.wikipedia.org/wiki/government https://en.wikipedia.org/wiki/society https://en.wikipedia.org/wiki/guidelines https://en.wikipedia.org/wiki/principles https://en.wikipedia.org/wiki/legislation https://en.wikipedia.org/wiki/human_welfare https://en.wikipedia.org/wiki/quality_of_life https://en.wikipedia.org/wiki/harvard_university https://en.wikipedia.org/wiki/health_policy https://en.wikipedia.org/wiki/criminal_justice https://en.wikipedia.org/wiki/social_inequality https://en.wikipedia.org/wiki/education_policy https://en.wikipedia.org/wiki/wicked_problems asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 15 © 2021 by the authors; licensee online academic press, usa the goal of criminal policy is to realize the welfare of the community, namely by providing guarantees for the welfare of the community, education and employment of the population. these conditions are the basis for a safe community life. the objective of criminal policy is to reduce criminality and its harmful effects. crime prevention efforts are the primary means for achieving this. another objective is to increase safety and sense of security in society. g. peter hoefnagels formulates criminal political efforts through influencing society of crime and punishment, law criminal application and prevention without punishment. specifically, crime prevention without punishment is carried out through social policy, community planning mental health, national mental health, social work child welfare, administrative & civil law. to enforce laws and regulations, the government can use a social policy approach, namely using community leaders to socialize the applicable laws and regulations so that these laws and regulations are more effectively accepted by the community. the stipulation of laws and regulations in controlling covid-19 still faces many obstacles, for example in the protocol for burial of bodies exposed to covid-19 in several places, there are still many rejections from the community. to prevent a similar situation from occurring, the government needs to involve community leaders in the area to provide an understanding so that the community obeys the regulations. taking power during the covid-19 pandemic poses many complex issues that need to be resolved. the solution to this problem requires a stable and resilient framework to shape and guide decision making (jarman, 2021). related to this problem, it is necessary to involve community leaders so that the decisions taken reflect the decisions that are really needed by the community, and the community does not feel disadvantaged by the decision. for example, the decision to handle the covid-19 pandemic. thus, social policy carried out as an action to deal with covid-19 will become more effective. on the other hand, the handling of covid-19 is carried out using a criminal political approach. criminal politics is a rational effort to tackle crime. criminal politics as a science as well as a means of tackling criminal acts is deemed capable of cracking down and overcoming this phenomenon, both through penal and non-penal means. criminal politics as a rational effort of society in tackling crime operationally can be carried out either through penal or non-penal means. enforcement of criminal law in dealing with covid-19 criminal acts cannot only use penal facilities but also use non-penal means. when viewed from the perspective of criminal politics at a macro level, the policy of overcoming the covid-19 crime by using means other than criminal law is the right policy. this is because non-penal efforts are more of a preventive measure against the occurrence of covid-19 criminal acts. the main target of non-penal policies is to deal with and eliminate the conducive factors that cause the occurrence of these crimes. this study aims to examine the policies of the indonesian government in dealing with the spread of covid-19 which is carried out with a criminal political approach from a socio-political perspective. 4. methods this research is an observational study using primary data taken by conducting direct observations and interviews with people affected by covid-19. information data collection is also carried out through the media, both print media, television, youtube, facebook, and other electronic media 5. discussion domestic policies implemented in response to the coronavirus pandemic range from school closures and the cancellation of public events to full-scale national lockdowns. previous research has suggested that democratic countries, especially those with competitive elections, are quicker to close schools (bickley et al., 2021). interestingly, those with high government effectiveness (i.e., those with high quality public and civil services, policy formulation, and policy implementation) were slower to implement the policy (cronert, 2020) as were more right-leaning governments (adolph, amano, bang-jensen, fullman, & wilkerson, 2020). the policy adopted by the indonesian government uses a criminal policy approach. from this approach, the analysis is carried out using a criminal policy approach in a socio-policy perspective and the implementation of sanctions for handling covid-19? 5.1. criminal politics in the perspective of social policy handling the spread of covid-19 criminal politics as stated by sudarto is a rational effort of society to tackle crime. marc ancel defines criminal politics as the rational organization of the social reactions to crime (hoefnagles, 1969). hoefnagles (1969) which gives the meaning of criminal policy in various senses, such as the expression that the science of criminal policy is the science of crime prevention, criminal policy as a science of policy is part of a larger policy: the law enforcement policy. nawawi (1996) illustrates the approach to criminal politics as part of social politics as presented in the figure 1 below: asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 16 © 2021 by the authors; licensee online academic press, usa figure-1. skema criminal policy. source: hoefnagles (1969). overcoming violations of the legal provisions of large-scale social restrictions are intended to create a safe, peaceful life. the need to realize a safe and peaceful community life is a means to realize a just and prosperous community life which is illustrated by the “tata tentrem and kerta rahardja”. a safe, just and prosperous community life is a social policy that must be realized by the state as mandated in the fourth paragraph of the 1945 constitution, namely protecting the community, educating and realizing public welfare. the social politics mandated by the 1945 constitution to state administrators as carried out by the government is related to the protection of the community against the spread of covid-19, namely the sacred mandate of the 1945 constitution to protect the community against the spread of covid-19 and to ensure that the community still has its basic needs fulfilled to avoid the life of the people who are suffering from poverty not prosperous. to realize social policy against the spread of covid-19, apart from having to be based on rationality – as a characteristic of the policy approach – one must also open to alternative choices of policies taken. an open and rational approach to social policy in dealing with the spread of covid-19 indicates an approach that is not emotional in nature, but rather an approach that is built based on knowledge that is full of rational values. law number 6 of 2018 concerning health quarantine as a state policy has determined the existence of a regional, home, hospital or social quarantine policy for the prevention and control of an epidemic that is contagious. under chapter 49 states that the policy must be based on epidemiological considerations, the magnitude of the threat, effectiveness, resource support, operational technical, economic, social, cultural and security considerations. the existence of a state policy in the form of large-scale social restrictions indicates that the state policy has been built based on rational considerations. although social policies have been based on rational considerations, the problem is that the choice made by the government is large -scale social restrictions, not the option of regional quarantine or home quarantine as also alternatively by law number 6 of 2018 concerning health quarantine. the choice to quarantine the territory voiced by the community has been defeated by economic and business interests. even in 2020 the governor of jakarta who took the policy to close the dki area (lockdown, or according to law no. 6 of 2018 with the term regional quarantine) was not supported by the central government and was also rejected by the owner of the jarum group by sending a letter of rejection in person open to the president of the republic of indonesia. the dominance of economic considerations over health considerations was firmly rejected by dr. faisal basri is a lecturer at the university of indonesia and a senior indef economist. the government's choice of a policy of restricting community activities instead of a regional quarantine is a social policy choice to deal with covid-19, which is still a concern for the community, even though this policy has been going on for more than 16 months. the social-political approach that is full of rational choices built based on of science teaches that the powerlessness of a falsified method requires replacing it with another method. social restrictions coupled with vaccinations that are not recommended by the world health organization (who) are not sufficient to reduce the spread of covid-19. for this reason, it is necessary as a social policy to provide alternative vaccine options recommended by the world health organization (who). on the other hand, other methods are also needed outside of large-scale social restrictions (psbb) or the imposition of restrictions on community activities (ppkm). another alternative social policy determined by the law is the regional quarantine as stipulated in chapter 53 paragraph (1) which emphasizes that the regional quarantine is part of the response to a public health emergency. this responsibility of the central asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 17 © 2021 by the authors; licensee online academic press, usa government may also involve the regional government and other related parties (chapter 55). this means that there is a shared responsibility for efforts to overcome covid-19 under the control of the central government. the policy to carry out a regional quarantine or a lockdown that limits the entry and exit of the region was also mentioned again during the regional restriction policy at the level by jusuf kalla, the former vice president, as well as by dr. rizal ramli, namely the implementation of the closure of the area and the provision of basic needs of the community. the proposal submitted by jusuf kalla requires 60 t per month for 6 months (the rough calculation is that there are 60 million families with 30% receiving direct cash assistance of idr 1,000,000/each kk every month for 6 months). meanwhile, rizal ramli estimates that there will be a budget allocation of 415 t (a rough calculation of the provision of blt for 70 million poor people with a nominal value of 105 t per month and the need for 100 t for 3 months) also proposed by dr. rizal ramli. this effort can still be carried out by the government, but it seems that the government prefers the enforcement of restrictions on community activities. this means that the government is still confident in its policy choices even though it has been judged unsuccessful several times in tackling the spread of covid-19. from the point of view of victimology, which is oriented towards minimizing the number of victims who continue to fall, the involvement with local governments and other related parties as mandated by cha pter 55 teaches the basis for arguments for social contracts and social solidarity. the responsibility of the central government in dealing with covid-19 is the implementation of the social contract argument, and involvement with other related parties is the elaboration of the social solidarity argument. the existence of jogo tonggo who grows voluntarily has eased the burden on the community, whether individuals, community organizations or the mosque/church movement concerned with covid-19 in various forms such as the provision of masks, food, or personal protective equipment (ppe). the spirit of cooperation of the community to jointly share relieves the burden on the community which characterizes the community can be used as social capital to be transformed into a community movement. 5.2. criminal policy perspectives on the implementation of sanctions for handling covid-19 5.2.1. application of criminal sanctions one of the efforts to overcome covid-19 is the enforcement of the rules for restricting the enforcement of community activities. the enforcement of the rule of law is not in a vacuum, but in the conditions and situations of the indonesian people who experience a disciplinary deficit against the rule of law. myrdal (1970) once assessed that there was disobedience to the law that had become widespread and became public indiscipline. koentjoroningrat (2015) also considers indonesian society as an undisciplined society, likes to trespass. given this factual condition, the government tries to enforce the rules for the psbb or emergency ppkm by imposing strict sanctions. law number 6 of 2018 and law number 4 of 1984 and the criminal code have determined that there are criminal sanctions in prison, imprisonment, and a certain number of fines. criminal threats can also be imposed through the criminal code starting with chapter 212 -216, and chapter 218 of the criminal code. the threat is a maximum imprisonment of one year and four months or a maximum fine of rp. 4,500, or a maximum imprisonment of four months and two weeks or a maximum fine of rp. 9,000 (chapter 216), or a maximum imprisonment of four months and two weeks or a maximum fine of idr 9,000 (chapter 218). the threats of criminal sanctions if applied mean the application of criminal law as one of the criminal political efforts through criminal law (penal). in the study of criminal politics, the application of criminal law must consider the nature of the subsidiary functions of criminal law, on the one hand, also based on human values. this means that the application of criminal sanctions must be carried out selectively, especially when the application of criminal sanctions is faced with social conditions that force people to fulfill the ir basic needs. especially for the small business sector, for community members to meet their basic needs, such as the implementation of legal sanctions, they are still within the limits of business opening hours, online services or are dine-out. violations of this rule of law are subject to criminal sanctions of imprisonment or fines that are still within the limits of community discipline enforcement, for example being processed in a fast court and subject to imprisonment for 1-3 days or a minimum fine. even the enforcement of social sanctions needs to be initiated in accordance with the prevailing customs in society. 5.3. media role criminal policy, this effort can be done through changing people's perceptions about the dangers of behavior not complying with the legal provisions for the implementation of restrictions on community activities (ppkm). efforts have been made through making news about the spread of covid-19 that can make people aware of being obedient and obedient to the provisions of the law. through print media, television and other social media, people have shown awareness to strictly adhere to health protocols, namely wearing masks, washing hands, and avoiding crowds, and limit mobility. people's behavior has shown this change. the community has been limiting crowds to gatherings for more than a year. meetings of residents at the rt or other region or community level have shifted to meetings through whatsapp groups or through other social media. even the crowd of recitations is also very limited and replaced by online recitations via youtube. even in places of worship, there has also been a decline in worshippers either in mosques, churches, or other places of worship. recitation awareness through asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 18 © 2021 by the authors; licensee online academic press, usa youtube has become a model for online recitation today. a new life behavior in several gatherings to avoid crowds has formed. 5.3.2. involvement of community leaders indonesian society which is communal and obedient to the demands of role models becomes extraordinary social capital. social capital that builds social communities that are full of demands from community leaders has become a very strategic and effective medium in social movements aware of the dangers of covid-19. the chairman of pbnu, kyai aqiel siradj, realized that the use of this media had not been maximized. he admitted that as the chairman of pbnu with a very strong and culturally rich social capital network, from the beginning he was not involved much in building social movements. in fact, with the number of tens of millions of worshipers and their network which is full of cultural values, nu congregations and other cultural organizations are the main pillars in the movement of people who care about covid-19. not only can they be involved in social movements to prevent the spread of covid-19, but also become the center of the people's movement to share and care for the victims of covid-19. 5.3.3. science-based covid19 control management the management and institutional approach to controlling covid-19 is considered not optimal in preventing the spread of covid-19 based on a scientific basis. the scientific footing determined by the mandate of law number 6 of 2018 is the closure of the area or regional quarantine by providing a budget to meet the basic needs of the community during the regional quarantine. the existence of a large-scale social restriction approach or the enforcement of restrictions on community activities that provide the possibility for social movements to open up the potential and vulnerability to the spread of covid-19. moreover, this concession is dominated by pragmatic economic interests. the experience of implementing psbb and ppkm accompanied by vaccination programs that have not met the target has not been able to reduce the spread of covid-19. although vaccination has been carried out simultaneously with the implementation of ppkm, the spread of covid-19 shows an alarming trend of increasing and creates an emergency. policy-wise, the choice of methods that are not effective for controlling the spread of covid-19 is reviewed to be replaced by other methods based on science and technology. the regional quarantine policy approach and guaranteeing the adequacy of basic needs on the one hand, as well as the massive acceleration of vaccinations that are effective in preventing the spread of covid-19 and the use of community social capital networks to ease the burden on the community on the other hand. ulil absar abdala's criticism regarding the management of emergency ppkm control in the java and bali regions has been controlled despite the fact that the field is very serious, and the paid vaccine plan is far from a mass psychology approach when the covid-19 pandemic is worrying the public, showing a less robust approach based on consistency of knowledge. 5.3.4. utilization of information technology information technology has greatly assisted efforts to build public awareness and has even massively helped facilitate community activities in the economic, health, education, socio-cultural sectors during the massive spread of covid-19. several online facilities carried out by grab, gojeg, bukalapak, tokopedia, and online banking have been digitized, including health services, education, and other sectors. digitization has permeated all areas of life. this is also an effort to prevent the spread of covid-19 through the use of information technology. likewise, the use of digital mass media has also been able to influence public perceptions of the dangers of the spread of covid-19, including public participation in supervising government policies in controlling covid-19. public criticism through social media has had an impact on the repeal of government policies that plan to sell vaccines in the name of the mutual cooperation vaccine program. social media has played a major role in controlling the spread of covid-19. 6. conclusion based on the results of the analysis and by looking at the facts from observations that occurred during the implementation of the criminal political approach to prevent the spread of covid-19 in indonesia, there is still a gap between expectations and facts from the criminal political approach. therefore, another more persuasive approach is needed by involving community leaders to prevent the spread of covid-19. the influential community figures in question are religious leaders, traditional leaders and other figures who have great influence as people who are respected among the community. criminal politics against law enforcement during the covid-19 outbreak must be part of social policy, namely community protection, both in protecting public health and preventing community poverty due to the implementation of government policies through psbb or emergency ppkm. the social policy is to prevent the spread of covid-19 through regional quarantine by meeting the basic needs of the community as stipulated in law number 6 of 2018 concerning health quarantine. the imposition of criminal sanctions for violators of the psbb or emergency ppkm policies in criminal politics must be carried out by integrating the application of penal sanctions with non-penal community efforts, namely the massive use of mass media to influence public perception, involvement of social institutions. figures with culturally strategic social capital asian themes in social sciences research 2021, vol. 5, no. 1, pp. 13-19 19 © 2021 by the authors; licensee online academic press, usa networks, and management of controlling the spread of covid-19 that is consistent with relying on health sciences that are integrated with social sciences and technology. references adolph, c., amano, k., bang-jensen, b., fullman, n., & wilkerson, j. (2020). pandemic politics: timing state-level social distancing responses to covid-19. journal of health politics, policy and law, 46(2), 211-233. available at: https://doi.org/10.1215/03616878-8802162. bickley, s. j., chan, h. f., skali, a., stadelmann, d., & torgler, b. (2021). how does globalization affect covid-19 responses? globalization and health, 17(1), 1-19. available at: https://doi.org/10.1186/s12992-021-00677-5. callaway, e., cyranoski, d., mallapaty, s., stoye, e., & tollefson, j. (2020). the coronavirus pandemic in five powerful charts. nature, 579(7800), 482-483. available at: https://doi.org/10.1038/d41586-020-00758-2. cheyne, c., o'brien, m., & belgrave, m. (2005). social policy in aotearoa new zealand: a critical introduction (3rd ed.). south melbourne, vic: oxford university press. cronert, a. (2020). democracy, state capacity, and covid-19 related school closures. working paper, uppsala university. retrieved from: https://preprints.apsanet.org/engage/apsa/articledetails/5ea8501b68bfcc00122e96ac. hoefnagles, g. p. (1969). the other side of criminology: an inversion of the concept of crime. holland: cluwer deventer. jarman, r. (2021). power, politics and policing: how the pandemic has highlighted fractures and fault lines in our society. journal of global faultlines, 8(1), 100-113. available at: https://doi.org/10.13169/jglobfaul.8.1.0100. kilbourne, e. (2006). influenza pandemics of the 20th century. emerging infectious diseases, 12(1), 9-14. available at: https://doi.org/10.3201/eid1201.051254. koentjoroningrat. (2015). culture, mentality, and development. jakarta: pt. gramedia pustaka utama. lim, p. l. (2014). travel and the globalization of emerging infections. transactions of the royal society of tropical medicine and hygiene, 108, 1309–1310. available at: https://doi.org/10.1093/trstmh/tru051. lindahl, j. f., & grace, d. (2015). the consequences of human actions on risks for infectious diseases: a review. infection ecology & epidemiology, 5(1), 30048. available at: https://doi.org/10.3402/iee.v5.30048. lipscy, p. y. (2020). covid-19 and the politics of crisis. international organization, 74(s1), e98-e127. myrdal, g. (1970). the challenge of world proverty . harmond worth: penguin books. nawawi, a., b. (1996). limits of criminal law capability in combating crime. paper presented at the national seminar paper on non-penal approaches in crime prevention, semarang. the malcolm wiener center for social policy. (2015). presidents and fellows of harvard. harvard kennedy school. retrieved from: https://www.hks.harvard.edu/centers/wiener/news-events/news-archive. http://www.hks.harvard.edu/centers/wiener/news-events/news-archive asian themes in social sciences research issn: 2578-5516 vol. 4, no. 1, pp. 1-8 2020 doi: 10.33094/journal.139.2020.41.1.8 © 2020 by the authors; licensee online academic press, usa accepted: 26 october 2020 | published: 30 december 2020 1 © 2020 by the authors; licensee online academic press, usa macroeconomic determinants of stock market fluctuations: the case of indonesia agustinus susanto university of eastern finland, finland. abstract the study was aimed at assessing the macroeconomic determinants of stock market fluctuations in indonesia. the quantitative data was collected through secondary sources such as world bank. the data was collected from 1990 to 2019. the statistical testing was done through descriptive statistics, unit root testing and ardl (autoregressive distributed lag) model. the data was of mixed nature as it consisted of stationary and unit root. the findings revealed that the overall model was significant and in long run, there is a significant impact of macroeconomic indicators on stock prices in indonesian market. geographical limitation is the major issues that have restricted the collection and analysis of data. this study can also be improved by doing country comparison and industry comparison of same industries. keywords: interest rate, exchange rate, stock market, inflation rate, fdi, macroeconomic indicators. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. 1. introduction the stock markets are a vital part of country’s economy because these markets list all the public limited companies whose stocks are bought and sold by investors in this particular market. the stock markets tend to raise investment for companies benefitting the general public as well as large companies operating within the country (pradhan, 2018). this market is most preferred by investors due to its high return and generally low to moderate risk associated with the stocks. however, the stock market is affected by the country’s external factors including political environment, macroeconomic variables and technological advancements (babajide, isola, & somoye, 2016). all of them carry a significant place with regards to their impact on stock market. nonetheless, macroeconomic indicators tend to define and signify the stock market to a great extent. there are various macroeconomic variables including country’s gdp, interest rate, inflation, exchange rate, unemployment rate, fdi etc. that help in determining stock market fluctuations. according to demir (2019) the macroeconomic variables are dynamic and change rapidly with time which in turn, specify the changes in stock market returns which is of great interest for government, investors as well as companies. indonesia is one of the emerging markets in the world primarily famous for its tourism industry having a stable stock market and dynamic macroeconomic indicators. since the focus of scholars recently has been on emerging economies, most of the studies have depicted the macroeconomic determinants within brics economies (asongu, akpan, & isihak, 2018; syed & tripathi, 2020; umar & sun, 2016). however, there is still little evidence related to the stock market fluctuations in indonesia. hence, this paper is aimed to fill the gap by focusing on the macroeconomic determinants and its impact on stock market fluctuations in indonesia. the study is aimed at assessing the macroeconomic determinants of stock market fluctuations in indonesia. for this purpose, the following objectives are made; • to examine the significance of macroeconomic dynamics on emerging economies. • to identify and explain the macroeconomic factors associated with stock market fluctuations. https://www.doi.org/10.33094/journal.139.2020.41.1.8 asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 2 © 2020 by the authors; licensee online academic press, usa • to analyse the impact of macroeconomic determinants on stock market fluctuations with respect to indonesian stock market. • to recommend investment strategies and techniques to investors for gaining higher returns with respect to macroeconomic fluctuations. the primary research question answered through the following paper is; what is the impact of macroeconomic determinants on stock market fluctuations in indonesian stock market? sub-questions are defined as under; • what is the significance of macroeconomic dynamics on emerging economies? • what are the macroeconomic factors associated with stock market fluctuations? • what is the impact of macroeconomic determinants on stock market fluctuat ions with respect to indonesian stock market? • what are some recommended investment strategies and techniques for investors in order to gain higher returns with respect to macroeconomic fluctuations? 2. literature review there are numerous studies that have been conducted to analyse the important factors that tend to impact stock returns. for instance, in many textbooks and literature, one of the renowned factor models that have been discussed by many scholars is the single-factor model, which is known as the capital asset pricing model (capm). the rationale behind this model has been derived from the important concept associated with diversification that states that well-diversified investors should only assess systematic risks associated with a given investment (elbannan, 2015). in this regard, kisman and restiyanita (2015) have also argued that this systematic risk can be examined by looking at the sensitivity of every stock to a change within the overall market, which can be measured or assessed by looking at the beta value. in other words, it can be stated that the market factor is the single most important factor that can be utilized to determine the stock return. due to the simplicity of the representation associated with this model, as well as its good theoretical background, capm is considered as a highly renowned model which is utilized in determining the return on stock under most financial textbooks and for this reason, the model has also been used by numerous practitioners under the stock markets (brogaard & detzel, 2015). similarly, the topics associated with the stock return and macroeconomic variables have also gained tremendous attention from different scholars that have tried to determine their relationships, which also include their impact on emerging economies. many of these scholars have also utilized both new and traditional techniques to verify the significance of macroeconomic factors. for instance, boako, omane‐adjepong, and frimpong (2016) have conducted their study about the exchange rate and stock return in which they have utilized the quantile regression to examine whether the exchange rate impact returns on stock and whether the returns on stock, in turn, influence the exchange rate. the results of their study indicated that in most of the quantiles, the exchange rate had a dramatic impact on the stock return. nevertheless, the authors also found that the stock return had no impact on the fluctuation under the exchange rate. likewise, in their study, kurov and gu (2016) analysed the effect of monetary policy on the stock returns under both the sectorial and aggregate levels by utilizing panel and time-series regression models. for this purpose, they utilized the three-month sterling libor futures contract for generating the monetary policy shock. the findings of their study indicated a substantial impact on the stock returns from both unexpected and expected changes within the interest rate. in addition to this, the authors were also able to detect and measure the structural break as the relationship between the interest rate and stock return becomes positive during the period of recession. on the other hand, to analyse the relationship between inflation and stock return, kurov and gu (2016) also utilized an asymmetric test within their study. in their study, the authors were able to observe a negative relationship between these variables during the low inflation environment. however, the relationship between the variables was found to be positive under the high inflation environment. based on this observa tion, they concluded this finding as an inflation protection characteristic associated with stock return. under the study of rehman and shah (2016) the lead-lagged relationship between macroeconomic variables, as well as the stock market was analysed by utilizing a vector auto-regression technique. in their study, the macroeconomic variables that were selected by the authors were mostly related to wholesales’ price index, interest rate, and industrial production index. the findings of their study indicated that these macroeconomic variables had a substantial impact on the stock market. however, the authors also discovered that future economic performance was not explained by the stock market fluctuations. these and other studies associated with macroeconomic impact on the stock markets have always remained an interesting topic for many scholars and researchers not only under the major stock mark ets in the developed economies but also in the stock markets of emerging economies. for european countries, the research of antonios (2010) was based on examining the sensitivity of german stock returns to changes under the interest rates of the country. in this research, the evidence indicated that the term structure associated asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 3 © 2020 by the authors; licensee online academic press, usa with interest rates was a highly important factor in explaining the stock returns’ sensitivity in both overall and industry level in germany. whereas, in the study of siliverstovs and kholodilin (2010) variance decomposition, and vector error correction model (vecm) was used by the authors to analyse the effect of the important macroeconomic factors on switzerland’s stock market. the results of the variance decomposition indicated that every sector was sensitive to different types of innovations under the macroeconomic variables. in this regard, siliverstovs and kholodilin (2010) further argued that this information was highly useful for the allocation of strategic asset s in different sectors to control the risks associated with macroeconomic variables. likewise, artikis and nifora (2012) in their research was found to study the interaction among the stock market and macroeconomic variables in greece. the findings of their research indicated that the movement under the stock market was not the leading indicator associated with the fluctuations in macroeconomic variables while the macroeconomic dynamics were found to partially explain the fluctuations within the stock market. korhonen and peresetsky (2016) also used the egarch model to assess the impact of macroeconomic variables on the russian stock exchange market under which they discovered that the stock market was heavily dependent on both the us dollar exchan ge rate, as well as oil prices. while the study of ozturk and yilmaz (2015) was based on examining the impact of macroeconomic factors and dynamics on the stock return under the stock exchange market of istanbul, turkey. in this study, seven important macroeconomic factors were identified by the authors which were related to money market interest rate, consumer price index, industrial production index, gold price, oil price, money supply, as well as foreign exchange rate. the results of this study indicated that the money supply had a significant positive impact on the returns of stock, while the variables related to the exchange rate, oil price, production index, and interest rate had a significant negative impact on the stock returns. besides, the above-stated countries, several studies describing the relationship between stock market fluctuations and macroeconomic determinants are also popular under the emerging asian countries. for instance, the study of yang, kim, kim, and ryu (2018) under which the authors were found to utilize fama’s proxy hypothesis framework can be considered as an example where the relationship between the real activities, inflation, and real stock return was assessed with respect to the korean market. the findings of their research highlighted a negative relationship between the real stock return and inflation rate in the korean stock exchange market. this negative relationship was described by the authors as driven from the inflationary pressure to the future potential earnings of the listed companies, as well as a higher nominal discount rate. similarly, the relationship between the macroeconomic variables and the stock market in singapore has also been analysed by leong and hui (2014) who were able to discover the presence of co-integration between every important macroeconomic variable under their study and market index. while examining the sectorial level, the authors were also able to find a co-integration between all macroeconomic variables and the property sector of the country. nevertheless, while analysing the finance sectors, the authors were not able to found a significant relationship between real economic activities and money supply and for the hotel sector, an insignificant relationship was noted by the authors between the money supply and interest rates of the country. 3. methodology as stated earlier, the study is aimed at assessing the impact of macroeconomic determinants on stock market fluctuations which is based on numbers; hence, a positivist approach has been used to conduct the study. the reason why this research philosophy has been selected to conduct this study is that it adheres to the view that only factual or objective knowledge which is attained through observation (i.e., senses), as well as through measurement, can be considered as trustworthy. due to this reason, in most positivism studies, the researcher’s role is restricted to collecting and interpreting the data in an objective way (ryan, 2018). therefore, by using this philosophy, objective inferences have been made by analysing the collected data in order to test the hypotheses and accomplish the objectives of this research. similarly, as quantitative analysis has been made in this research, the quantitative research methodology has also been used to provide appropriate inferences related to the relationship between t he study's key variables (i.e., stock market fluctuations and macroeconomic determinants). this research methodology has further assisted to increase both the accuracy and objectivity of the inferences and conclusions that have been made to describe the relationship between stock market fluctuations and macroeconomic determinants of indonesia (bryman, 2017). 3.1. unit root testing under this research, the unit root testing method has been used to determine whether the analysed data associated with the key variables of this study is stationary or not. after using this technique, the autoregressive distributed lag (ardl) analysis has also been carry out in the research to evaluate the impact of macroeconomic determinants on the stock returns. moreover, to conduct these time series analyses, the primary data that has been gathered for this research has focused on analysing the changes under the variables between 1990 and 2019. asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 4 © 2020 by the authors; licensee online academic press, usa the processing of a time series, by considering the findings of beare (2018) typically comprise certain assumptions and limitations that are needed to be followed while predicting and analysing different time series under given research. thus, it is highly essential to explain how certain criteria and assumptions are important to consider while conducting an econometric assessment that has also been carried out in this research. in addition to this, the quantitative data for this study has been collected by accessing the idx composite index of the indonesian stock exchange (idx) which can also be classified as secondary data. therefore, it can be stated that for this study, the desk research method has been employed. as most stock markets in different countries are impacted by different macroeconomic determinants (which was also evident under the critical analysis of the literature review), this research has specifically focused on determining the impact of macroeconomic variables associated with the interest rate, inflation rate, and exchange rate of indonesia on the stock market returns or returns on investment that are attained by the stockholders in the country. similarly, it has also analysed the impact of foreign direct investments (fdi) that the local investors or stockholders in indonesia can make in other countries to protect themselves from the risk associated with capital losses that they are compelled to face during high fluctuations under the stock exchange market in their home country (i.e., indonesia). by considering these variables and the above literature review, the conceptual framework of this research has been provided below. figure-1. conceptual framework. the relationship between the explained and explanatory variables of this research (as highlighted by the above conceptual framework) can also be understood by using the following empirical equation: spt = α + β1 (irt) + β2 (i t) + β3 (xet) + β4 (fdi t) + ε where: • sp: stock price. • ir: inflation rate. • i: interest rate. • fdi: foreign direct investment. in this research, autoregressive distributed lag, as well as augmented dickey-fuller have also been implemented. the detailed explanations of these methods have been provided below: 3.2. augmented dickey-fuller (adf) as stated earlier, this research has analysed the impact of macroeconomic determinants on the stock returns (i.e., the return on investment) of the investors in indonesia. thus, to understand the current research phenomenon, the time series data associated with the macroeconomic determinants (i.e., inflation rate, interest rate, exchange rate, and fdi), as well as stock returns in indonesia were collected from 1990 to 2019. nevertheless, while using time-series data, researchers are often required to follow certain assumptions. thus, the fundamental assumption criteria which have been used in this research have followed the stationarity of time-series. this stationarity of time-series data can be evaluated by using the adf technique which has also been utilized in this research. this adf technique typically assists in forming the basis of the assumption that is used to propose the null hypothesis of time-series data that also requires the use of unit-roots (paparoditis & politis, 2018). in this regard, it can be stated that the rejection or acceptance of the null hypothesis helps in determining whether time-series comprises unit-roots. upon confirming the presence of unit roots under the time series, appropriate inferences are made to conclude that the data is stationary, and vice versa. the adf approach can also be explained by using the following mathematical model: asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 5 © 2020 by the authors; licensee online academic press, usa as indicated by the above-provided equation, can be described as the difference operator. on the other hand, in the equation indicates the random error of stationary. further, highlights non-stationary timeseries data. 3.3. autoregressive distributed lag (ardl) the statistical technique associated with ardl is also commonly utilized to determine the long-term associations while conducting the econometric assessment under given research. by considering the findings of nkoro and uko (2016) this approach is commonly utilized to determine the long-term relationship or association between two quantitative variables. moreover, this technique is also frequently used to form the basis of the analysis by using an iterative approach under which the time-series’ marginal log is maximized. the below-provided equation highlights the standard log-linear function that is generally used under this approach: in the above-provided equation, roit describes the log of return on investment, while the in the equation represents the error terms and α denotes the parameter estimate. hence, represents significant coefficient. 4. results for the purpose of analysing the collected data from the world bank’s website, the results have been presented below. along with the results, the discussion and conclusion is also given related to the research topic and the findings. this section has outlined descriptive statistics of the data, evaluation of unit root as the study has used time series data and assessment of relationship through ardl approach. 4.1. descriptive statistics this section determines the average of exchange rate, interest rate, inflation rate and fdi along the period of 1990 to 2019. the table of descriptive statistics below also show minimum and maximum values through which the range is computed. on the other hand, standard deviation has been used to calculate the deviation as well. the results in the below table are showing that average exchange rate value in the period from 1990 to 2019 has been $8,236.03, the average value of interest rate has been 548.3% in indonesia and the average inflation rate has been 925.0%. the average value of fdi had been $8,120,000,000. on the other hand, the deviation in exchange rate had been $4,078.24, the deviation in interest had been 74 4.7% and the deviation in inflation rate was 998.4%. the average values of stock price and stock returns are 179 and 6.18% respectively. table-1. descriptive statistics. variable mean std. min max exchange rate $8,236.03 $4,079.24 $1,842.81 $14,236.94 interest rate 548.3% 744.7% -2460.0% 1560.7% inflation rate 925.0% 998.4% 303.1% 5845.1% fdi $8,120,000,000.00 $9,240,000,000.00 -$4,550,000,000.00 $25,100,000,000.00 stock price volatility 179.0 146.4 15.0 533.1 stock return volatility 6.18% 3.57% 0.00% 17.25% 4.2. adf testing to evaluate unit root as discussed in the initial section that adf testing was carried out since the data is was time series in nature. it is assumed that non-stationary characteristics are present in null hypothesis of the study. the results have been presented below in table 2 and are computed through e-views. as per the details of the results, the t-statistics of exchange rate is -1.59 with p value of 0.4886. this implies that p value is greater than all the standard values such as 5%, 1% or 10%. hence it indicates that exchange rate has a unit root. similarly, the t-statistics of interest rate is -5.448 with 0.0 as the p-value. this means that the data was stationary and there was no unit root in interest root as the p value was 0.000 (p-value <0.05) and the null hypothesis was negated in this case. the t-statistics of inflation rate was -4.285 with 0.0005 as p-value. since the p-value is less than the threshold values hence, there is no unit root in inflation rate too. moreover, the t-statistics of fsdi was -8.347 with 0.00 as the p value hence it also means that due to stationarity in data, there is no unit root. in case of stock price and stock return, the t -statistics was -.183 and asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 6 © 2020 by the authors; licensee online academic press, usa 3.124 respectively whereas, the p-values were 0.3658 and 0.0248. overall, mixed nature of the data series can be observed from the results obtained hence, the methodology adopted later is decided in accordance with the nature of the data. table-2. unit root testing. variable test statistics p-value exchange rate -1.59 0.4886 interest rate -5.448 0 inflation rate -4.285 0.0005 fdi -8.347 0 stock price volatility -1.83 0.3658 stock return volatility -3.124 0.0248 4.3. bounds testing bounds testing are another way or approach of co-integration where variables are bound together in the long run period. this method has several benefits as it is new and helps in determining whether there will be any association between the variables in future or in long run or not. this tests is used irrespective of the fact whether the series of data is mixed or not. the values shown below of t -statistics and f-statistics alongside the p-values indicate the results. table-3. bound values. 10% 5% 1% p-value i(0) i(1) i(0) i(1) i(0) i(1) i(0) i(1) f 2.828 4.353 3.582 5.396 5.603 8.152 0.016 0.065 t -0.2478 -3.622 -2.9 -4.133 -3.805 -5.235 0.004 0.042 4.4. autoregressive distributed lag model from the results obtained in previous section (adf testing), it was assessed that the nature of the data is mixed where some variables have unit root whereas some are stationary hence, the model selected for analysis after considering the nature of data is ardl model. the results are presented below in table 4 that shows the t-statistics and p-values obtained. also, it has the optimal lag order which was selected by e-views automatically. to ensure that the errors of data are fixed so, hac error was used to strengthen the assessment between the independent and dependent variables. for the purpose of selecting the optimal model, in the first lag, stock return volatility had significant result (b=-2.335 with p-value of 0.001). furthermore, the interest rate had also significant result in first lag (b=-0.00511 with p value of 0.00). however, contrary to these results, inflation rate had insignificant results in first lag because of the values obtained less than the threshold value (b=0.00038 and p-value of 0.651). the first lag of fdi shows it has significant results (b=0.00176 with p-value of 0.015). similarly, all other results shown below are also of same nature and they indicate in second lag that significant results were not obtained. table-4. ardl model of the research short run. coef. std. err. t p>|t| [95% conf. interval] sr stock return volatility ld. 0.96287 0.36002 2.67 0.019 0.18509 1.74066 l2d. 0.31308 0.26306 1.19 0.255 -0.2552 0.88138 interest rate d1. -0.0064 0.00187 -3.4 0.005 -0.0104 -0.0023 ld. 0.00494 0.00174 2.85 0.014 0.00119 0.00869 l2d. 0.00487 0.00144 3.37 0.005 0.00175 0.00798 l3d. 0.00358 0.00101 3.56 0.004 0.00141 0.00576 inflation rate d1. -0.0015 0.00134 -1.15 0.269 -0.0044 0.00135 lfdi d1. -0.0041 0.00201 -2.04 0.062 -0.0085 0.00025 _cons 0.80285 0.1985 4.04 0.001 0.37401 1.23168 overall it can be concluded that since the aim of the study was to determine the impact of macroeconomic determinants on stock market fluctuations with respect to indonesian stock market therefore, it can be concluded that since the p-value is less than the threshold values such (p=0.019) therefore, statistical relationship to some extent can be observed. based on this assertion, it can be found that macroeconomic indicators (inflation rate, exchange rate, fdi and can have impact over stock prices or stock returns considering the external factors remain the same. the table 4 below was also divided into long run and short asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 7 © 2020 by the authors; licensee online academic press, usa run so that the association or the relationship between the macroeconomic indicators and stock price return can be assessed. it also depends on the lag values. in the long run period, fdi (p-value at 0.015) and stock return volatility (p-value at 0.001) have significant results. on the contrary, in the short run period, lag of interest rate (p-value at 0.005). therefore, it depends on the lag values and the short run and the long run period. table-5. ardl model of the research long run. coef. std. err. t p>|t| [95% conf. interval] lr stock return volatility -2.3351 0.54827 -4.26 0.001 -3.5196 -1.1507 ler -0.0274 0.00395 -6.94 0 -0.0359 -0.0189 interest rate -0.0051 0.00073 -7.03 0 -0.0067 -0.0035 inflation rate 0.00038 0.00082 0.46 0.651 -0.0014 0.00216 lfdi -0.0018 0.00063 -2.81 0.015 -0.0031 -0.0004 the results of the study can be validated from another study conducted in similar domain by demir (2019) that has revealed that economic growth, portfolio investments and fdi help in raising the stock market whereas, interest rate and oil prices negatively impact it. ardl approach was adopted in this study and it was suggested that stock exchange should increase capital inflow and their investments. the stationarity of the variables was also tested through adf, and unit root testing that were developed by dickey and fuller (1979) and phillips and perron (1988). 4.5. hypothesis assessment summary the primary assessment and overall evaluation has revealed that the overall model is significant. there is a more strong association during the long run as compared to short run. it was also found that stock prices is significantly dependent on its lagged values. based on the results obtained, it can be stated that the proposed hypothesis has been accepted. 5. discussion several studies are conducted in similar domain which has analysed the impact of macroeconomic indicators with stock prices. the following study used the case of indonesian market so that in-depth data can be collected and evaluated. the data was obtained from 1990 to 2019 from world bank. the data was also assumed to be mixed because some of the variables were stationary whereas, some had unit root. this was the major rationale behind opting for ardl model testing as the data was of mixed nature. furthermore, it had been found from the previous studies that risks is one of the essential element that is present and every stock market has to face this. kisman and restiyanita (2015) determined in their study that market factor can be used for finding the impact on stock returns though the stock prices fluctuate on daily basis due to various external factors. similarly, capm model is found to be significant in case of assessing stock returns with other variables. the macroeconomic indicators such as inflation rate, exchange rate and fdi are affected by many changes in the local economy such as increase in prices, government international deals or any political shocks or inflow of more investments and dollar price fluctuations. even oil has a significant part in changing the stock prices on daily basis. in addition to this, it was also found that there is a strong interrelationship between financial development and economic growth due to which the macroeconomic variables such as interest rate and exchange rate are influenced too. despite of the studies conducted in this domain, indonesian stock market was selected because the current studies are conducted on large economies such as china and usa. there is limited data available regarding indonesian market and the fluctuations observed in stock prices. thus, based on the results obtained above it is evident that in short and in long run, the macroeconomic variables behave differently and the results obtained are also different. in the short run, there might be no impact but in the long run, there is a significant impact. 6. conclusion in order to conclude the research article, it can be stated that the independent variables selected in this study were interest rate, inflation rate, exchange rate and fdi whereas, the dependent variable was stock return. conclusively, the overall model was found to be significant and in the long run, there is impact of macroeconomic indicators on stock prices in the indonesian market. the government needs to design policies for controlling inflation rate and exchange rate fluctuations. the government should encourage foreign investors so that inflow of fdi can increase and benefit the economy and growth. precisely, it is advised that government should focus on creating a strong mechanism that helps in increasing investment and more exports should be exported through local production. this may lead towards significant impact on stock market in short run period. asian themes in social sciences research 2020, vol. 4, no. 1, pp. 1-8 8 © 2020 by the authors; licensee online academic press, usa 7. limitations of study and future directions the following research article was based on indonesian market hence, it entails that geographical limitation is the major issues that has restricted the collection and analysis of data. the results of the study cannot be generalized to other developing or developed countries. in order to improvise the results in future, the data can be collected from malaysia and thailand. in terms of the macroeconomic indicators, the future papers can include more indicators and assess them in short run and long run period. moreover, this study can also be improved by doing country comparison and industry comparison of same industries. the researcher can use the data of different countries along with different indicators and find the impact on gdp and gnp too. references antonios, a. 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(2018). macroeconomic shocks and stock market returns: the case of korea. applied economics, 50(7), 757-773.available at: https://doi.org/10.1080/00036846.2017.1340574. asian themes in social sciences research issn: 2578-5516 vol. 1, no. 2, pp. 60-75 2018 doi: 10.33094/journal.139.2018.12.60.75 © 2018 by the authors; licensee online academic press, usa 60 © 2018 by the authors; licensee online academic press, usa banking sector operations and foreign direct investment in nigeria: a causality analysis patrick kanayo adigwe1 --celestine sunday okaro2 --ikenna justin emejulu3 -- amalachukwu chijindu ananwude4* 1,2,3,4department of banking and finance, nnamdi azikiwe university, anambra state, pmb 5025, awka, nigeria abstract this study examined the causality relationship between banking sector operations in nigeria and foreign direct investment from 1997 to 2015. the causal relationship between foreign direct investment (fdi) and banking sector development in nigeria is not clear yet, while there abounds empirical and theoretical studies on the nexus between foreign direct investment and economy in general, considerable attempts has not been made on the causality relationship between and banking operations in nigeria. specifically, this study ascertained the causal relationship between banking sector deposits, loans and advances, foreign exchange transactions, domiciliary operations, international banking operations and foreign direct investment. to achieve these objectives, this study employed ordinary least square (ols) econometric technique, auto regressive distributive lag (ardl) bound test and granger causality test among others. secondary data were collected from central bank of nigeria statistical bulletin of 2015. the result indicated significant causal bidirectional relationship between banking sector deposits, foreign exchange transactions and foreign direct investments; a significant unidirectional causal relationship between domiciliary operations and foreign direct investment, while no significant causal relationship existed between loans and advances, international banking operations and foreign direct investment. the study recommends that banking sector should adopt completely smart banking as this evidences low risk, reliability and stability of the banking sector which is essential for inflow of foreign direct investments. central bank of nigeria should cautiously focus on tackling monetary policy variables such monetary policy rate, cash reserve ratio and loan portfolio which a capable of attracting investors from abroad. keywords: banking operation, foreign direct investment. licensed: this work is licensed under a creative commons attribution 4.0 license. 1. introduction financial sector foreign direct investments, a relatively new phenomenon, typically takes the form of banks in industrialized countries establishing branches and facilities in developing countries (goldberg, 2007). the nigeria law allows inflow of foreign direct investments in the banking sector. foreign investors or foreign banks are permitted to operate in nigeria provided they meet the minimum capital requirements and central bank of nigeria regulation in addition to other laws allowing foreign investment in nigeria. according to the central bank of nigeria policy on foreign banks’ participation in the nigerian banking system, foreign individuals or institutional investors could also invest in existing nigerian banks, however, there is a condition that no single foreign individual/institutional investor should acquire more than the share https://www.doi.org/10.33094/journal.139.2018.12.60.75 asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 61 © 2018 by the authors; licensee online academic press, usa of the single largest nigerian individual/institutional investor in any bank, provided the aggregate shareholding of the foreign investors do not exceed 10% of the total capital of the bank. the policy guidelines went further to assert that foreign banks could acquire or merge with a local bank existing in nigeria but, such foreign bank must have operated in nigeria for at least five years and established branches in at least 2/3 of states of nigeria (excluding the state capital), provided the foreign bank/investors’ sha reholding arising from the merger/acquisition should not exceed 40% of the total capital of the resultant entity. the banking sector is meritoriously controlled by domestic individual compared to foreigners. the overwhelming ownership by domestic individuals is a function of the outcome of the indigenization programme of 1977 which effectively transferred ownership of banks from foreigners to domestic individuals and institutions (ani, odo and okelue, 2012). however, the reforms at different point in time in the financial system have attracted foreign banks to operate in nigeria. the two foreign banks operating in nigeria are standard chartered bank from south africa and citi bank from usa. standard chartered bank and citi bank started operations in nigeria in 1999 and 1984 respectively. as at today, standard chartered bank have about forty (40) branches in nigeria while citi bank has ten (10) branches. besides, the presence of foreign banks in nigeria, foreign investors have ownership interest in banks operating in nigeria. as at 2015, based on banks annual reports and accounts, the percentage of foreign shareholding in some banks operating in the country were value to be 6.39% for access bank plc, 41.54% for first city monument bank, 14.73% for first bank nigeria limited, 54.46% for stanbic ibtc bank, 38.81% for sterling bank and 70.44% for eco bank transnational plc. diamond bank, fidelity bank, guaranty trust bank, united bank for africa, unity bank, wema bank and zenith bank has no foreign shareholding. based on the foregoing, this study is set out to examine the causal relationship between banking operations and foreign direct investments in nigeria’s bank ing sector from 1997 to 2015. specifically, the causal relationship between banking sector deposits, l oans and advances, foreign exchange transactions, domiciliary operations, international banking operation and foreign direct investments we arranged this study as follows: with the introduction of the study in section one, we proceeded to explaining the major concepts and reviewed relevant literature in section two. in section three, the methodology context was dispelled. section four discussed the data, sensitivity analysis and regression output interpretation, while conclusion drawn from available data was spell out in section five. 2. review of related literature 2.1. clarification of concepts 2.1.1. banking operations banking operations are the legitimate day to day activities carried out by banks such as acceptance of deposits, lending of credits, foreign exchanges provision, etc. owing to the sensitive nature of the banking sector, banking operations are strictly regulated compared to other sectors of the economy. the noncompliance to approved operations leads to sanction by the central bank of nigeriathe sole regulator of the banking sector, and in some cases, withdrawal of operating license. banking operation is central to money supply mechanism in an economy as it provides the aggregate credit to the domestic economy as well as international liquidity through net foreign assets both of which are essential variables of money supply (ngerebo, 2012). the banking sector in nigeria is one of the major player in the financial system coupled with its critical role in financial intermediation process. virtually all the funds for productive economic activities are provided by the deposit money banks. the stock market is just the provider of funds to the privileged few who vividly meet requirements for listing. the stock market is completely of the reach of small and medium scale enterprises which are dominance players in economic activities in the country. the banking sector provides relevant financial services such as deposits, loans and advances, foreign exchange operations, domiciliary operations, international banking operations, trusts and information services among others. notwithstanding the dominance of the banking sector over stock market, the financial services penetration to the populace are still very low compared to some developing countries in africa like south africa and other advances countries in the world, due to, but not limited to, changes in government economic policies, inst ability in macroeconomic fundamentals, operating environment and monetary policies variations. there are a lot of channels through which foreign direct investment affects banking growth sector growth, however, this study is limited to five selected fundamental via deposits, loans and advances, foreign exchange transactions, domiciliary operations and international banking operations. these fundamentals are succinctly discussed below. 2.1.2. deposits past literatures have laid claim that increase inflow of foreign investment causes upsurge in host country’s banking sector deposits as foreign direct investment comes with money. deposits are total funds of individuals, firms, organizations, state and local governments among others in demand, savings, time and other types of accounts operated by banks. the deposits of the banking sector has rising over the years owing to various reforms in the banking system. the total deposits in the banking sector as at 1981 was n10.7 billion, however, the end of 2015, it has tremendously risen to n29, 161.98 billion, an indication of stability asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 62 © 2018 by the authors; licensee online academic press, usa and reliability of the banking system. with the exception of the financial crisis that hit the economy in 2009 which depreciated banking sector deposits by 7.80%, the deposits of the banking sector has not witnessed any fluctuation. okeke (2015) reported that nigerian banks were much healthier and stronger than in the tumultuous period of the 2008-09 crisis in nigeria’s financial sector as customers withdrew their money and the banks’ deposit ratios deteriorated. within the period of the crisis, the central bank of nigeria injected funds into some banks discovered to have had huge toxic assets in their balance sheet, and some managing directors/ceo were removed and forensic audit of the entire banking sector conducted. 2.1.3. loans and advances increased inflow of foreign capital in the banking sector through foreign ownership would in no small magnitude increase the loans and advances extended to economy for productive activities which ul timately results in growth and development of the economy. similar to deposits, the loans and advances extended by the banking sector to the economy have also witnessed undeniable appreciation. the sectorial allocation of loans and advances favours the oil and gas sector to other sectors of the economy. the preference of the oil and gas sector is due to the huge nature if their assets and considering the fact that oil is the major source of government revenue. in 2015, the total credit to the oil and gas sector was n3, 328.58 billion compared to n1, 870.56 billion for manufacturing, n498.36 billion for power and energy and n467.63 billion for agriculture. to meet with up with growing demand for loan amidst the global financial crisis, the banking sector has to borrowed abroad resulting in increase in their foreign liabilities from n100.8 billion in 2007 to n146.2 billion in 2010, balances held for other banks outside nigeria felled to 15.8 billion in 2010 as against n124.0 billion in 2007. following the sanusi reform that prevailed in the banking sector during the global financial meltdown, stability has returned in the banking system and the capacity to extend credits to the economy boosted. the total credits of the banking sector appreciated to n13, 222.65 billion in 2015 compared to n8, 912.10 billion in 2009. 2.1.4. foreign exchange transactions it is the conversion of a country’s currency to another for the purpose of transaction executed by the banking sector over a specified period of time. foreign exchange transactions operations of the banks is the facilitator of international trade between nigeria and the outside world as it involves the sales and purchase of foreign exchange. as international competitiveness increases, the demand and supply for foreign exchange also increases in the same magnitude, and this increases the volume of foreign exchange transaction which also translates to increase in the volume of banking sector activities as they remain the major player in foreign exchange market (manyo, sabina and ugochukwu, 2016). the proper documentation of foreign exchange transactions in nigeria for the banking sector following series of foreign exchange regimes in nigeria based on central bank of nigeria 2015 report, started in 1997. since then, the banking sector remains an active player in the foreign exchange market. the foreign exchange operations of the banking sector are sectorial divided visa viz: imports and invisibles. imports include foreign exchange services for agricultural, industrial, finished goods, transport, personal effects, minerals and oil and gas services while invisibles such as education, airlines remittance, estacode, re-insurances and contract services among others are cared for in foreign exchange operations of the banks. the imports constitute 68.99% of foreign exchange operations of the banking sector while 31.01% are invisibles. 2.1.5. domiciliary operations domiciliary accounts are banks accounts in foreign currencies such as british pound, us dollar, japanese yen, etc. other than the local currency: naira for the purpose of international transactions, and maintained by individuals, firms, corporate organization, etc. deposits are made in foreign currency and same applies to withdrawals. the banking sector operated two types of domiciliary accounts: savings and current domiciliary accounts which are equivalent to the savings and current accounts in the local currency. from 1981 till 1993, there was no domiciliary account operations in the banking sector. however, in 1993, deposit money banks engaged in the financial service of domiciliary account operation. according to the 2015 statistical bulletin of the central bank of nigeria, banking sector domiciliary operations was valued at n1.7 billion. contemporary, domiciliary operations have vehemently expanded from a value of n1.7 billion in 1994 to n4, 357.03 billion in 2015. 2.1.6. international banking operations international banking operations refer to the banking activities of the banking sector outside nigeria. put differently, there are banking transaction across national boundaries. the banking sector international banking operations cover claims on non-residents banks, balances held with banks, offices and branches, loans and advances, bills discounted payable outside nigeria, treasury bills of foreign governments, attached assets, international gold tranche, special drawing rights, regional monetary corporation and other foreign assets. the international banking operation of the banking sector was valued at n0.3 billion in 1981 but, this has magnificently surged over the years. as at 2015, the international banking operation of the banking sector was asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 63 © 2018 by the authors; licensee online academic press, usa summed to worth n1, 735.6 billion. nigerian banks have expanded operations in some countries in africa and other countries of the world owing to banking reform of 2004 which increased the minimum capital base for national regional and international banking. for instance, access bank plc operates in gambia, burundi, rwanda, ghana, london, china and uk among other countries in the globe. the same applies to united bank for africa plc, zenith bank international plc, union bank plc, skye bank plc, first bank nigeria limited, guaranty trust bank, first city monument bank and diamond bank. 2.2. theoretical buttress many theories have been advanced in connection with foreign direct investments and economic growth as it passes through the financial system. among these theories are production cycle theory , eclectic paradigm theory, internationalization theory and theory of exchange rate on imperfect capital market. however, this study discussed briefly two of the theories: eclectic paradigm theory and endogenous optimum currency area hypothesis due their closeness in explaining banking sector foreign direct investments. this study is anchored on the endogenous optimum currency area hypothesis because offers the closets reason for foreign direct investments in the banking sector. 2.2.1. eclectic paradigm theory the eclectic paradigm theory was introduced by john dunning in 1973 otherwise called the dunning oli’s theory because it was modelled from the aspects of other theories. eclectic paradigm theory of foreign direct investment centres on three factors via ownership, location and internationalization. in the words of louangrath (2014) if one asks whether all the three factors pass the test in each foreign direct investment case. the answer is no; it might be the case that only one factor is caught in the nest, especially in the banking sector. the ownership factor implies the intangible assets at the possession of a firm which it can, at its discretion, transfer such intangible assets to other firms abroad to earn profit or reduced cost of production usually via contract agreement. the aspect of location come to play depending on transnat ional country where such intangible assets is highly needed or where the utilization will provide higher returns. however, the choice of location may be hindered by macroeconomic environment, infrastructural potency and political consideration among others. the third factor: internationalization depends on actualization of the assumption/conditions of ownership and location aspects. internationalization is the various channels available to a company to exercise its control from the sale of its goods or serv ices based on the contract agreement with other companies. 2.2.2. endogenous optimum currency area hypothesis according to mundell who popularised this theory in 1973, barriers to trade lead to increase inflow of foreign direct investment. it is also called the capital market theory of foreign direct investment. the endogenous optimum currency area hypothesis assumed that if there is a trade barrier between countries, the ideal option would be to take the bold step and enter the country in focus, then set up business machineries for production and make products or services available for sale. following louangrath (2014), toyota of japan setting up car production plant in us that produces lexus cars to bypass us barriers on foreign cars vehemently fit into the endogenous optimum currency area hypothesis of mundell. the same applies to nissan motors of japan which also established production plant in the us that produces infinity cars. makoni (2015) noted that foreign investment in general arose as a result of capital market imperfections. while this capital market theory holds true in the case of developed countries such as the united states, united kingdom and canada, it was challenged by later scholars on the basis of ignoring basic currency risk management fundamentals (makoni, 2015). 2.2.3. justification for endogenous optimum currency area hypothesis as theoretical underpin the banking sector is one of the most regulated sector in nigeria compared to other sectors because of the critical role of banking operations and the resultant effect on the financial system in general. the strict regulation in the banking sector does not only applies to nigeria but to other countries especially, developing economies with the aim of guaranteeing sound, reliable and stable financial system capable mobilizing funds needed for growth and development. foreign direct investment in the banking sector by a single foreign/institutional investor is limited 10% of a bank total capital. this restriction on foreign ownership in banks have automatically created a barrier to foreign investments in the banking sector compared to, say a country like thailand that allows 49% foreign ownership stake. if any single foreign/institutional investor who despite this restriction, acquire an ownership stake of not more than 10%, he/she has indirectly fulfilled/abide by postulation of endogenous optimum currency area hypothesis which envisaged that trade barrier increases the inflow of foreign direct investments in host economy. if this study should anchor on the eclectic paradigm theory foreign direct investment by john dunning based on foreign ownership restriction as applicable in the nigeria banking sector, then the ownership aspect assumption of eclectic paradigm theory has failed thus favouring endogenous optimum currency area hypothesis as the theoretical basis for this study is pursued. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 64 © 2018 by the authors; licensee online academic press, usa 2.3. empirical review owing to the heavy regulation in the banking sector, empirical studies on foreign direct investments and banking sector operations are few and in most scare particularly, for emerging economies as emphasis are placed on manufacturing through setting up of industries. however, the few available literatures that closely related foreign direct investment in the banking sector were reviewed. tajgardoo, noormohamadi and behname (2012) studied the causality relationship between fdi and islamic banking. panel unit root tests show that the variables are stationary at level. pedroni test indicates that there is not log run relationship between fdi and islamic banking. data chosen 9 countries from organization islamic conference (oic) over the period 1995-2010 were used for analysis. the results showed that there is a bidirectional relationship between these variables (the feedback relationship). i t means that fdi reinforce islamic banking and islamic banking attracts foreign direct investment. o’connor, santos-arteaga and tavana (2014) proposed a game-theoretical model for commercial bank foreign direct investment strategy, government policy and domestic banking industry interactions in emerging market economies and demonstrate the application of this strategy to the banking system. the paper develops a game-theoretical model to analyse the optimality of the limiting entry strategy followed by a given domestic institutional sector when considering the entry applications of foreign banks in the domestic financial system. the paper showed that the progressive liberalization of entry restrictions would define the perfect bayesian equilibria of the subsequent set of continuation games and the respective payoffs derived from this liberalization as the domestic economy integrates and competes within the global financial system. tsaurai (2014) investigated if there is a causality relationship between banking sector development and fdi inflows in botswana. three arguments were raised regarding the relationship between banking sector development and fdi inflows into the host country. the first perspective says that banking sector development attracts fdi inflows into the host country. the second perspective suggests that there is a positive feedback effect between banking sector development and fdi inflows whilst the third perspective maintains that there is no direct causality relationship between the two variables. the results from the study were consistent with the third perspective that says there is no direct causality relationship between banking sector development and fdi net inflows. this confirms that the long run relationship between banking sector development and fdi net inflows is an indirect one and the two set of variables affect each other indirectly through other factors in botswana. poelhekke (2014) hypothesized whether global banks facilitate foreign direct investments. using a new detailed data set of outward fdi and exploiting heterogeneity in banking sector deregulation across countries and time, the paper found that banks’ direct investment abroad increased the volume of non -financial fdi from the same home-market. this effect is stronger in countries where investing is more hazardous, those with worse corruption and rule of law. importantly, they did not find that host -market domestic or thirdcountry foreign banks facilitate fdi. kim (2013) using data collected from 60 countries for the years 1990-2010 examined the relationship between foreign direct investment and a banking crisis in addition to the linkage between a banking crisis and domestic investment. the pooled ordinary least squares was used for the first empirical method. the lagged investment is done for robustness and the fixed effects is used to check a final robustness. the results indicated that banking crisis is highly correlated with domestic investment rate while the lagged value of banking crisis does not seem to have any significant impact. however, the results with fixed effects show that the lagged effect of banking crisis has a large impact on investment while the banking crisis variables turn out to be not correlated with investment. for fdi, both the banking crisis and the lagged value of banking crisis do not show any significance in all specifications. onyekwena (2012) investigated the impact of foreign direct investment on nigerian manufacturing firms and banks. unique data obtained from a survey of nigerian firms conducted by the centre for the study of african economies, university of oxford, and united nations industrial development organization was employed for the estimations based on manufacturing firms. for the investigation based on nigerian banks, the study used the bankscope data base. ordinary least squares and fixed effects techniques were used to estimate the coefficients of foreign presence measures in augmented cobb-douglas models for manufacturing firm data, and augmented dealership models for data on banks. results of the estimations show evidence of positive effects of foreign presence on domestic manufacturing firms, while no effects were obtained from the estimations based bank data. the differences in fdi effects reflect on the sector-specific characteristics of manufacturing firms and banks in nigeria. manufacturing firms in nigeria operate at low technology levels and are open to foreign direct investment, while the opposite seems to be case of banks in the country. the results therefore support earlier thoughts in literature on fdi which assert that positive spillovers exist were technology gaps between foreign firms and domestic firms exist, or in sectors open to fdi. wezel (2004) assessed the factors crucial in the locational decisions of multinational german banks in selected emerging market of central and eastern europe, latin america and asia from 1994 to 2001. emphasis was placed on testing macroeconomic variables and financial risk factors along with measures of bank-client integration and host country market characteristics. results indicated that fdi by non-bank exerted a strong pull effect on banking fdi inflows. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 65 © 2018 by the authors; licensee online academic press, usa oke (2012) explored the relationship between foreign direct investment and financial sector growth, providing empirical evidence from nigeria. annual time-series data were gathered on foreign direct investment, market capitalization, gross domestic product, external debt, inflation rate, exchange rate and degree of openness (ratio of imports and exports to gross domestic product) from 1981-2010. the empirical model was analysed using the econometric techniques of ordinary least square method, unit root test, cointegration test, error correction mechanism, and granger causality test. the findings suggested that the inflow of fdi has a positive impact on the financial sector in the short run but fail to translate to real long financial sector growth that could promote speedy economic growth due to the fact that the bulk of foreign direct investment has been channelled to other sectors of the economy namely the oil and gas sector. adeniyi, omisakin, egwaikhide and oyinlola (2012) examined the causal linkage between foreign direct investment and economic growth in cotr’d”ivoire, gambia, nigeria and sierra leone with financial development accounted for a period 1970 to 2005 within a trivariate framework which applies granger causality tests in vecm setting. three alternative measures of financial development -total liquid liabilities, total banking sector credit and credit to private sector were employed. the findings supported the view that the extent of financial sophistication matters for the benefits of fdi to register on economic growth in ghana, gambia and sierra leone. in nigeria on the other hand, displays no evidence of any short or long run causal relationship from fdi to growth with financial deepening accompanying. desbordes and wei (2013) using a novel database on bilateral real green field manufacturing fdi and two distinct but complementary econometric approaches studies foreign direct investment, financial development and the 2007-2010 global financial crisis. they exploited differences in firmor sector-specific dependence on external finance and the occurrence of the 2007-2010 banking crises in developed countries. the main results are that source countries’ financial development (fd) tends to contribute strongly to the promotion of fdi, especially in sectors typically dependent on external finance, whereas destination countries’ fd matter much less and may, in sectors not typically dependent on external finance, even have a negative impact on fdi. using a panel dataset of bilateral flows of banking sector foreign direct investment (fdi) in developed and developing countries, we study the impact of regional integration agreements (rias) on the location of banking sector fdi. laifi (2008) ascertained whether regional integration agreement matters in fdi attraction in the banking sector. the results indicated that the impact of rias vary depending on different kinds of regional int egration. hope, laurenceson and qin (2008) analysed the impact of foreign participation on chinese banking by studying its different manifestations in china’s commercial banks. they found that strategic investors play an important role when stated owned commercial banks (scbs) and other shareholding banks start their ipo processes, either abroad or in the local market. data show that most banks entering partnerships with foreign interests derive “direct benefits:” they improve their capability for financia l innovation – in structural reorganization, and new products and services -by this transfer of management knowledge from their foreign partners. asante (2015) examined the impact of foreign direct investment on the performance of the banking sector of ghana. to accomplish this objective, the study used panel data for sixteen (16) financial institutions (universa1 banks) from the year 2000 to 2012. random effect models were estimated and the results suggested that foreign direct investment inflows into the country positively and significantly impact on banks’ capital stock. the results also suggest that, fdi positive and significant impact on the liquidity position of financial institutions in ghana. however, the study found a negative and insignificant re lation between fdi and banks’ profitability. korna, ajekwe and idyu (2013) studied the level of impact; foreign direct investment has on the nigerian banking sector in the wake of the unprecedented capital flight from the nigerian economy during the recen t global economic recession (the credit crunch). data which are secondary data nature were obtained from statistical bulletins of the central bank of nigeria. the expost-facto research design was adopted to determine the level of the impact for 25 deposit money banks for the period 2006-2010. the ordinary least square (ols) estimation technique was employed and the results revealed that there is a non-positive significant impact of foreign direct investment on the equity capital of the nigerian banking sector, there is a negative insignificant impact of foreign direct investment on the liquidity position of the nigerian banking sector and there is a negative insignificant impact of foreign direct investment on the total assets of the nigerian banking sector. 3. data and method a test of causation was utilized in determining the causal relationship between foreign direct investments and banking operations using yearly data from the central bank of nigeria (cbn) statistical bulletin of 2015. foreign direct investments is the dependent variable and was symbolized by (fdi). the independent variables are the surrogates of banking sector operations which include: total deposits (tdp) in the banking sector, loans and advances (lad), foreign exchange transactions (fet), domiciliary operations (domp) and international banking operations (ibkp). asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 66 © 2018 by the authors; licensee online academic press, usa 3.1. model estimation this study adopted a modified model of tajigardon, noormohamadi and behname (2012) for a study in nine selected countries from organisation islamic conference (oic): bahrain, iran, malaysia, united arab emirates, pakistan, kuwait, saudi arabia, qatar and turkey. the researcher expressed foreign direct investments as a function of islamic banks assets, the original model thus: where is foreign direct investment, is ratio of islamic banks assets divided by central bank assets plus islamic banks assets, captures time effect and captures individual effect. to determine the causal relationship between foreign direct investments and banking operations variables: total deposits, loans and advances, foreign exchange transactions, domiciliary operations and international banking operation, the following models in functional form were estimated: to avoid the possible effect of any outlier that may cast a dent on the result of analysis or result in nonnormality distribution of variables, the models were transformed in log-linear format as follows: model 1 model 2 model 3 model 4 model 5 3.2. variables explanation fdi is foreign direct investments: this are the investments made by foreign investors in the form of either setting up a business enterprise or having controlling right or ownership privilege in business enterprise in nigeria. in financial account section of the balance of payment statement, it is the liability of nigeria to other countries of the world. foreign direct investment was utilized in the works of tajigardon, noormohamadi and behname (2012) and o’connor, santos-arteaga and tavana (2013). tdd is total deposits of the banking sector: in this study, total deposit are the funds of private sector, state and local government in different account types operated by the banks that can be withdrawn anytime. total deposit encompasses demand, savings and time deposits in the banking sector. to the banks, deposits are short term, medium or long term obligation to customers. lad is the total loan and advances of the banking sector: this is the credit the banking sector extends private sector, state and local government. put differently, it is total credit the banks extends to the economy productive economic activities, services, etc. fet is foreign exchange transactions: foreign exchange transaction details the sales and purchase of foreign currencies for international trade and other services outside a country. the foreign exchange transaction as applied in this research work encompass the total foreign exchange provided by the banking sector and utilized for transactions valid for foreign exchange. domp is domiciliary operations: this is the foreign currency deposits of private sector, federal, state and local governments in domiciliary accounts of deposit money banks in nigeria. it is foreign currency liability of the banking sector. ibkp is international banking operations: international banking operation as used in this research work are monetary value of banking sector operations outside nigeria. they include bill discounted payable, claims on non-resident banks, balances held with banks, balances held with offices and branches, loans and advances outside nigeria. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 67 © 2018 by the authors; licensee online academic press, usa 4. result and discussion of data estimations 4.1. summary of data descriptive properties table 1 shows the summary of the descriptive properties of the variables estimated. the summary of the descriptive statistics shows the mean, median, maximum, minimum, standard deviation, skewness, kurtosis, jarque-bera, p-value and number of observations. as can be seen in table 1, the mean of variables were 586442, 2352896, 4729901, 26132.6, 1140292 and 977893 for fdi, tdp, lad, fet, domp and ibkp while 624500, 1497900, 2524300, 18678.9, 302400 and 930700 entails the median respectively for fdi, tdp, lad, fet, domp and ibkp. the maximum and minimum values were 1360300 and 80700 for fdi, 5436000 and 128200 for tdp, 13222650 and 272900 for lad, 65990.4 and 4783.0 for fet, 4357025 and 5500 for domp and 977893 and 930700 for ibkp. the standard deviation discloses 424775.5 for fdi, 2105019 for tdp, 4349060 for lad, 19217.39 for fet, 1442967 for domp and 743478.0 for ibkp. the variables were positively skewed towards normality. as depicted by the kurtosis, the variables are by nature not leptokurtic. table-1. summary of descriptive statistics. mean median maximum minimum std. dev. skewness kurtosis jarquebera p-value obs fdi 586442 624500 1360300 80700 424775.5 0.283734 1.817577 1.361780 0.506166 19 tdp 2352896 1497900 5436000 128200 2105019 0.351700 1.434011 2.333114 0.311440 19 lad 4729901 2524300 13222650 272900 4349060 0.484063 1.791750 1.897742 0.387180 19 fet 26132.6 18678.9 65990.40 4783.00 19217.39 0.537186 1.993545 1.715721 0.424068 19 domp 1140292 302400. 4357025 5500.00 14429670 1.089136 2.773449 3.796989 0.149794 19 ibkp 977893 930700 2132175. 53300.00 743478.0 0.222246 1.539981 1.843973 0.397730 19 source: output data from e-views 9.0. table-2. lilliefors test of normality. variables lilliefors test statistic p-value fdi 0.201076 0.04 tdp 0.221639 0.01 lad 0.220289 0.02 fet 0.194852 0.05 domp 0.2567180 0.00 ibkp 0.221596 0.02 source: output data from gretl. the p-value of the jarque-bera statistic in table 1 entails that all the variables were not normally distributed. to this effect and having obtain the mean and standard deviation of the variables , the lilliefors test of normality was applied to further ascertain the distribution of the variables and result presented in table 2. the lilliefors test of normality, which is advancement on the kolomogorov-smirnov (k-s) test-correcting the k-s for small values at the tail of probability distribution confirmed that all the variables were normally distributed and does not have any outlier that may results in bias in the regression outcome. 4.2. preliminary test preliminary analysis of the data via serial lm test, heteroskedasticity and ramsey reset specification were performed in line with econometric assumption and results summarized in tables 3 – 5. this is to ensure that the model estimated have no problem associated with heteroskedasticity, serial correlation and ramsey specification. serial correlation lm test is dispelled in table 3, heteroskedasticity in table 4, while ramsey reset specification in table 5. table-3. breusch-godfrey serial correlation lm test. models f-statistic p-value model 1 1.247085 0.3010 model 2 0.012605 0.9160 model 3 2.288013 0.1811 model 4 0.237596 0.6432 model 5 0.580704 0.4749 source: data output via e-views 9.0. table-4. harvey heteroskedasticity test. models f-statistic p-value model 1 1.546456 0.2772 model 2 1.127018 0.4726 model 3 0.279738 0.9427 model 4 0.944036 0.5293 model 5 0.552241 0.7742 source: data output via e-views 9.0. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 68 © 2018 by the authors; licensee online academic press, usa table-5. ramsey reset specification test. models f-statistic df p-value model 1 0.148775 (1, 7) 0.7112 model 2 0.149132 (1, 4) 0.7190 model 3 0.032834 (1, 6) 0.8622 model 4 1.067699 (1, 6) 0.3413 model 5 0.438683 (1, 6) 0.5324 source: data output via e-views 9.0. 4.4. unit root test result the variables were cleaned of stationarity defect that may impede inferences from results of analysis using the augmented dickey-fuller (adf), phillips perron (pp) and kwiatkowski-phillips-schmidt-shin (kpss). the unit root test of adf and pp were performed at level and first difference and three parapets: intercept, trend and intercept and none while kpss was performed at level and first difference and two parapets: intercept, trend and intercept. tables 6 and 7 present the adf test as level and first difference: intercept, trend and intercept. the pp test at level and first difference were summarized in tables 8 and 9 whereas, tables 10 and 11 detail the kpps test at level and first difference in three sets: intercept, trend and intercept and none. 4.4.1. augmented dickey-fuller (adf) as can be seen in table 6, all the variables were not stationary at level thus the need for first difference. the first difference adf test as condensed in table 7 depicts that the variables were all stationary at the three estimation was effected. table-6. result of adf test at level. variables intercept trend and intercept none remark fdi -1.369726 (0.57) -1.107371 (0.89) -0.354609 (0.54) not stationary tdp 0.275598 (0.96) -2.064448 (0.52) 2.245654 (0.99) not stationary lad 1.195632 (0.99) -3.043118 (0.15) 2.542564 (0.99) not stationary fet 0.154252 (0.95) -3.639597 (0.05)** 1.801511 (0.97) stationary domp 4.510935 (1.00) 1.058447 (0.99) 6.728763 (0.10) not stationary ibkp -0.556207 (0.86) -3.834645 (0.03)** 1.254026 (0.94) stationary source: data output via e-views 9.0. note: the optimal lag for adf test is selected based on the akaike info criteria (aic), p -values are in parentheses where (*) and (**) denote significance at 1% and 5% respectively. table-7. result of adf test at first difference. variables intercept trend and intercept none remark fdi -5.094248 (0.00)* -3.440724 (0.02)** -5.111365 0.00)* stationary tdp -3.475949 (0.02)** -3.385869 (0.04)** -2.495405 (0.01)* stationary lad -3.776471 (0.01)* -4.437350 (0.01)* -0.523367 (0.05)** stationary fet -5.020553 (0.00)* -3.092641 (0.01)* -4.466161 (0.00)* stationary domp -3.503700 (0.03)** -4.173875 (0.02)** -2.422262 (0.03)** stationary ibkp -6.609190 (0.00)* -6.331161 (0.00)* -5.563022 (0.00)* stationary source: data output via e-views 9.0. note: the optimal lag for adf test is selected based on the akaike info criteria (aic), p -values are in parentheses where (*) and (**) denote significance at 1% and 5% respectively . 4.4.2. phillips perron (pp) test the result of the phillips perron (pp) unit root test in tables 8 is similar to the adf test in tables 6 as all the variables were found to be non-stationary. consequently, the first difference test was conducted which affirmed the stationarity of all the variables at order one 1(1) as enshrined in table 9. table-8. result of pp test at level. variables intercept trend and intercept none remark fdi -1.301638 (0.60) -1.122965 (0.89) -0.301879 (0.56) not stationary tdp 0.228217 (0.96) -2.064763 (0.52) 2.010187 (0.98) not stationary lad 0.741168 (0.98) -1.854213 (0.63) 2.950667 (0.99) not stationary fet -1.046224 (0.72) -3.570194 (0.06) 0.176031 (0.72) not stationary domp 4.221902 (1.00) 1.293148 (0.99) 6.728763 (1.00) not stationary ibkp -0.876423 (0.77) -3.834645 (0.0)** 0.639342 (0.85) stationary source: data output via e-views 9.0. note: in determining the truncation lag for pp test, the spectral estimation method selected is bartlett kernel and newey -west method for bandwidth, p-values are in parentheses where (*) and (**) denote significance at 1% and 5% respectively. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 69 © 2018 by the authors; licensee online academic press, usa table-9. result of pp test at first difference. variables intercept trend and intercept none remark fdi -5.018450 (0.00)* -5.360473 (0.00)* -5.024417 (0.00)* stationary tdp -3.463545 (0.02)** -3.361929 (0.02)* -2.409524 (0.01)* stationary lad -2.062961 (0.05)** -2.240121 (0.04)** -2.579283 (0.03)** stationary fet -7.687628 (0.00)* -6.747777 (0.00)* -4.458500 (0.00)* stationary domp -3.282087 (0.02)** -4.281323 (0.01)* -2.690806 (0.03)** stationary ibkp -6.826198 (0.00)* -6.513785 (0.00)* -5.409914 (0.00)* stationary source: data output via e-views 9.0. note: in determining the truncation lag for pp test, the spectral estimation method selected is bartlett kerne l and newey-west method for bandwidth, p-values are in parentheses where (*) and (**) denote significance at 1% and 5% respectively. 4.2.3. kwiatkowski-phillips-schmidt-shin (kpss) test from table 10, the kpss results reveal that stationarity was attained for all the variables hence, table 11 which confirmed the non-stationarity of the data at first difference. table-10. result of kpss test at level. variables intercept trend and intercept remark fdi 0.447413 (0.00)* 0.124001 (0.00)* stationary tdp 0.147316 (0.00)* 0.147316 (0.00)* stationary lad 0.564478 (0.00)* 0.128589 (0.00)* stationary fet 0.550867 (0.00)* 0.116738 (0.00)* stationary domp 0.517106 (0.02)** 0.163957 (0.02)** stationary ibkp 0.558389 (0.00)* 0.090017 (0.00)* stationary source: data output via e-views 9.0. note: the spectral estimation method selected for kpss test is bartlett kernel and newey-west method for bandwidth, p-values are in parentheses where (*) and (**) denotes significance at 1% and 5% respectively. table-11. result of kpss test at first difference. variables intercept trend and intercept remark fdi 0.166038 (0.38) 0.261180 (0.68) not stationary tdp 0.238368 (0.00)* 0.140987 (0.38) stationary lad 0.362011 (0.00)* 0.054791 (0.05)** stationary fet 0.431323 (0.38) 0.500000 (0.85) not stationary domp 0.606919 (0.00)* 0.155838 (0.00)* stationary ibkp 0.054296 (0.22) 0.053407 (0.86) not stationary source: data output via e-views 9.0. note: the spectral estimation method selected for kpss test is bartlett kernel and newey-west method for bandwidth, p-values are in parentheses where (*) and (**) denotes significance at 1% and 5% respectively. 4.5. dependability of long run relationship prior to estimating the long run relationship between foreign direct investments and banking operation, it is ideal to ascertain the reliability of this relationship. with regard to this, the var lag order selection criteria was estimated to determine the lag length. the optimal lag level are evaluated with the aid of akaike information criterion (aic) and schwarz information criterion (sc) test statistics. in var estimation technique, the reliability of a model is dependent on a low akaike information criterion (aic) and schwarz information criterion (sc) values. tables 12 16 summarize the var lag order selection criteria which the lag lengths were automatically selected by econometric software: e-views 9.0. table-12. lag length criteria for fdi and tdp. lag logl lr fpe aic sc hq 0 -535.8269 na 3.08e+23 59.75855 59.85748 59.77219 1 -499.5433 60.47269* 8.57e+21* 56.17148* 56.46827* 56.21240* source: data output via e-views 9.0. * indicates lag order selected by the criterion, lr: sequential modified lr test statistic (each test at 5% level), fpe: fina l prediction error, aic: akaike information criterion, sc: schwarz information criterion and hq: hannanquinn information criterion. table-13. lag length criteria for fdi and lad. lag logl lr fpe aic sc hq 0 -551.1735 na 1.69e+24 61.46372 61.56265 61.47737 1 -518.6129 54.26772* 7.13e+22* 58.29032* 58.58711* 58.33124* source: data output via e-views 9.0. * indicates lag order selected by the criterion, lr: sequential modified lr test statistic (each test at 5% level), fpe: fina l prediction error, aic: akaike information criterion, sc: schwarz information criterion and hq: hannanquinn information criterion . asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 70 © 2018 by the authors; licensee online academic press, usa table-14. lag length criteria for fdi and fet. lag logl lr fpe aic sc hq 0 -452.6207 na 2.97e+19 50.51342 50.61235 50.52706 1 -433.4116 32.01521* 5.52e+18* 48.82351* 49.12030* 48.86444* source: data output via e-views 9.0. * indicates lag order selected by the criterion, lr: sequential modified lr test statistic (each test at 5% level), fpe: fina l prediction error, aic: akaike information criterion, sc: schwarz information criterion and hq: hannanquinn information criterion . table-15. lag length criteria for fdi and domp. lag logl lr fpe aic sc hq 0 -535.3386 na 2.91e+23 59.70429 59.80322 59.71793 1 -481.2051 90.22254* 1.12e+21* 54.13390* 54.43069* 54.17483* source: data output via e-views 9.0. * indicates lag order selected by the criterion, lr: sequential modified lr test statistic (each test at 5% level), fpe: fina l prediction error, aic: akaike information criterion, sc: schwarz information criterion and hq: hannanquinn information criterion . table-16. lag length criteria for rgdpgr and ibkp. lag logl lr fpe aic sc hq 0 -517.0209 na 3.81e+22 57.66899 57.76792 57.68263 1 -493.5491 39.11955* 4.40e+21* 55.50546* 55.80225* 55.54638* source: data output via e-views 9.0. * indicates lag order selected by the criterion, lr: sequential modified lr test statistic (each test at 5% level), fpe: fina l prediction error, aic: akaike information criterion, sc: schwarz information criterion and hq: hannanquinn information criterion . 4.6. co-integration relationship the long run relationship was estimated with the aid of johansen co-integration and auto-regressive distribute lag (ardl) model techniques. the result of the ardl long run relationship between foreign direct investments and banking operations indices as presented in tables 17 – 21 reveal the presence of a long run relationship between foreign direct investments, total deposits and foreign exchange transactions of the banking sector. the f-statistic values of 6.24, 16.39 and 13.53 for total deposits, loans and advances and foreign exchange transactions of the banking sector respectively are greater than the lower and upper bound test statistic of 4.94 and 5.73 sequentially at 5% level of significance. table-17. bound test for fdi and tdp. t-test 5% critical value bound remark f-statistic lower bound upper bound 6.241097 4.94 5.73 null hypothesis rejected source: data output via e-views 9.0. table-18. bound test for fdi and lad. t-test 5% critical value bound remark f-statistic lower bound upper bound 16.38591 4.94 5.73 null hypothesis rejected source: data output via e-views 9.0. table-19. bound test for fdi and fet. t-test 5% critical value bound remark f-statistic lower bound upper bound 13.533234 4.94 5.73 null hypothesis rejected source: data output via e-views 9.0 table-20. bound test for fdi and domp. t-test 5% critical value bound remark f-statistic lower bound upper bound 3.008311 4.94 5.73 null hypothesis accepted source: data output via e-views 9.0. table-21. bound test for fdi and ibkp. t-test 5% critical value bound remark f-statistic lower bound upper bound 2.841479 4.94 5.73 null hypothesis accepted source: data output via e-views 9.0. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 71 © 2018 by the authors; licensee online academic press, usa 4.7. ols regression results the short run relationship for the subject matter was ascertained through the ols methodology and the results presented in tables 22 26. the interpretations were anchored on the global and relative statistics of the variables. from table 22, there is a positive and significant relationship between foreign direct investments and total deposits. the coefficient of the constant 173607.6 implies that total deposits foreign direct investments would be n173, 607.6 million. as shown by the total deposits coefficient of 0.387442, a unit increase in total deposits of the banking sector results in n0.38 million increase in foreign direct investments. from the adjusted r-squared, 65.39% variation in foreign direct investments was explained by changes in total deposits of the banking sector. the p-value of the f-statistic unveils that total deposit of the banking sector significantly explained the variation in foreign direct investments within the period studied. durbin watson of 1.31 is not that quite close to the bench mark of 2.0. nevertheless, the deficiency that may be associated this was corrected by the serial correlation test in table 3 which affirms that the variables in the model are not serially correlated. table-22. ols regression result for fdi and tdp. variable coefficient std. error t-statistic prob. c 173607.6 95312.09 1.821465 0.0885 tdp 0.387442 0.146526 2.644190 0.0184 tdp(-1) -0.238457 0.151495 -1.574026 0.1363 r-squared 0.694677 mean dependent var 612883.3 adjusted r-squared 0.653967 s.d. dependent var 420693.4 s.e. of regression 247471.2 akaike info criterion 27.82699 sum squared resid 9.19e+11 schwarz criterion 27.97538 log likelihood -247.4429 l hannan-quinn criter. 27.84745 f-statistic 17.06411 durbin-watson stat 1.319426 prob (f-statistic) 0.000137 source: data output via e-views 9.0. as can been seen in table 23, loans and advances extended to the economy by the banking sector has a positive and significant relationship with foreign direct investments. looking at the constant coefficient of 319874.2, if loans and advances of the banking sector is kept constant, foreign direct investme nts would be n319, 874.2 million. similarly, a percentage rise in loans and advances of the banking sector leads be n0.11 million increase in foreign direct investments. only 47.96% changes in foreign direct investments that was attributed to variation in loans and advances of the banking sector. the adjusted r-square discloses that loans and advances of the banking sector significantly accounted for the variation in foreign direct investments. the durbin watson value of 1.12 does not portray any danger of autocorrelation based on the affirmation from table 3 that the variable are free from serial correlation. table-23. ols regression result for fdi and lad. variable coefficient std. error t-statistic prob. c 319874.2 139414.4 2.294413 0.0424 lad 0.114601 0.032298 3.548246 0.0046 lad (-5) -0.098365 0.042259 -2.327677 0.0400 r-squared 0.559665 mean dependent var 757857.1 adjusted r-squared 0.479604 s.d. dependent var 359808.0 s.e. of regression 259560.0 akaike info criterion 27.95877 sum squared resid 7.41e+11 schwarz criterion 28.09571 log likelihood -192.7114 l hannan-quinn criter. 27.94610 f-statistic 6.990489 durbin-watson stat 1.125897 prob (f-statistic) 0.010985 source: data output via e-views 9.0. the regression result in table 24 shows that foreign exchange transactions of the banking sector has a significant and positive relationship with foreign direct investments. the coefficient of the constant depicts foreign direct investment to be n 314, 949.5 million when foreign exchange transactions of the banking sector is held constant. a unit appreciation in foreign exchange transactions entails a n19.71 million upsurge in foreign direct investments. considering the adjusted r-square coefficient, 36.07% variation in foreign exchange transactions was owed to volatility in banking sector foreign exchange transactions. foreign exchange transactions was significantly responsible for variation in foreign exchange transactions as evidence by p-value of the f-statistics which is significant at 5% level of significance. there is no problem of autocorrelation in the model even though the durbin watson value is 1.31. this study hinged on the serial asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 72 © 2018 by the authors; licensee online academic press, usa correlation test in table 3 which clears the model of serial correlation. furthermore, the serial correlation lm test is superior to durbin watson in testing autocorrelation in a model. table-24. ols regression result for fdi and fet. variable coefficient std. error t-statistic prob. c 314949.5 168077.3 1.873838 0.0877 fet 19.70869 7.540493 2.613714 0.0241 fet (-5) -11.88926 10.24660 -1.160313 0.2705 r-squared 0.459079 mean dependent var 757857.1 adjusted r-squared 0.360730 s.d. dependent var 359808.0 s.e. of regression 287682.2 akaike info criterion 28.16451 sum squared resid 9.10e+11 schwarz criterion 28.30145 log likelihood -194.1516 l hannan-quinn criter. 28.15183 f-statistic 4.667847 durbin-watson stat 1.318624 prob (f-statistic) 0.034059 source: data output via e-views 9.0. the regression output in table 25 lays credence to the presence of a positive significant relationship between foreign direct investments and domiciliary operations of the banking sector. the constant coefficient of 431867.4 is an indication that foreign direct investments will experience n431, 867.4 million in growth if domiciliary operations of the banking sector is kept constant. each time domiciliary operations increases by a unit, foreign direct investments will rise by n0.58 million. the revelation from the adjusted r-square shows that domiciliary operations of the banking sector accounted for 60.72% changes in foreign direct investments, and this is statistically significant based on the 0.00 p-value of f-statistic. the durbin watson value of 1.65 is within the acceptable range of no autocorrelation in the model. table-25. ols regression result for fdi and domp. variable coefficient std. error t-statistic prob. c 431867.4 98614.69 4.379341 0.0011 domp 0.584285 0.125749 4.646428 0.0007 domp (-5) -1.490119 0.359545 -4.144452 0.0016 r-squared 0.667663 mean dependent var 757857.1 adjusted r-squared 0.607238 s.d. dependent var 359808.0 s.e. of regression 225494.2 akaike info criterion 27.67739 sum squared resid 5.59e+11 schwarz criterion 27.81433 log likelihood -190.7417 l hannan-quinn criter. 27.66471 f-statistic 11.04948 durbin-watson stat 1.652187 prob (f-statistic) 0.002337 source: data output via e-views 9.0. table-26. ols regression result for fdi and ibkp. variable coefficient std. error t-statistic prob. c 137623.3 125230.3 1.098962 0.2903 ibkp 0.615405 0.228103 2.697929 0.0173 ibkp (-2) -0.186484 0.231791 -0.804536 0.4345 r-squared 0.618594 mean dependent var 644188.2 adjusted r-squared 0.564108 s.d. dependent var 411463.2 s.e. of regression 271656.9 akaike info criterion 28.02125 sum squared resid 1.03e+12 schwarz criterion 28.16829 log likelihood -235.1806 l hannan-quinn criter. 28.03587 f-statistic 11.35315 durbin-watson stat 1.131078 prob (f-statistic) 0.001174 source: data output via e-views 9.0. finally, table 26 regression outcome reveals a positive and statistically significant relationship between foreign direct investments and international banking operations of the banking sector. foreign direct investments would stand at n137, 623.3 million if the banking sector international banking operations is unbroken. foreign direct investments will rise by n0.62 million if international banking operations rises by a unit. international banking operations significantly explained 56.41% variat ion in foreign direct investments by unarguable relying on the adjusted r-square value of 0.368425. there is no autocorrelation in the estimation as this study vehemently relied on the serial correlation lm test in table 3 for autocorrelation detection. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 73 © 2018 by the authors; licensee online academic press, usa 4.8. causal relationship: foreign direct investment and banking operations the casual significant relationship between foreign direct investments and banking operations was determined using the granger causality test which ascertains the direction of relationship between variables of interest based on the default number of lag. table 27 presents the output of the granger causality analysis. from table 27, there is a significant two way causal/bidirectional relationship between foreign direct investments and total deposits of the banking sector. causality flows from total deposits of banking sector to foreign direct investments and from foreign direct investments back to total deposit of banking sector at 5% level of significance. this implies that total deposits of the banking sector has significant effect on foreign direct investments on one hand, while on the other hand, foreign direct investments also exerts significant effect on banking sector total deposits. table-27. granger causality output for foreign direct investment and banking operations. null hypothesis: obs f-statistic prob. remarks tdp does not granger cause fdi fdi does not granger cause tdp 17 11.0533 3.94618 0.0019 0.0482 causality causality lad does not granger cause fdi fdi does not granger cause lad 17 0.60054 1.33750 0.5642 0.2990 no causality no causality fet does not granger cause fdi fdi does not granger cause fet 17 4.38318 3.42494 0.0372 0.0069 causality causality domp does not granger cause fdi fdi does not granger cause domp 17 4.74806 2.65928 0.0303 0.1107 causality no causality ibkp does not granger cause fdi fdi does not granger cause ibkp 17 0.89086 3.27254 0.4358 0.0734 no causality no causality source: data output via e-views 9.0 . again, there is also bidirectional significant causal relationship between foreign exchange transactions of the banking sector and foreign direct investments in nigeria. at 5% level of significance, causality runs from foreign exchange transactions to foreign direct investments, and from foreign direct investments back to foreign exchange transactions. the disclosure from table 27 is that foreign exchange transactions exerts significant influence on inflow of foreign direct investments in nigeria, and at the same t ime, foreign direct investments significantly affects the banking sector foreign exchange transactions. domiciliary operations of the banking sector was found to have significantly (at 5% level of significance) affected foreign direct investments as evidenced by the unidirectional causal relationship between foreign direct investment and domiciliary operations of the banking sector. finally, international banking operations and loans and advances have no significant causal relationship with foreign direct investment in nigeria. causality does not flow/run from either direction at 5% level of significance. 4.9. discussion of findings the positive significant relationship between foreign direct investments table 22 and total deposit of the banking sector as well as the bidirectional causal relationship between total deposit of the banking sector and foreign direct investments table 27 implies that total deposits of the banking sector fortifies foreign direct investment in nigeria and foreign direct investment propels and increases deposits of the banking sector. adeniyi, omisakin, egwaikhide and oyinlola (2012) achieved the same result in ghana, but tajgardoon, noormohamadi and behname (2012) established the absent of a causal relationship between international banking operations and foreign direct investments in nine (9) countries from organization islamic conference (oic): bahrain, iran, malaysia, united arab emirates, pakistan, kuwait, saudi arabia, qatar and turkey which is similar to the finding of this study as evidenced in table 37. on the contrary, the positive and significant relationship between foreign direct investments and international banking operations would not affirm the result of korna, ajekwe and idyu (2013) who envisaged that foreign direct investments and total assets of banks are negatively and significantly correlated. the international banking operations of the banking sector is a subsect of their total assets and as such, fit in the korna, ajekwe and idyu (2013) research on foreign direct investments and total assets of banks. the long run relationship between foreign direct investment and loans and advances of the banking sector supports the works of tsauran (2014) for bostwana, asante (2015) for ghana and adeniyi, omisakin, egwaikhide and oyinlola (2012) for cross country analysis of nigeria, ghana and gambia on one hand, but on the other hand, disagrees with adeniyi, omisakin, egwaikhide and oyinlola (2012) that loans and advances of the banking sector does not enhance foreign direct investments in selected countries in africa. 5. conclusion, policy implications and contribution to knowledge it is unarguably staunch that developing countries can attain a considerable height with respect to economic growth and development through the inflow of foreign direct investments which facilitates the transfer of technology, human capital and services among others. this study has vividly proved that the development of the financial system especially, the banking sector for an emerging economy like nigeria will asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 74 © 2018 by the authors; licensee online academic press, usa in no small measure spur inflow of foreign direct investments. this study does not in any way put to end further studies on the nexus between banking operations and foreign direct investments in the context of nigeria, rather a driving force to broaden the horizon of studies with regard to banking operations and foreign direct investments in a bid to developing the financial system to attract more foreign direct investment and realizing the ambition of being among the top twenty (20) economies in the world even though not in 2020 that is very near, but in the nearest future. from the findings emanating from this study, the following recommendations are offered for attention and consideration by policymakers to assuage development in the banking sector to attract more foreign direct investments in nigeria. 1. to increase deposit base, the banking sector should adopt completely smart banking as this evidences low risk, reliability and stability of the banking sector which is essential for inflow of foreign direct investments. the inflow of foreign direct investment raises deposits in banks as foreign direct investment itself comes with fund in the host economy. 2. the central bank of nigeria should cautiously focus on tackling monetary policy variables such monetary policy rate, cash reserve ratio, loan portfolio, etc. which a capable of attracting investors from abroad. a reduction in the monetary policy rate would possible results in low cost of capital thus attracting foreign directing investments which in turn increase the international banking operations of the banking sector. frequent changes in the banking sector’s reserve requirements and loan portfolio may shy away foreign investors. 3. the central bank of nigeria should complement the fiscal policies of the federal government (government expenditure and fiscal deficit which lead to high money in circulation) with monetary policies in such a way as reduce inflation and exchange rate fluctuations among others. a lower inflation rate increases the purchasing power of money and a stable exchange rate enhances the foreign exchange transactions of the banking sector. 4. the government should make an ideal climate for foreign investors such as tax holidays and reduction in taxes. this gives room for foreign investors in the banking sector to have enough profit to expand operations thus increasing the domiciliary operations of the banking sector. 5. the foreign equity restriction to 10% for foreign participation in the banking sector in favour of indigenous investors should be looked into and raised to a range of say 20%-30%. in period of boom, high equity participation in the banking sector will results to more capital inflows which in turn increases the credit the banking sector extends to the economy through loans and advances. this study contributes to knowledge by explicitly ascertaining the causality between banking operations and foreign direct investments by using up-to-date data in the context of nigeria. to the best of our knowledge based on the literature reviewed, this study is the first of its kind to succinctly determined the direction of causality between banking sector operations and foreign direction investments in nigeria by utilizing the core banking sector operations indices: total deposits, loans and advances, foreign exchange transactions, domiciliary operations and international banking operations. references adeniyi, o., omisakin, o., egwaikhide, f. o. & oyinlola, a. (2012). foreign direct investment, economic growth and financial sector development in small open developing economies. economic analysis and policy, 42(1): 105-127. ani, w. u., odo, c. & okelue, u. d. (2012). ownership structure reform and bank performance in nigeria. journal of research in national development, 10(3): 334-344. asante, a. (2015). the impact of foreign direct investment on banking sector performance in ghana, (master’s thesis, kwame nkrumah university of science and technology, ghana). desbordes, r. & wei, s. (2013). foreign direct investment, financial development and the 2007-2010 global financial crisis. department of economics, sir william duncan building, university of strathclyde, 130 rottenrow, glasgow g4 0ge, scotland, united kingdom. goldberg, s. l. (2007). financial sector fdi and host countries: new and old lessons. frbny economic policy review, 3(1): 1-17. hope, n. c., laurenceson, j. & qin, f. (2008). the impact of direct investment by foreign banks on china’s banking industry. stanford centre for international development, working paper no. 362. kim, e. (2013). does a banking crisis reduce foreign direct investment? (master’s thesis, graduate school of clemson university). korna, j. m., ajekwe, t. & idyu, i. a. (2013). the impact of foreign direct investment on the nigerian banking sector. journal of business and management, 7(4): 77-92. laifi, j. (2008). the determinants of foreign direct investment in banking sector: does regional integration agreements matter? centre de recherches économiques de saint etienne (creuset), 6 rue basse d es rives 42023 saint etienne cedex 2 france. asian themes in social sciences research 2018, vol. 1, no. 2, pp. 60-75 75 © 2018 by the authors; licensee online academic press, usa louangrath, p. (2014). foreign direct investment in the banking industry. available from: https://www.researchgate.net/post/which_are_the_relevant_fdi_theories_in_the_case_of_foreign _bank_entry_into_host_countries. makoni, p. l. (2015). an extensive exploration of theories of foreign direct investment. risk governance and control: financial markets and institutions, 5(2): 77-83. manyo, s. t., sabina, n. e. & ugochukwu, u. s. (2016). the effect of foreign exchange transaction on the performance of nigerian banks. journal of business management, 2(11): 139-154. ngerebo, t. a. (2012). the impact of foreign exchange fluctuation on the intermediation of banks in nigeria (1970 – 2004). african journal of business management, 6(11): 3872-3879. o’connor, a., santos-arteaga, f. j. and tavana, m. (2013). a game-theoretical model of bank foreign direct investment strategy in emerging market economies. international journal of bank marketing, 32(3) : 194-222. oke, m. o. (2012). foreign direct investment and the nigerian financial sector growth. asian economic and financial review, 2(2): 262-275. onyekwena, c. (2012). empirical investigation of the impact of foreign direct investment on manufacturing firms and banks in nigeria, (master’s thesis, university of portsmouth, england). okeke, a. (2015). nigerian banking and finance sector: legal and regulatory overview. available from: www.ajumogobiaokeke.com. poelhekke, s. (2014). do global banks facilitate foreign direct investment? vu university amsterdam and de nederlandsche bank (dutch central bank). tsaurai, k. (2014). banking sector development and foreign direct investment. a case of botswana. risk governance and control: financial markets and institutions, 4(3): 44-50. tajgardoon, g., noormohamadi, k. & behname, m. (2012). foreign direct investment and islamic banking: a granger causality test. economics and finance review, 2(5): 08 – 13. wezel, t. (2004). foreign banks entry into emerging economies: an empirical assessment of the determinants and risk predicted on german fdi data. studies of economic research centre, discussion paper series 01/2004. https://www.researchgate.net/post/which_are_the_relevant_fdi_theories_in_the_case_of_foreign_bank_entry_into_host_countries https://www.researchgate.net/post/which_are_the_relevant_fdi_theories_in_the_case_of_foreign_bank_entry_into_host_countries http://www.ajumogobiaokeke.com/ asian themes in social sciences research issn: 2578-5516 vol. 7, no. 1, pp. 1-9 2023 doi: 10.33094/atssr.v7i1.69 © 2023 by the authors; licensee online academic press, usa accepted: 15 december 2022 | published: 13 february 2023 1 © 2023 by the authors; licensee online academic press, usa relationship between promotion and employees' performance: evidence from the university of abuja innocent uchechukwu duru1* --millicent adanne eze2 --abubakar yusuf3 --iyaji danjuma4 --abubakar sadiq saleh5 1department of economics, rhema university nigeria, aba, abia state, nigeria. email: iud3x@yahoo.com 2school of business, law and social sciences, abertay university, dundee, united kingdom. email: ezemillicent@gmail.com 3national metallurgical development centre, jos, plateau state, nigeria. email: bbkr_yusuf2000@yahoo.com 4department of economics, nigerian army university, biu, borno state, nigeria. email: danjumaiyaji@gmail.com 5department of banking and finance, university of abuja, abuja, nigeria. email: abubakar.saleh@nileuniversity.edu.ng abstract this study investigated the relationship between promotion and employees' performance at the university of abuja. the study utilized a descriptive research design. the multiple regression methodology and descriptive statistics were employed for the analysis of data. the data was derived through structured questionnaires from 337 workers at the university of abuja. the findings indicated that the university treats you fairly and equitably with regard to promotion, the university provides opportunities for career development and the university provides promotional opportunities had a positive influence on employee s’ performance at the university of abuja. conversely, the university is fair and equitable in its treatment of management had a negative impact on employees’ performance at the university of abuja. however, the university provides clear and consistent requirements for promotion, the university supports ongoing professional development, the university acknowledges the long hours you devote to work and the university rewards excellence in performance through a promotion system did not exert a significant effect on employees’ performance at the university of abuja. the university treats you fairly and equitably with regard to promotion, the university provides opportunities for career development and the university provides promotional opportunities had a positive influence on employees’ performance at the university of abuja. however, the university is fair and equitable in its treatment of management had a negative impact on employees’ performance at the university of abuja. the results suggest that the management of the university of abuja should continue treating their employees fairly concerning promotion to increase performance. in addition, the university management should sustain their policies on promotions and career development. furthermore, the management of the university of abuja needs to review and reinforce the way it handles its management. keywords: employee’s performance, nigeria, promotion, university of abuja. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. http://doi.org/10.33094/atssr.v7i1.69 mailto:iud3x@yahoo.com mailto:ezemillicent@gmail.com mailto:bbkr_yusuf2000@yahoo.com mailto:danjumaiyaji@gmail.com mailto:abubakar.saleh@nileuniversity.edu.ng asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 2 © 2023 by the authors; licensee online academic press, usa 1. introduction the realization of an organizational mission and vision in a world characterized by competition and uncertainties is contingent on the satisfaction of its workforce. workers' satisfaction in organizations could be attained through promotion among other factors. in developing and developed economies, promotion acts as a veritable instrument for self-development, the attainment of workers satisfaction, the development of the spirit of competition, reduction of workers turnover, the attraction of skilled and industrious individuals and realization of optimal performance from the workforce. the low performance of universities in nigeria in particular and africa in general is a major challenge of the 21st century. there is no african university in the first 244 universities ranked in the web ranking of universities in the world (webometrics, 2022). the performance of employees in private and public institutions is a critical issue because it serves as the yardstick for employees' promotion to higher ranks. the recommendation of chen and silverthorne (2008) that the performance scores of employees should be used as the benchmark for promotion to foster hard work and competition among employees for the advancement of business organizations' growth and development underlines this. in the contention of hameed and amjad (2009) promotion is important to employees and the owners of the business. arthur, kaphova, and wilderon (2005) stated that it inspires promoted workers to increase their productivity resulting in improvement in the general growth and development of organisations. no wonder, yasmeen, umar, and fahad (2013) stressed that job promotion exerts a powerful effect on the performance of organizations. thus, workers' promotion in organizations should follow laid-down promotion policies and practices. the findings of this study may inform the design of appropriate p romotion practices to drive the productivity of workers at the university of abuja. in addition, the findings would enable the policymakers of government to make knowledgeable decisions in the articulation of incentive policies in tertiary institutions. furthermore, the findings may result in a policy for the attraction, satisfaction and retention of competent workers at the university of abuja. armstrong (1984) stressed that promotion inspires individuals to work in an organization for a long time for the fulfilment of their needs, which subsequently results in increased performance and stability of organizations. thus, as was stated by tilahun (2019) ''the loss of employee represents a loss of skills, knowledge and experiences which can create a significant economic impact and cost to the organization as well as impacting the needs of customers (p. 4). the nigeria's national development plan (ndp) 2021-2025, envisions an economy on the path to unlocking its capability in every sector of the economy for sustainable and all-inclusive national development (federal ministry of finance, budget and national planning (fmfbnp, 2020). this plan is tailored towards the attainment of the federal republic of nigeria’s pledge of removing 100 million nigerians from poverty in 10 years. specifically, 21 million permanent jobs are expected to be created by this plan by 2025. in addition, by 2025, 35 million persons are anticipated to be lifted out of poverty. as was stated in the plan, high -quality economic growth and a more inclusive economy are the avenues through which these goals can be accomplished using its youthful labour force and supplemented by the ability for implementation at national and subnational levels. therefore, nigeria will grow meaningfully in the direction of unlocking its capacities in every sector of the economy for sustainable and all-inclusive national development with the efficient execution of this plan. as part of other issues for implementation, if the young workforces who are also part of the university system are not adequately motivated through promotions among others, this objective may not be achieved. notwithstanding the presence of some academic and non-academic staff that are highly productive, generally, the university of abuja is lagging far behind similar institutions in the universe. statistics from the ranking of world universities confirm this. this statistical fact underscores the poor performance of african universities in general and the university of abuja in particular. no wonder, duru, eze, yusuf, udo, and saleh (2022) stated that ''the federal government of nigeria has been deficient in the management of workers of government universities in nigeria, particularly from the perspective of career advancement, remuneration and training of these workers'' (p. 70). again, regardless of the attempts by the management of the university of abuja to promote its workers, some employees believe that promotions are delayed and characterized by nepotism as well, resulting in labour turnover particularly the loss of highly skilled employees. most of the time, all the employees qualified for promotions are not promoted. this prompts the question of whether the management of the university of abuja engages in annual performance evaluation at the appropriate time and promotes their employees based on it to inspire them and prepare the m to adapt to increased competition triggered by changes in economic and political environments, changes in technology and globalization to improve their performances? the objective of this study is to examine the influence of promotion practices on employees' performance at the university of abuja. the question to address is what is the influence of promotion practices on employees' performance at the university of abuja? the rest of this paper is organized into five sections. the second section discusses the literature review and theoretical framework. the methodology was discussed in section three. section four would focus on results and discussions. section five consists of conclusion and recommendations. asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 3 © 2023 by the authors; licensee online academic press, usa 2. theoretical and empirical issues 2.1. theoretical framework this study was reinforced by the equity theory developed by adams (1963). this theory proposed that employees would be motivated to work better when there is fair treatment in the workplace. in other words, when the promotion practices in an organization are fair, the motivation of employees increases resulting in increased performance and productivity respectively. furthermore, this theory stressed the need for a balance between employees' work inputs and outputs in the workplace referred to as inputs and outputs. perkins (2011) opined that this is the yardstick for determining what represents a fair balance of inputs and outputs. johnsrud and rosser (2002) maintained that workers' impacts on the establishment, comprising of education level, hard work, loyalty, number of years with the establishment, skills and training constitute inputs. contrariwise, the apparent reward that employees can obtain from this circumstance, which is promotion, in this situation is known as outputs or outcomes. thus, in the contention of adams (1965) the ratio of input to the output of workers should be compared to the ratio of input to the output of their coworkers in the same circumstances and workplaces. hence, this theory strikes a balance between the ratio of input to the output of an employee to attain satisfaction which in this case is promotion. thus, any establishment that wants to retain its employees needs to adopt equity principles concerning promotion. this is premised on the fact that workers appreciate fair treatment contingent on the ir responsibilities. as far as the promotion of employees is concerned, workers compare their labours to climb through the stages of an establishment to their co-workers to draw motivation to boost their performance or not (ansah, 2017). adam's equity theory proposed that workers will be motivated, glad and work to boost the production level in the organization if inputs are justly and sufficiently rewarded by outputs (adams & kirst, 1998). by implication, if the efforts of the employees are yielding the desired reward for getting promotions compared to co-workers, it would motivate them to increase their performance. hence, if workers' promotions are based on the results of the annual performance evaluation, there would be an improvement in the general performance of the organization. bowles and gelfand (2010) maintained that this happens if the annual performance evaluation results are used as the main standard for promotion in an establishment. in contrast, when the annual performance evaluation results are not utilized as a yardstick for promotion, workers will not be motivated to boost their performance in an establishment. it results in work dissatisfaction, low morale of workers, low workers performance and poor organizational performance. one of the ways through which employees can get this kind of promotion is nepotism. however, ross and kapitan (2018) claimed that the absence of equity at the workstation could prompt dissatisfied workers to leave their present jobs in pursuit of well-paid jobs or reduce the overall productivity of the organization by lowering their effectiveness at work. based on the equity theory, two things to be considered by managers for promotion are a uniform chance for promotion among all workers and the link between workers' inputs and outputs (hellriegel, slocum, & woodman, 1998). as far as the current study is considered, the position of the equity theory is that promotion practices at the university of abuja should be free and fair to motivate the workers to improve their general performance. thus, when workers are satisfied with the university of abuja's promotion practices, it would serve as a yardstick to perform better causing an increase in performance. 2.2. review of empirical studies the studies on the relationship between promotion and employees’ performance (ansah, 2017; hidig, 2014; ligare, wanyama, & aliata, 2020; peter, 2014; ratemo, bula, & makhamara, 2021; rinny, purba, & handiman, 2020; winoto, surati, & wahyulina, 2021) were little. first, peter (2014) employed the survey research design and descriptive statistics to investigate the effect of promotion on employees' performance at dar es salaam city council (dcc). the 150 employees employed for this study were selected from 300 employees utilizing purposive, convenience and simple random sampling techniques. the results revealed the awareness of promotion procedures among dcc workers. however, there was an emphasis that it should be spelt out clearly to all workers by the human resource department. in addition, the results showed that promotion influenced the performance of employees and the organization respectively. furthermore, the findings revealed that non-adherence to procedures of promotion affected individual and organizational performance respectively. these were in terms of accumulated promotion, poor performance, poor relations and labour turnover. hidig (2014) used descriptive research design and inferential statistics to examine the link between promotion policies and employees' performance in golis company branches in dhahar. the 160 employees employed for this study were selected from 267 employees utilizing purposive and systematic sampling techniques and the slovene formula. the results revealed that promotion policies had a positive and significant relationship with employees' performance. ansah (2017) utilized the mixed method research design to determine the effectiveness of two criteria of promotion in engendering the performance of the senior staff of the university of cape coast. five assistant registrars and 200 senior employees constituted the sample. the findings indicated that supervisors had mixed opinions about the qualification criteria for senior staff promotion. in addition, the results showed that the systems of promotion had a significant influence on senior staff performance. rinny et al. (2020) used the multiple linear regression methodology to investigate the relationship between compensation, job promotions, asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 4 © 2023 by the authors; licensee online academic press, usa job satisfaction and the performance of the academic staff of mercu buana university. the 77 employees employed for this study were selected from 332 employees utilizing the convenience sampling technique. the findings indicated that job promotions and job satisfaction exerted a positive influence on the academic staff performance of mercu buana university. however, compensation had a negative and insignificant effect on the performance of the academic staff of mercu buana university. in kenya, ligare et al. (2020) used a survey research design, descriptive statistics and inferential statistics to investigate the influence of job promotion on the performance of administrative police officers in bungoma county. the 384 administrative police officers employed for this study were selected from 1318 administrative police officers utilizing simple random sampling, stratified random sampling and systematic random sampling methods. the findings revealed a positive and significant relationship between job promotion and the performance of administrative police officers in bungoma county. ratemo et al. (2021) used a survey research design, descriptive statistics and inferential statistics to examine the influences of job promotion practices on workers' performance at kenya forestry research institute in muguga. the 121 workers used for this study were chosen from 178 employees using a stratified random sampling method. the results indicated that job promotion practices exerted a significant effect on employee performance at kenya forestry research institute. the effect of demotion, promotion and transfer on work motivation and performance of the west nusa tenggara regional police was investigated by winoto et al. (2021) employing the structural equation model (sem) partial least square (pls). the findings disclosed that promotion and transfer exerted a positive influence on work motivation. contrariwise, demotion exerted a negative effect on work motivation. however, motivation exerted a positive influence on the performance of west nusa tenggara regional police. the literature review indicated that studies on the relationship between promotion and employees’ performances were limited. a number of the studies were undertaken in the context of other african countries. on the other hand, the absence of empirical studies on the nexus between promotion and employee performance in nigeria informed this study. to the best of our knowledge, the only related previous study in nigeria had a different focus. this was the study conducted by abdulmumini (2021) on the impact of promotion on academic staff development in the state higher educational institutions of borno state. this study consequently intends to close this gap by examining the relationship between promotion and employee performance at the university of abuja. 3. methodology this study was based on the university of abuja and employed the descriptive research design. the 2145 employees of the university of abuja formed the study population. it involves 640 academic staff and 1505 non-academic staff. the yamane’s formula was ut ilized to select a sample of 337 workers from the population of 2145 workers. 𝑛 = 𝑁 1 + 𝑁(𝑒)2 𝑊ℎ𝑒𝑟𝑒 : 𝑛 = 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑖𝑧𝑒 𝑁 = 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑒 = 𝑎𝑙𝑙𝑜𝑤𝑎𝑏𝑙𝑒 𝑒𝑟𝑟𝑜𝑟 (%) substitution into the formula yields: 𝑛 = 2145 1+2145(0.05) 2 𝑛 = 2145 1 + 2145 (0.0025 ) 𝑛 = 2145 1 + 5.3625 𝑛 = 2145 6.3625 𝑛 = 337.13 the sampling method used for this study was simple random sampling. it was utilized to ensure that each worker has an equal chance of being chosen in the sample. the instrument for data gathering was a structured questionnaire. the eight items established by krivokapic-skoko, o'neill, and dowell (2009) were used to measure promotion. on the other hand, we employed 11 items to measure workers’ performance. out of the 11 factors of work performance, productivity was utilized to measure it because it was extensive ly used by other scholars in the literature. regression methodology and descriptive statistics were employed for the analysis of data. the principal component analysis (pca) was used to determine the presence of unique items from the construct of promotion. 4. results and discussions out of the three hundred and thirty-seven questionnaires administered to respondents, 300 questionnaires were retrieved. this denotes response and non-response rates of 89% and 11% respectively. a cronbach-alpha reliability value of 0.969 and 0.859 was realized for work performance measures and construct asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 5 © 2023 by the authors; licensee online academic press, usa of promotion respectively. these values showed that the instrument was reliable. a cronbach alpha score of 0.932 was obtained for the whole instrument. these coefficients were deemed reliable for data analysis. table 1 shows the background characteristics of the respondents. the background characteristics of the respondents are depicted in table 1. it revealed that 220 respondents representing 73.3% were the academic staff. conversely, 80 respondents representing 26.7% were the non-academic staff. it revealed that 116 respondents representing 38.7% had worked at the university of abuja between 11 to 15 years. however, the rest representing 61.3% were distributed among less than 5 years, 6 to 10 years, 11 to 15 years, 16 to 20 years, 21 to 25 years and 26 years and above. from the angle of their marital status, 225 respondents representing 75% were married and 75 respondents representing 25% were single. however, 0 or 0% was shared equally by the divorced, never married, engaged to be married, widowed and separated. the findings showed that 235 respondents representing 78.3% were male and the remaining 65 respondents representing 21.7% were female. furthermore, 124 respondents in the age group of 31 to 35 years representing 41.3% constituted the majority. conversely, the remaining respondents in the age groups of 21 to 25 years, 26 to 30 years, 36 to 40 years, 41 to 45 years, 46 to 50 years, 51 to 55 years and 56 to 60 years represented 58.7%. in terms of education, 272 respondents representing 90.7% had tertiary education. in addition, 16 respondents representing 5.3% had secondary education. however, 12 respondents representing 4% had polytechnic education. table 1. percentage distribution of respondents based on background characteristics. variable items frequency percentage (%) type of staff academic staff non-academic staff total 220 80 300 73.3 26.7 100.0 number of years worked less than 5 years 6-10 years 11-15 years 16-20 years 21-25 years 26 years and above total 40 49 116 29 40 26 300 13.3 16.3 38.7 9.7 13.3 8.7 100.0 marital status married single widowed separated never married divorced engaged to be married total 225 75 0 0 0 0 0 300 75.0 25.0 0.0 0.0 0.0 0.0 0.0 100.0 gender male female total 235 65 300 78.3 21.7 100.0 age 21-25 years 26-30 years 31-35 years 36-40 years 41-45 years 46-50 years 51-55 years 56-60 years 61-65 years 66-70 years total 4 41 124 14 42 15 45 15 0 0 300 1.3 13.7 41.3 4.7 14.0 5.0 15.0 5.0 0.0 0.0 100.0 education no education primary education secondary education polytechnic education tertiary education total 0 0 16 12 272 300 0.0 0.0 5.3 4.0 90.7 100.0 source: field survey, 2022. in table 2, the evaluation of the effectiveness of promotion practices at the university of abuja was done through a 5-point likert scale questionnaire. the eight items used to measure promotion were adopted from krivokapic-skoko et al. (2009). the respondents were requested to assess their agreement level with the promotion practices at the university of abuja. asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 6 © 2023 by the authors; licensee online academic press, usa table 2. influences of promotion practices at the university of abuja. code opinion strongly agree (x5) agree (x4) undecided (x3) disagree (x2) strongly disagree (x1) sum mean std. dev. rank pp1 the university provides clear and consistent requirements for promotion 275 424 174 88 37 998 3.33 1.28 1st pp2 the university treats you fairly and equitably with regard to promotion 50 500 150 136 47 883 2.94 1.19 2nd pp3 the university is fair and equitable in its treatment of management 45 252 177 210 64 748 2.49 1.13 4th pp4 the university provides opportunities for career development 190 116 126 212 85 729 2.43 1.33 5th pp5 the university supports ongoing professional development 245 92 102 86 151 676 2.25 1.53 7th pp6 the university provides promotional opportunities 215 128 96 44 171 654 2.18 1.54 8th pp7 the university acknowledges the long hours you devote to work 45 344 126 238 44 797 2.66 1.13 3rd pp8 the university rewards excellence in performance through a promotion system 45 360 99 70 133 707 2.36 1.38 6th note: pp denotes promotion practices. source: field survey, 2022. asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 7 © 2023 by the authors; licensee online academic press, usa the average of a five points ranking scale (3.00) was used as a standard for decision. if the mean value was ≥ 3.00, the view was regarded as agreed. conversely, if the mean value was < 3.00, the view was regarded as not agreed. the respondents agreed that the university provides clear and consistent requirements for promotion. it was ranked first and was the only promotion construct variable ranked above a mean score of 3.00. on the other hand, the respondents accepted that the remaining practices of promotion were ineffective at the university of abuja. this was underscored by the ranking of these promotion practices below the mean score of 3.00. table 3. factor analysis results of the construct of promotion. code factors and observed variables loadings eigenvalues percentage of variance factor: promotion practices pp1 the university provides clear and consistent requirements for promotion. 0.713 4.199 52.483 pp2 the university treats you fairly and equitably with regard to promotion. 0.786 2.239 27.988 pp3 the university is fair and equitable in its treatment of management. 0.856 0.670 8.372 pp4 the university provides opportunities for career development. 0.851 0.292 3.645 pp5 the university supports ongoing professional development. 0.790 0.279 3.482 pp6 the university provides promotional opportunities. 0.779 0.157 1.963 pp7 the university acknowledges the long hours you devote to work. 0.405 0.124 1.554 pp8 the university rewards excellence in performance through a promotion system. 0.470 0.041 0.514 total variance explained by motivation 100.000 note: extraction method: principal component analysis. kmo measure of sampling adequacy = 0.754, bartlett’s chi-square 2304.44 with 28 d.f., p < 0.05, and bartlett’s test of sphericity = 0.000. the pca result is shown in table 3. no element of promotion practices was rejected. the whole factors showed good internal reliability and were validated for additional analysis. the kaiser-meyer-olkin (kmo) measurement assumption was satisfied. the relevance of the investigation was underscored by the kmo value of 0.754. the importance of factor analysis was further underlined by the significance of the bartlett test of sphericity. table 4. results of regression analysis. factor/model unstandardized coefficients standard error t-statistic sig. constant 0.636 0.187 3.397 0.001 the university provides clear and consistent requirements for promotion -0.090 0.070 -1.300 0.195 the university treats you fairly and equitably with regard to promotion 0.556 0.087 6.425 0.000 the university is fair and equitable in its treatment of management -0.309 0.081 -3.807 0.000 the university provides opportunities for career development 0.254 0.093 2.732 0.007 the university supports ongoing professional development -0.237 0.135 -1.756 0.080 the university provides promotional opportunities 0.660 0.109 6.037 0.000 the university acknowledges the long hours you devote to work 0.003 0.098 0.031 0.976 the university rewards excellence in performance through a promotion system 0.039 0.081 0.488 0.626 model parameters r2 0.571 adjusted r2 0.559 f-value (sig.) 48.394 (0.000) note: dependent variable: workers’ performance. asian themes in social sciences research 2023, vol. 7, no. 1, pp. 1-9 8 © 2023 by the authors; licensee online academic press, usa the findings of the regression analysis are shown in table 4. the findings showed that four factors of promotion practices had a significant relationship with workers’ performance at the university of abuja. the university treats you fairly and equitably with regard to promotion had a positive effect on employees’ performance at the university of abuja. the university is fair and equitable in its treatment of management had a negative impact on employees’ performance at the university of abuja. in addition, the university provides opportunities for career development exerted a positive influence on employees’ performance at the university of abuja. furthermore, the university provides promotional opportunities had a positive effect on employees’ performance at the university of abuja. the findings revealed that promotion practices explained 57% of employees’ performance at the university. the good fit of the model was underlined by the f-statistic of 48.394 and its significance estimate of 0.000. 5. conclusion and recommendations four out of the eight promotion practices did not have a significant effect on employees’ performance at the university of abuja. these are as follows: the university provides clear and consistent requirements for promotion, the university supports ongoing professional development, the university acknowledges the long hours you devote to work and the university rewards excellence in performance through a promotion system. in addition, three promotion practices had a positive effect on employees’ performance at the university of abuja. these are the university treats you fairly and equitably with regard to promotion, the university provides opportunities for career development and the university provides promotional opportunities. however, the university is fair and equitable in its treatment of management had a negative impact on employees’ performance at the university of abuja. the study recommends that the management of the university of abuja should continue treating their employees fairly concerning promotion to increase productivity. in addition, the university management should sustain their policies on promotions and career development. furthermore, the management of the university of abuja needs to review and reinforce the way it handles its management. references abdulmumini, a. 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(2013). impact of rewards on organizational performance: empirical evidence from telecom sector of pakistan. journal of basic and applied scientific research, 3(5), 938-946. https://doi.org/10.46827/ejhrms.v5i1.1041 https://doi.org/10.1108/ejm-01-2017-0002 https://www.webometrics.info/en/world asian themes in social sciences research issn: 2578-5516 vol. 6, no. 1, pp. 12-24 2022 doi: 10.33094/atssr.v6i1.66 © 2022 by the authors; licensee online academic press, usa accepted: 1 april 2022 | published: 11 may 2022 12 © 2022 by the authors; licensee online academic press, usa effect of ownership structure on earnings management in listed manufacturing firms at nairobi securities exchange, kenya john gikonyo mwangi1* --tabitha nasieku2 1,2jomo kenyatta university of agriculture and technology, kenya. 1email: gikonyomwangi164@gmail.com 2email: tabithanasieku@gmail.com abstract a firm's ownership structure is important to the effectiveness of monitoring the mechani sms used to manipulate earnings. based on the ownership structure of a firm, management can feel pressure to manage earnings by manipulating the company's accounting practices to meet financial expectations. this paper focuses on how the three components of ownership structure affect earnings management of listed firms. that is to determine the effect of ownership concentration, managerial ownership, and institutional ownership on earnings management of listed firms. as per the jones and modified jones model, discretionary accruals were used as a measure of earnings management. the study deployed a random effects model and stata software for data analysis. data was collected for the period from 2011 to 2019 from all listed manufacturing firms in nairobi securities exchange. the study findings indicated that managerial ownership, institutional ownership and ownership concentration have an insignificant effect on earnings management. the study indicated that while majori t y shareholders are keen to closely monitor the management to ensure that their interests are well protected, this can only be attained if they have requisite skills, knowledge, and experience. the study also indicated that most pertinent is to have strong internal controls in place that seals all possible loopholes that could be exploited by the management to manipulate earnings. the study considered two control variables, firm size and growth which were also found to have an insignificant effect on earnings management. keywords: institutional ownership, managerial ownership, ownership concentration, earnings management. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction the separation of ownership and control has seen the management pursue own interests at the expense of shareholders (principal). this basically is the agency problem where the agent fails to act in the best interests of the principal. partly the pursuant of self-interests have been manifest in the form of earnings manipulation. alareeni (2018) explains that the management manipulates earnings in a bid to attain set performance targets which is the basis of their bonuses and salary increments. however, iraya, mwangi, and wanjohi (2014) adds that the management may also manipulate earnings in a bid to smooth out earnings and to signal the market that the company presents an ideal consideration for investment. swai and mbogela (2016) indicates that with strong corporate governance system in place, the loopholes exploited by top management to manipulate earnings are bound to be effectively sealed. this will eventually translate to reliable and quality financial reporting. mohammadikhanghah, piry, and mansourfar (2020) opines that some of the incentives towards earnings management by top management are to earn bonuses or to enhance http://doi.org/10.33094/atssr.v6i1.66 mailto:gikonyomwangi164@gmail.com mailto:tabithanasieku@gmail.com asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 13 © 2022 by the authors; licensee online academic press, usa the firm ability to raise capital both in the money and capital markets. in the context of corporate governance, alareeni (2018) opines that curtailing earnings management requires a very strong board. specifically, alareeni (2018) underscores the value of board independence in offering quality oversight and control to the management. laksmi and kamila (2018) hold that board size, board diversity and ceo duality are also critical in enhancing quality control over the management to curb earnings manipulation. however, bao and lewellyn (2017) indicates that even with a strong board notably a highly independent board who may not be involved in day -today activities, the management may connive to manipulate earnings. ownership structure is cited as critical in giving a boast to a strong board in curtailing earnings management. ownership structure can simply be put as the distribution of ownership of equity in an entity (mohammadikhanghah et al., 2020). lassoued, attia, and sassi (2018) indicates that managerial and institutional ownership are the key dimensions under ownership structure bound to reduce instances of earnings manipulations. managerial ownership entails ownership of stake by the top management in an entity. this aligns their interests with those of the shareholders and this is bound to reduce the incentives for earnings manipulation as such could affect the value of their stake in the future. institutional ownership denotes the ownership of stake in an entity by institutional investors. bao and lewellyn (2017) indicates that institutional investors come with knowledge and expertise critical in providing quality oversight to the management. other than institutional and managerial ownership, ownership concentration has been termed as critical in curbing earnings management. in summation reduction of the rising cases of earnings management in listed kenyan entities calls for enhanced ownership structure. most notably is the need to enhance managerial ownership to align the interests of management to that of shareholders. the institutional ownership is also pertinent as institutional investors come with knowledge and expertise that promote quality oversight and monitoring of the corporate activities. 1.1. statement of the problem the cases of earnings management continue to rise despite the advancements in global financial reporting standards and having an independent audit for all listed firms. even in developed economies such as uk, the accounting manipulations has risen even among the ftse 100 firms. for instance, in 2014, tesco, one of the four largest retail firms in uk overstated its profits by £263 million. following this revelation, the firm had its market value decline by a whooping £2bn and this meant massive shareholders’ wealth. some of the analysts pointed to a weak corporate governance in the firm (kizil & kaşbaşı, 2018). the case is no different in emerging economies notably china which is bound to overtake us as the largest economy by 2030. in 2020, luckin coffee, a chinese coffee company revealed that it had overstated its revenues in 2019 by a whooping $328 million (katanga, 2020). other than being fined $180 million for intentionally overstating the revenues and understating its net loss in 2019, the firm was delisted in us based nasdaq. wang (2020) holds that the company pledged to enhance its internal financial controls and adhere to best practices of corporate governance. this underscores the value of corporate governance in enhancing accountability and transparency in financial reporting. in the same year (2020), the chinese tal education group had about 4% of its revenues fabricated. upon the public knowledge of the misstatement, the firm’s shares dipped by 18% depicting massive loss of shareholders’ wealth. developing economies deemed to still be at infant stages of capital market development have also reported numerous cases of earnings manipulation. a survey done ernst and young in 2018 that focused on 100 kenyan firms revealed that 53% of firms were overreporting their financial performance (the east african, 2018). the report raised questions on the ability of the corporate boards and auditors in the wake of the glaring misstatements of financial reports in the kenyan corporations. in 2015, deloitte was accused of conniving with top management of mumias to conceal accounting flaws at the entity which has been hardly hit by financial woes even after being bailed out by the government. mumias outgrowers company (moco) accused the company of having declared false profits and contested a sh2.6 billion outstanding loan demand from the miller, terming it as a false entry. indubitably there are intense cases of earnings management globally that have seen shareholders lose massively. strong corporate governance has been recommended in curbing the rising cases of earnings management. specifically, ownership structure has been cited as a critical in fostering accountability and transparency in financial reporting. this study aimed at examining the effect of ownership structure on earnings management. 1.2. research aim and objectives the main aim of this study was to examine the effect of ownership structure on earnings management. this was facilitated by the following research objectives; (i) to examine the effect of managerial ownership on earnings management of listed manufacturing firms. (ii) to examine the effect of institutional ownership on earnings management of listed manufacturing firms. (iii) to examine the effect of ownership concentration on earnings management of listed manufacturing firms. 2. literature review 2.1. theoretical literature 2.1.1. agency theory the agency theory holds that the management is the agent who is bound to act in the best interests of the shareholders (principal). the agency problem crops up due to the manager acting to serve their interests at the expense of the shareholders. in line with earnings management, the management might manipulate earnings in asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 14 © 2022 by the authors; licensee online academic press, usa a bid to achieve set profit targets to earn bonuses (laksmi & kamila, 2018). the most cited solutions to the agency problem revolve around corporate governance. for instance, managerial ownership which is a component of ownership structure aligns the interests of management to that of shareholders. other cited solutions include board independence and board gender diversity to enhance control and oversight. managerial ownership is pertinent in aligning the interests of the management to the interests of the corporate owners. the management become owners of the entity as such they become more cautious in their approach to management and even in preparation of annual report. this is in recognition that any gaps in investment decisions and financial reporting could adversely affect their stake in the firm. however, nguyen, lien le, and anh vu (2021) indicates that there are limitations of managerial ownership in that they become hesitant to pursue high risks that has potentially high returns. this could derail the growth of an entity and hence the need to explore other potential solutions to the agency problem. institutional ownership and ownership concentration have been hailed as other potential solutions to the agency problem. proponents of institutional ownership hold that institutional shareholders come with immense experience in corporate and industry operations and can effectively monitor the actions of management compared to individual investors. alzoubi (2016) indicates that ownership concentration also helps to curb cases of earnings manipulation as the top shareholders are keen to closely monitor the management activities. this also includes ensuring that the firm has strong internal controls to seal loopholes that could be exp loited by the management to manipulate earnings. 2.1.2. stakeholder theory elghuweel, ntim, opong, and avison (2017) explains that the management is expected act in the best interests of all stakeholders. venturing in earnings management does not just hurt the shareholders but othe r stakeholders such as employees, lenders, and customers. this is because such manipulations have adverse effect on future operating performance and this could see delays in paying employees and supplies and deterioration of quality for goods sold to the customers. outa, eisenberg, and ozili (2017) puts forth that a strong corporate governance is indispensable in ensuring the management balances between the diverse interests of stakeholders. having in place a strong ownership structure notably institutional shareholders representation in the board, ensures that there is efficacy in the board effectiveness in exercising their control over the management. 2.1.3. positive accounting theory positive accounting theory holds that accounting choices available for the management has seen rise of managerial opportunism. this basically is to say that managers may opt for certain accounting policies if such will serve their interests. for instance, the accounting policies under stock valuation gives three valuation techniques or methods, lifo, weighted average, and fifo. fifo tends to understate the value of closing stock and this can see the gross profit rise and eventually the net earnings. the mot ivation could be either to report profits which allow mangers to get bonuses which are based on the net earnings of the company. swai and mbogela (2016) indicates that it could also be motivated by the intent to send a signal to the market that the performance of the firm has improved or has remained relatively stable. however, the repercussions are felt later by shareholder and iraya et al. (2014) indicates that a strong corporate governance system will be able to curb such by promoting appropriate accounting policies for the company. managerial ownership would reduce the incentives of management to use accounting policies to gratify their own interests. 2.2. empirical literature several scholars have ventured in examining the influence of ownership structure on earnings management. table 1 offers a detailed summary of reviewed empirical literature. 2.3. summary and critique of the literature the review of theoretical literature highlights three critical theories, agency theory, stakeholder theory and positive accounting theory. most striking is the agency theory which explains the principal agent relationship which yields an agency problem where the management pursue their own interest at the detriment of shareholders (corporate owners). ownership structure in form of managerial ownership, institutional ownership and ownership concentration is suggested as potential solution to agency problem which manif ests itself partly through earnings management. most of the reviewed studies indicates that managerial ownership, institutional ownership, and ownership concentration help to dimmish cases of earnings management. managerial ownership aligns the interests of the management to that of the shareholders. this drives the top management to engage in activities that promotes shareholders value and shun such tendencies as earnings manipulation. institutional shareholders come expertise, knowledge and experience which is critical in providing quality oversight to the management. high ownership concentration means that top shareholders are keener to protect their interests due to the large stake in the entity and as such will closely monitor corporate activities and management actions. there are gaps in extant literature as has been reviewed in the above sections. firstly, there are methodological research gaps. there is no clarity as to whether most of the empirical studies focus on real earnings management or accrual earnings management. secondly, several studies have not effectively proxied earnings management. some studies have used earnings quality as an indicator of earnings management while others have adopted the modified jones model which support the computation of discretionary accruals as an asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 15 © 2022 by the authors; licensee online academic press, usa indicator of accruals earnings management. earnings quality is quite distinct from earnings management. studies should focus at examining the two cases of earnings, real earnings and accrual earnings management as listed entities are facing these two forms of earnings management. table 1. summary of empirical literature. topic author, year, country objectives methodology findings and recommendations the effect of corporate governance practices on earnings management of companies listed at the nairobi securities exchange iraya et al. (2014) kenya • to examine the effect of ownership concentration on earnings management • to examine the effect of board independence on earnings management • to examine the effect of board size on earnings management • to examine the effect of ceo duality on earnings management quantitative research which collected secondary data from annual reports of listed firms (20102012). the study sampled out 49 listed firms in nse. descriptive statistics, and linear regression analysis were adopted for analysis the findings indicated that ownership concentration, board size and board independence have negative effect on earnings management. this means they help in curbing earnings management. ceo duality was however found to have a positive effect on earnings management. in line with ownership structure, the study concluded that the majority shareholders keep to closely monitor day to day activities as they stand to lose massively should the management engage in any form of malpractice. accrual-based versus real earnings management; the effect of ownership structure: evidence from east africa. swai and mbogela (2016) east africa • to examine the effect of ownership concentration on accrual earnings management • to examine the effect of institutional ownership on accrual earnings management the study collected data for the period from 2003 to 2013 and adopted regression analysis to analyze data collected. this was on a sample of 44 nonfinancial firms in east africa. the findings indicated significant negative effect of ownership concentration and institutional ownership on earnings management. the study concluded that the majority shareholders are keen to effectively monitor corporate operations to ensure that their interests are well protected. the study however indicated the effectiveness of this control depends on their skills and experience. ownership concentration and earnings management practice of nigerian listed conglomerates usman and yero (2012) nigeria • to examine the effect of ownership concentration on earnings management the study estimated panel ols collecting data from annual reports of the 30 listed firms in nigeria for the period from 2006-2010 the findings indicated a negative effect of ownership concentration on earnings management. the study recommends that while high ownership concentration could see the interests of the minority shareholders disregarded, it is pertinent in that the shareholders keep close watch to the management. ownership structure and earnings management: empirical evidence from vietnam nguyen et al. (2021) vietnam • to examine the effect of ownership concentration on earnings management • to examine the effect of foreign ownership on earnings management multiple regression analysis data; secondary data from listed firm’s annual reports. the study sampled out 489 firms. discretionary accruals were adopted as a measure of earnings management. both managerial and foreign ownership has a negative effect on earnings management. in other words, they help in curbing earnings management. the study recommends firms to consider allotting shares to the top management as this aligns their interests with those of the company. they exercise due care in financial reporting as any misrepresentation would also adversely affect their stake in the entity. foreign investors also come with diverse skills and asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 16 © 2022 by the authors; licensee online academic press, usa topic author, year, country objectives methodology findings and recommendations expertise critical for the growth of an enterprise far beyond fostering accountability and transparency in financial reporting. managerial equity holdings and income smoothing incentives shu and thomas (2019) china • to examine the effect of managerial equity holdings and income smoothing incentives. regression analysis deductive research approach and secondary data collected from the published annual reports (2009-2018) the findings indicated that managerial equity holdings help curb income smoothing. the study recommended that firms to consider allotting shares to top management. the share ownership helps align management interests with those of shareholders. the focus is to have the management focus at maximising shareholders’ wealth and not delving in earnings management which is at the detriment of the shareholders. ownership structure and earnings management: evidence from portugal’ alves (2012) portugal • to examine the effect of managerial ownership on earnings management • to examine the effect of ownership concentration on earnings management multiple regression analysis on secondary data collected from the annual reports for the period from 2002-2007. this was on a sample of 34 nonfinancial listed entities in portugal. the findings indicated that discretionary accruals as a proxy for earnings management is negatively related both to managerial ownership and ownership concentration. this means that both managerial ownership and ownership concentration help to curb earnings management. the study recommends that firms consider giving a proportion of ownership of the company to the top management to enhance their commitment towards effective management of shareholders’ wealth and to promote financial reporting quality. coupled with ownership concentration, the cases of earnings management are bound to significantly diminish. the top owners are keen to effectively monitor the firm’s operations and financial reporting process and this minimizes chances of management manipulating earnings to attain selfish ends such as bonuses. ownership structure and earnings management: evidence from jordan alzoubi (2016) jordan to examine the effect of insider managerial ownership, institutional ownership, external blockholder, family ownership and foreign ownership on earnings management ols and generalized least squares were adopted for analysis on data collected from the annual reports of 62 firms quoted in amman stock exchange. discretional accrual was used a s a proxy of the findings indicated that insider managerial ownership, institutional ownership, external blockholder, family ownership and foreign ownership diminish cases of earnings management. the study recommends that these distinct forms of ownership are not only critical in curbing earnings management but also in promoting diligence in investments and risk management. the study asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 17 © 2022 by the authors; licensee online academic press, usa topic author, year, country objectives methodology findings and recommendations earnings management recommends that investors should consider firms with institutional investors representation in the board as such deploy their experience and knowledge to protect the interests of all shareholders. the effect of the ownership concentration on earnings management. empirical evidence from the italian context grimaldi and muserra (2017) italy • to examine the effect of ownership concentration on earnings management multiple regression analysis of secondary data collected for the period 2011 to 2013. this was on a sample of 300 nonfinancial listed in italy. the study findings indicated that ownership concentration has a negative effect on real earnings management. the majority shareholders are keen to effectively monitor corporate operations to ensure that their interests are well protected. however, the study concludes that high level of ownership concentration could see the interests of the minority shareholders disregarded. the relationship between equity ownership concentration and earnings quality: evidence from brazil sousa and galdi (2016) brazil • to examine influence of ownership concentration on earnings quality of brazilian firms regression analysis datasecondary data from annual reports for the period from 1994-2014. the findings indicated an insignificant effect of ownership concentration on earnings management in listed entities in brazil. this was in tandem with demand paradigm which holds that earnings are more reliable and consistent when the ownership is dispersed. corporate governance, firm characteristics, and earnings management in an emerging economy waweru and riro (2013). kenya • to examine the effect of ownership structure, independence of the audit committee and board composition) and firm specific characteristics (firm size, firm performance, leverage) on earnings management by kenyan listed firms. ols regression analysis earnings management discretionary accruals. datasecondary data from annual reports on a sample of 37 listed firms in nse, kenya. all the components of corporate governance were found to curb cases of earnings management. for firm specific characteristics only, leverage was found to have a significant effect and specifically positive effect on earnings management. this means firms with high leverage are more likely to manipulate earnings. the study recommends the need for a strong independent board and representation of institutional shareholders in the board to provide quality oversight to the management. the study further recommends a board with diverse skills and experience beyond having high ownership concentration and institutional investors. such a board is able to put up strong internal controls that seal loopholes that are normally exploited by the management to manipulate earnings. the impact of corporate governance code on earnings management in listed non-financial firms: evidence from kenya outa et al. (2017) kenya • to examine the effect of corporate governance on earnings management regression analysis on data collected for the period from 2005 to 2014; 338-firm annual observations. corporate governance the findings indicated corporate governance as indicated by corporate governance index (cgi) has no significant effect on earnings management. however, the study recommends the need to have an independent board with asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 18 © 2022 by the authors; licensee online academic press, usa topic author, year, country objectives methodology findings and recommendations index used as a proxy of corporate governance. requisite experience and skills to provide quality oversight to the management. further, the study underscores the need for institutional shareholders to closely monitor corporate operations to quickly spot any incontinences in the financial reporting that could be a pointer to cases of earnings manipulation. monitoring earnings management in emerging markets: ifrs adoption and ownership structure. hessayri and saihi (2015) united arab emirates, morocco, south africa, and the philippines • to examine the effect of ownership concentration on earnings management • to examine the effect of managerial ownership on earnings management • to examine the effect of institutional ownership on earnings management multiple regression analysis secondary data financial data from the annual reports of the sampled listed firms in uae, morocco, south africa, and philippines the findings indicated that ownership concentration, managerial ownership and institutional ownership are critical in curbing cases of earnings management. the study recommended listed firms to consider institutional investors with immense knowledge and experience in enterprise operations and financial reporting. there representation in the board is critical as they are able to closely monitor the corporate operations. earnings management behavior in malaysia: the role of ownership structure and external auditing nor, mahyuddin, hashim, and nahar (2020) malaysia. • to examine the effect of institutional ownership on earnings management • to examine the effect of family ownership on earnings management • to examine the effect of family ownership on earnings management • to examine the effect of external audit on earnings management the study sampled 227 listed firms in malaysia and collected data for the period from 2001 to 2016. regression analysis was adopted to examine the effect of each of the study predictor variables on earnings management. the findings indicated that family ownership, managerial and institutional ownership help in mitigating earnings management. however, external audit function was found to have no significant effect in curtailing earnings management. the study recommended that corporations and shareholders should consider managerial ownership as this could reduce the control and monitoring costs as the management interests stands aligned to shareholders’ interests. however, the study recommended that institutional shareholders are still needed even in case of managerial ownership as the top management may still be motivated to manipulate earnings for short term gains such as immediate bonuses upon hitting set profit targets. with institutional investors and a strong and independent board, the firm will put up strong controls such as that an external audit may not even considerably mitigate earnings manipulation but just come to run audit tests to provide an assurance to shareholders. asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 19 © 2022 by the authors; licensee online academic press, usa topic author, year, country objectives methodology findings and recommendations ownership structure and earnings management. ekpulu and omoye (2018) nigeria • to examine the effect of managerial ownership on earnings management • to examine the effect of foreign ownership on earnings management • to examine the effect of institutional ownership on earnings management the study sampled out 75 listed firms and collected data from annual reports for the period from 2009 to 2014. regression analysis, person correlation analysis and descriptive statistics were adopted for analysis. the study findings indicated that managerial ownership significantly curbs earnings management. however, institutional and foreign ownership were found to have an insignificant effect on earnings management. the study concluded that with managerial ownership, the interests of the shareholders are protected as the management is also keen to safeguard their stake in the entity. the study indicated that even with institutional ownership, the management can still collude with accounting officers to bypass internal controls in the company. the study thus underscored the value of managerial ownership as one of the best solutions of agency problem and in mitigating earnings management. ownership structure and earnings management alexander (2019) indonesia • to examine the effect of ownership concentration on earnings management • to examine the effect of foreign ownership on earnings management • to examine the effect of institutional ownership on earnings management • the study focused on listed manufacturing firms in idx and collected data for the period from 2014-2016. multiple regression analysis in e views was adopted for analysis. the findings indicated that institutional ownership and foreign ownership significantly mitigates earnings management while ownership concentration was found to have no significant effect in curbing earnings management. the study recommended foreign and institutional investors citing their skills and expertise critical in providing quality oversight to the management. this is through their representation in the board. the study however, underscored the need to have strong internal controls beyond just having institutional and foreign investors. the foreign and institutional investors should work towards ensuring that the firm has robust controls in place. but this can be overridden by collusion in the management and other company officers. this therefore calls for strong board to offer quality oversight. 3. research methodology 3.1. introduction this chapter highlighted the research design, population and sample size, research variables, data collection and analysis techniques that would effectively examine the effect of ownership structure on earnings management. asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 20 © 2022 by the authors; licensee online academic press, usa 3.2. research design this basically is the overall strategy adopted to integrate all research parts in a logical manner to effectively address the research aim and objectives. this research adopted a quantitative research design given that it entailed analysis of numerical data/quantitative data that was subjected to statistical analysis. 3.3. target population the target population was 8 listed manufacturing firms in nairobi securities exchange as at 2019. panel data from the annual reports of the 8 listed manufacturing firms in nse for a period of 10 years (2011-2019). table 2. research variables. the proxy for earnings management was discretionary accruals which was derived from the modified jones model expressed as: 𝑁𝐷𝐴𝑡 = 𝛼1 1 𝐴𝑡 −1 + 𝛼2 (∆𝑅𝐸𝑉𝑡 − ∆𝑅𝐸𝐶𝑡) 𝐴𝑡 −1 + 𝛼3 𝑃𝑃𝐸𝑡 𝐴𝑡 −1 + 𝜀𝑡 ∆𝑅𝐸𝐶𝑡 is the difference between the operating income of the previous year and the receivable items of the current year. 𝜀𝑡 is the residual sequence of the regression model, that is, the company’s discretionary accruals (𝐷𝐴𝑡). discretionary accruals = total accruals non-discretionary accruals. the jones model was adopted to indicate the total accruals as follows; 𝑇𝐴𝑡 = ∆𝐶𝐴𝑡 − ∆𝐶𝐿𝑡 − ∆𝐶𝑎𝑠ℎ𝑡 + ∆𝑆𝑇𝐷𝑡 − 𝐷𝑒𝑝𝑡 where δca is the change in current assets, δcl is the change in current liabilities, δcash is the change in cash and cash equivalent, δstd is the change in current maturities of long-term debt and dep is the depreciation and amortization expense. changes in short-term debt are excluded from accruals because they relate to financing transactions as opposed to operating activities. 4. research findings and conclusion 4.1. descriptive statistics table 3 summarizes the descriptive statistics for the dependent variable, earnings management proxied by discretionary accruals. table 3. descriptive statisticsdiscretionary accruals. year mean std. deviation minimum maximum 2011 -0.005 0.112 -0.991 0.061 2012 -0.002 0.130 -0.970 0.068 2013 0.007 0.062 -0.490 0.192 2014 0.002 0.048 -0.380 0.252 2015 0.003 0.046 -0.370 0.091 2016 0.007 0.043 -0.321 0.154 2017 0.003 0.142 -0.406 0.136 2018 0.006 0.330 -0.342 0.204 2029 0.008 0.023 -0.257 0.141 total 0.003 0.104 -0.503 0.144 variables name symbol measure dependent variables earnings management discretionary accruals (da) da non obligatory expenses that are not realised but have been recorded in the financial reports independent variable ownership structure institutional ownership io percentage of shares held by institutional shareholders to total company shareholding managerial ownership mo percentage of shares held by top management to total company shareholding ownership concentration ownc top 10 shareholder shareholding ratio control variables firm size fsize log forms of total assets of the firm. growth grw percentage increase in annual sales asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 21 © 2022 by the authors; licensee online academic press, usa the mean discretionary accruals were found to be very low which indicated that the level of earnings management is insignificantly lower in the listed manufacturing firms in kenya. table 4 shows the descriptive statistics for independent variables. table 4. descriptive statistics; ownership structure. year mean/std. deviation io (%) ownc (%) mo (%) 2011 mean 9.279 36.849 0.513 std. deviation 1.965 5.898 2.671 2012 mean 9.249 37.038 0.733 std. deviation 1.985 5.346 3.575 2013 mean 9.241 37.14 0.82 std. deviation 1.924 5.085 3.506 2014 mean 9.125 36.986 1.109 std. deviation 1.819 5.812 4.257 2015 mean 8.962 37.405 1.787 std. deviation 1.796 5.844 5.958 2016 mean 9.04 37.027 1.608 std. deviation 1.638 5.533 5.775 2017 mean 9.062 37.272 1.7 std. deviation 1.729 5.393 5.783 2018 mean 9.048 36.95 1.691 std. deviation 1.76 5.786 5.379 2019 mean 8.933 37.622 1.639 std. deviation 1.692 6.055 5.195 total mean 9.104 37.143 1.289 std. deviation 1.813 5.638 4.843 the mean institutional ownership in listed manufacturing firms was found to be 9.104%. this was a standard deviation of 1.813 which means that there is a statistically significant variation in the institutional ownership of listed manufacturing firms. focusing on the trend, the institutional ownership slightly declined from 9.279% in 2011 to 8.933% in 2020. this could mean that institutional shareholders are possibly considering other sectors with potentially higher returns. however, extant studies notably (nor et al., 2020) indicates that firms across all sectors continue to appreciate the value of institutional ownership. the institutional owners bring on board experience and knowledge which enhances the quality of oversight. the average managerial ownership in listed manufacturing firms was found to be 1.289%. this was a standard deviation of 4.843 which means that there is a statistically significant variation in the managerial ownership of listed manufacturing firms. focusing on the trend, the managerial ownership rose from 0.513% in 2011 to 1.639% in 2020. however, it is still relatively low despite that managerial ownership has been cited by waweru and riro (2013) as a disincentive to earnings management. this is given that it aligns the interests of shareholders with those of management as the latter also has a stake in the entity. this study findings further established the mean ownership concentration to be 37.143%. this was a standard deviation of 5.638 which means that there is a statistically significant variation in the ownership concentration across listed manufacturing firms. focusing on the trend, the ownership concentration rose from 36.849% in 2011 to 37.622% in 2020. however, it is still relatively low despite that managerial ownership has been cited as a disincentive to earnings management. alves (2012) indicated that the level of managerial ownership could still be low in many firms given other approaches of incentivizing the top management such as bonuses and better pay. table 5 presents the correlation matrix for all the variables in the study. table 5. correlation matrix. variables da mo io oc fg fs da 1.000 mo 0.659 1.000 io -0.642 -0.943 1.000 ownc 0.502 0.565 -0.704 1.000 grw -0.401 -0.160 0.423 -0.620 1.000 fsize 0.788 0.922 -0.881 0.549 -0.361 1.000 4.2. correlation analysis firm size was found to have a significant negative correlation with ownership concentration. this is given a correlation coefficient of -0.881. institutional ownership was found to have a significant negative correlation with managerial ownership. this could possibly mean that a rise in institutional ownership is bound to see a decline in managerial ownership. this is despite that it is expected that institutional investors are bound to asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 22 © 2022 by the authors; licensee online academic press, usa promote managerial incentives that align the management interests to their interests. these findings dissent with those of alzoubi (2016) whose findings indicated a positive correlation between institutional ownership and managerial ownership. alzoubi (2016) indicated that institutional owners opt for incentivized managers through such approaches as stock ownership to ensure that they remain focused on the core goal of maximizing shareholders’ wealth. only firm size, though a control variable was found to have a significant positive correlation with discretionary accruals. 4.3. model specification tests 4.3.1. multicollinearity the study adopted variance inflation factor to test for multicollinearity. multicollinearity is bound to lead to biased results. table 6 presents the variance inflation factors (vif) for all predictor variables. table 6. multicollinearity testvariance inflation factor. variable vif i/vif mo 4.203 0.238 ownc 2.319 0.431 io 3.081 0.325 fsize 1.082 0.924 grw 4.048 0.247 mean vif 2.947 the vif for all the variables were found to be below 5.0 depicting low level of multicollinearity. 4.3.2. test for heteroscedasticity the clrm assumes equal variance of errors, homoscedasticity. conversely heteroscedasticity means that there is unequal variance of errors. deploying breusch pagan test, the findings indicated a p value of 0.0791 depicting absence of heteroscedasticity. this is given that the p value was higher than 5% significance level. table 7 presents results ofc the breusch test of heteroscedasticity. table 7. breusch pagan test of heteroscedasticity. statistic value chi2(2) 5.07 prob>chi2 0.0791 4.3. regression analysis the study deployed the random effects model and the results were as summarized in table 8. table 8. random effects regression. random effects gls regression number of obs. 76 group variable: id number of groups 8 r-sq: within 0.0392 obs per group: min 6 between 0.0023 avg 9.75 overall 0.0089 max 10 wald chi2(3) 1.78 corr (u_i, x) 0 (assumed) prob>chi2 0.8052 da coef. std err z p>z [95% conf. mo -0.00174 0.0144 0.12 0.904 -0.0301 io 0.0117 0.0392 0.3 0.766 -0.0652 ownc 0.0036 0.0041 0.86 0.388 -0.0045 grw -0.00004 0.0006 0.07 0.941 -0.0011 fsize 0.0043 0.0027 1.58 0.115 -0.0010 (the variables symbols are as indicated in table 2research variables (dadiscretionary accruals, mo managerial ownership, ioinstitutional ownership, owncownership concentration, grwfirm growth, fsizefirm size). the study findings indicated that managerial ownership has no significant effect on earnings management as proxied by discretionary accruals. this was given a p value of 0.904 higher than the 5% significance level. the findings dissented with those of nor et al. (2020); hessayri and saihi (2015) and alzoubi (2016) which established that insider managerial significantly diminish cases of earnings management. alzoubi (2016) indicated that managerial ownership is not only critical in curbing earnings management but also in promoting asian themes in social sciences research 2022, vol. 6, no. 1, pp. 12-24 23 © 2022 by the authors; licensee online academic press, usa diligence in investments and risk management. however, it should be noted that there are other incentives such as bonuses and better compensation which could dissuade managers from engaging in earnings manipulation. the study findings indicated that institutional ownership has no significant effect on earnings management as proxied by discretionary accruals. this was given a p value of 0.766 higher than the 5% significance level. it should be noted that most important is the skills and capability of the majority shareholders to provide control and oversight over the management. lack of requisite capacity to exercise control could still see instances of earnings management/manipulation. the findings agreed with those of sousa and galdi (2016) which indicated an insignificant effect of ownership concentration on earnings management in listed entities in brazil. however, the findings dissented with those of usman and yero (2012) and swai and mbogela (2016) which established a negative effect of ownership concentration on earnings management. these studies held that majority shareholders keep to closely monitor day to day activities as they stand to lose massively should the management engage in any form of malpractice. however, this depends on their capacity to exercise control and oversight. the study findings indicated that ownership concentration has no significant effect on earnings management as proxied by discretionary accruals. this was given a p value of 0.388 higher than the 5% significance level. the findings however dissented with most previous studies such as swai and mbogela (2016); alzoubi (2016) and hessayri and saihi (2015) which established a significant negative effect of institutional ownership on earnings management. this is holding that institutional investors come with experience critical in offering quality oversight over the management of the firm. however, the findings of this study indicated low level of discretionary accruals which means that this may not be a significant issue for the listed manufacturing firms. the two control variables (firm growth and size) were found to also not have any significant effect on earnings management. 5. conclusion and recommendations 5.1. conclusion the main aim of this study was to examine the effect of ownership structure on earnings management. a review of literature indicated that ownership structure as a component of corporate governance is critical in curbing instances of earnings management in listed entities across the globe. the main components of ownership structure studied included ownership concentration, managerial ownership, and institutional ownership. the study findings established that managerial ownership, institutional ownership and ownership concentration have an insignificant effect on earnings management. theoretically managerial ownership is expected to align the interests of the management to those of the shareholders. the management work towards that which will be beneficial to all shareholders as any deviations could also adversely affect their wealth. this is especially that previous cases of earnings management that have been unearthed have adversely affected shareholders’ wealth. however, the findings established that managerial ownership has no effect on earnings management. while institutional ownership has been cited to be critical in curbing cases of earnings management due to the experience and knowledge of institutional investors, the study established institutional ownership has no significant effect on earnings management. it has been held that the institutional investors are able to promote robust internal controls that help to seal loopholes that could be exploited by the management to manipulate earnings. in summation, ownership structure was found to have no significant effect on earnings management. 5.2. recommendations while all the components of ownership structure were found to have no significant effect on earnings management, their importance cannot be overlooked. however, they need to complemented by other core components of corporate governance notably board independence and avoiding instances of ceo duality. most pertinent is to ensure that proper internal controls are put in place to seal loopholes that could be exploited by the management to manipulate earnings. references alareeni, b. 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(2013). corporate governance, firm characteristics and earnings management in an emerging economy. journal of applied management accounting research, 11(1), 43-64. http://www.reuters.com/article/us-usa-sec-luckincoffee-iduskbn28q34p http://www.theeastafrican.co.ke/tea/news/east-africa/kenya-firms-post-false-company-results-study--1316672 http://www.theeastafrican.co.ke/tea/news/east-africa/kenya-firms-post-false-company-results-study--1316672 http://www.forbes.com/sites/ywang/2020/04/10/china-stocks-face-increased-scrutiny-after-tal-education-and-luckin-coffee-reveal-inflated-sales/?sh=37df69cd51b2 http://www.forbes.com/sites/ywang/2020/04/10/china-stocks-face-increased-scrutiny-after-tal-education-and-luckin-coffee-reveal-inflated-sales/?sh=37df69cd51b2 asian themes in social sciences research issn: 2578-5516 vol. 9, no. 1, pp. 1-8 2025 doi: 10.33094/atssr.v9i1.2356 © 2025 by the authors; licensee online academic press, usa accepted: 10 november 2025 | published: 28 november 2025 1 © 2025 by the author; licensee online academic press, usa economic system efficiency in the history of economic thoughts: tracing ideas from a. smith to j. stiglitz amira hakim1,2 1lps, fs, university of sfax, tunisia. 2isigk, university of kairouan, tunisia. 1,2email: hkmamira@gmail.com abstract the economic system is a set of institutional arrangements used for the repartition of resources. the economic systems are identified in function of their characteristics such as law of ownership, informational mechanisms, levels of responsibilities, authority of taking decision, and the incentive arrangements. the economic systems are considered as spectrum of arrangements for the types of economic systems such as decentralized, capitalist, incentive, social planned. the dichotomies within these systems bring us to the question to understand the differences between these types of systems and modelling the phases of transition towards an efficient system. we are using within this synthesis the historical economic thoughts analysis to diagnosis the transition towards an efficient economic system. keywords: coordination, economic system, efficiency, history of economic thoughts, crisis, transition. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. institutional review board statement: not applicable. transparency: the author declares that the manuscript is honest, truthful and transparent, that no important aspects of the study have been omitted and that all deviations from the planned study have been made clear. this study followed all rules of writing ethics. competing interests: the author declares that there are no conflicts of interests regarding the publication of this paper. 1. introduction in stiglitz (2003) addresses in his book « globalization and its discontents » the dilemma of the importance of the neoclassical model in the new contemporary economy, writing the following: « …behind the free-market ideology there is a model, often attributed to adam smith, which argues that market forces—the profit motive—drive the economy to efficient outcomes as if by an invisible hand. one of the great achievements of modern economics is to show the sense in which, and the conditions under which, smith’s conclusion is correct. it turns out that these conditions are highly restrictive. indeed, more recent advances in economic theory—ironically occurring precisely during the period of the most relentless pursuit of the washington consensus policies—have shown that whenever information is imperfect and markets incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly. significantly, there are desirable government interventions which, in principle, can improve upon the efficiency of the market. these restrictions on the conditions under which markets result in efficiency are important—many of the key activities of government can be understood as responses to the resulting market failures (stiglitz, 2003). such an assertion pushes back against the contradictory troubles of modern economics with the new theory, previous theories, and the standard theory on the one hand, but also highlights the similarity between traditional theory and those that followed. https://www.doi.org/10.33094/atssr.v9i1.2356 mailto:hkmamira@gmail.com asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 2 © 2025 by the author; licensee online academic press, usa the purpose of this article is to explore some lines of reflection to interpret adam smith’s statement when he declares the idealism of the neoclassical theory for the efficiency of the economic system, and to critique the theories that came after him up to stiglitz: how can the efficiency of an economic system be achieved and how do the mechanisms of transition toward an efficient economic system for emerging countries operate according to theories? the ambition of this article is also to limit itself to some working hypotheses or interpretations. furthermore, we will restrict ourselves to treating the analyses of smith and classical theory itself, and not the new classical theories in their entirety. we will propose five complementary lines of reflection. starting from the theory of the firm, which considers the firm as an organization and the economic system as a set of institutional arrangements where internalized coordination has become the major tool according to coase for the transition toward an efficient system. the economics of information as the management and manipulation of market conditions to achieve an efficient system, in which laffont (1984) was involved, treating information problems as a policy to attain system efficiency. continuing toward the general equilibrium pareto-walrasian theory and the major problem of state intervention to calibrate the market toward an optimum to reach efficiency. and finally, approaching the kuznets curve with real cases of transition toward an efficient system in which the classical theory was applied differently. throughout these lines of reflection, we have maintained stiglitz’s analysis for each line. 2. classical theory targeting the idealism of the economic system in our era, the theory of the firm opens the most progressive horizon of research as an object of study. to justify and specify the existence of the firm and its internal organization, economic theory studies the firm. initially, the firm was considered a black box. with the consideration of actor behavior, the firm becomes an organization. thus, economic analysis develops transaction cost theory and agency theory and assimilates the firm to a nexus of contracts. to begin, i would like to invite you to emphasize the basic assumptions of neoclassical thought. since time immemorial, we have been taught that neoclassical theory rests on a set of assumptions such as: market atomicity, product homogeneity, freedom of entry, perfect transparency, and mobility of production factors. therefore, traditional theory considers the firm as a black box, one “that was long refused to be opened” (rosenberg, 1982) a profit-maximizing agent by assuming its internal conditions. it supposes that transaction costs are zero, technological opportunities are known, forecasts are perfect, and information is complete, free, and perfect (you did not pay a price to obtain information about relevant market prices). once these assumptions are verified, full employment, price stability, economic growth, etc., are ensured. stiglitz (2012) advocates that the efficiency of a system depends on market functioning, and any market intervention alters equilibrium; in other words, the efficiency of a system can be altered by other organizations. citing the example of unions, the neoclassical model tells us that social divergences are resolved by the market through exit-entry mechanisms, and thus an efficiency regime is attained. others say that to resolve the problem of divergence, recourse to unions is necessary. however, for the classical economists, unions are imperfections, distortions... so how can one make the union a collective body expressing individual preferences? the solution is the following: since for the classicals the union is a monopolistic entity opposing efficiency and an exogenous intervention that prevents efficiency, if we consider the union as a collective body expressing individual preferences and therefore a source of efficiency under certain assumptions, we come to solve the problem of externalities and free-riding and lead to efficiency under certain assumptions. thus, the neoclassical model leads to efficiency if i inscribe it in another theoretical universe. so, with reference to arrow, the conclusions of neoclassical models are obviously valid only under particular assumptions, and may well be far too simplistic regarding the economic world and individual preferences. so, the neoclassical assumptions are overly simplistic; must we still take this into consideration? according to the reference model, economic efficiency means that the invisible hand works; that is to say, referring to the invisible hand, the market represents a regulatory model spontaneously leading to optimal efficiency based on market coordination. moreover, market coordination is realized through the conflict of individual interests (egoisms) which result in the general interest from a system of prices: in the neoclassical market, there are thousands of sellers who do not know each other’s existence; what attracts entry to this market is the price system (pricesignal) through the game of supply and demand. in fact, smith tells us in his major work the wealth of nations that «.. it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. we address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages» thus, for smith, the invisible hand is a sine qua non condition for the efficiency of the economic system. however, for the invisible hand to function, the underlying assumptions must be verified. but do the underlying assumptions of the invisible hand hold? nevertheless, this model has limits, including that some transaction costs are positive and the degree of uncertainty is significant. as long as the assumptions are unrealistic, then why consider it as a referential framework for the analysis of an economic system? there is no better theoretical model and scientific approach in the 20th century infallible than the neoclassical model. however, it is disconnected from its object of study. when the neoclassical model talks to us about resource allocation, theoretical assumptions are required although it is unclear what optimal resource allocation means; it is independent of its object. asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 3 © 2025 by the author; licensee online academic press, usa 3. the general equilibrium theory and the efficiency of the economic system general equilibrium theory is based on normative analysis. more precisely, it concerns specifying the behavior that consumers must adopt to maximize their utility under budget constraints, and producers to maximize their superprofit. but is this distribution good or bad, efficient or not? pareto’s contribution was to provide an answer to this question after defining an evaluative criterion. this criterion allows multiple optima to be identified but cannot decide between them. we use the edgeworth diagram which allows choosing which optimum among all pareto optima is preferable, meaning it allows selecting the best among better states. pareto optimum1 is analyzed by welfare economics and is defined as the state in which one cannot improve the situation of one individual without simultaneously deteriorating the situation of another. pareto (1917) states his criterion as follows: when a community is at a point q from which it can move to increase the well-being of all individuals, it is clear that, from an economic perspective, one should continue to move in that direction as long as everyone benefits. only upon reaching a point p, where further improvement for all is impossible, must other, non-economic considerations be taken into account». point p corresponds, for pareto, only to the social state ensuring the maximum welfare for the community. more precisely, provided certain conditions are met, the mere play of market mechanisms animated by agents who only have their self-interest in mind leads to a situation satisfying this efficiency criterion, meaning that the market equilibrium without the state constitutes a pareto optimum, so the state appears as the one disturbing the ideal order of the market. the pareto optimum changes depending on the initial feasible state, but this initial feasible state is a certain distribution of resources. it should be emphasized that the question of resource allocation is intimately linked to the question of resource distribution. this means that efficiency and justice are connected. however, the question of justice and equity is not taken into account by the reference model: productions are remunerated at their marginal productivity, which is the marginal calculation principle. more precisely, according to simonet (2006) for pareto, it is appropriate to separate questions related to the efficiency of the system, which can be studied subjectively according to him, from questions concerning equity or social justice, which require value judgments that the economist should not impose. the theory of correspondence between general equilibrium and the pareto optimum tells us that there exists an equilibrium price system that renders the behaviors of all agents compatible. this is based on the two welfare theorems which constitute the foundation of liberal thought. the first theorem states that a competitive equilibrium of private property, if it exists, is a pareto optimum. j.j. laffont explains this theorem as follows: it is sufficient that the signals represented by equilibrium prices coordinate decentralized economic activities in a manner that is satisfactory according to the pareto criterion. each economic agent, through their individual maximization behavior, adjusts to the price system by equating the marginal rates of substitution and transformation with the corresponding price ratios. since all agents face the same price system, at equilibrium all marginal rates are equal to one another. these equalities, together with market equilibrium, effectively characterize the pareto optima within a convex framework. more precisely, prices are sufficient signals to coordinate decentralized economic activities satisfactorily according to the pareto criterion. the second theorem states that if the usual convexity assumptions are verified, and if q is a pareto optimum, then there exists a price vector p such that q is an equilibrium at price p. this theorem is explained by laffont (1984) as follows: regardless of which pareto optimum corresponds to a given criterion of justice, it can be decentralized as a competitive equilibrium, provided that agents’ incomes are appropriately assigned; that is, in a private-property economy, conditional on the implementation of suitable lump-sum transfers among the agents. the optimum can be decentralized; we can find a price system p and incomes r such that each consumer maximizes utility choosing respectively the vectors x corresponding to the optimum. so, if there is correspondence, this system leads to an equilibrium price system characterized by uniqueness, stability, and existence, and this point corresponds to a situation that society collectively optimizes. therefore, the welfare theorems are proof that adam smith’s invisible hand indeed exists and that the market is the most efficient way to allocate goods among individuals. this is the formal and rigorous proof that neoclassical authors have provided to justify the non-need for the state in the economic sphere of the neoclassical model. it is the foundation of liberal ideology and the incontestable superiority of the neoclassical model. so, what justifies the intervention of the state in economic decisions? nothing—if there is no longer this correspondence, there is no longer justification for sidelining the state. when we consider a group of individuals, each optimizes by maximizing their individual interest; if there is no maximization, then there is room for the state. however, the neoclassicals did not completely close the door to the state. this is what economists have acknowledged—that the state must intervene under certain conditions. what are the situations identified by the neoclassicals in which they break this correspondence? when a hypothesis is not verified. these hypotheses lead to insufficiencies. moreover, these lead to the shortsightedness of agents in their ability to foresee the future (pigou). 1 vilfredo pareto did not introduce the concept of pareto optimum under this name in his own writings. however, in his work manuale di economia politica published in 1906, he developed the foundations of what would later become the concept of pareto efficiency. pareto was interested in the manner of optimizing the allocation of resources and in maximizing social welfare. “si una parte degli uomini trae da un dato cambiamento un utile, mentre nessun’altra ne riceve danno, c’é un aumento della funzione colletriva del benessere”. asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 4 © 2025 by the author; licensee online academic press, usa in fact, all decisions made by economic agents are projected into the future—yet the future is uncertain. situations of indivisibility of goods and externalities (positive or negative) are cases in which the market fails. in other words, we accept to see that there is a part ignored by the walraso-paretian model, such as indivisibility of goods and externality. in the presence of these two situations, there is a divergence between the private tmst and the social tmst, and between the private tmst and the social tmst; and the general equilibrium does not correspond to the pareto optimum. moreover, external effects—defined as « any indirect effect of a production activity or a consumption activity on a utility function, a set of consumption, or a set of production » (laffont, 1984)—do not pass through the market. similarly, indivisible goods do not correspond to the principle of marginal calculation, whereas the model prevents non-marginal calculation. there is no contradiction among the hypotheses forming the axiom of construction of the neoclassical model. let us take returns as an example; if returns are increasing, we cannot define a single equilibrium. so, the model is coherent—but to what extent does the model capture the entire economy today? if the model captures only part of the real world, then the model is not relevant. in fact, the hypotheses are unrealistic: rationality is limited, information is imperfect, capacities are heterogeneous… so why this model? why construct this model as long as it ignores a real part of the economy? there is no more flawless theoretical model or scientific approach in the 20th century than the neoclassical model. economists have understood that neoclassical theory produces an elastic neoclassical model. samuelson (1955) state that we can make an extension of the neoclassical model». marxism is a critique of the neoclassical model and not a school of thought. in fact, from these critiques they created the regulation school. the keynesian widened the capitalist economy and exposed the shortcomings of the neoclassical model and justified exogenous state intervention. neoclassical theory represents 99.99% of today’s economic theory. let us return to the notion of correspondence. market mechanisms are failing because they only take into account the monetary dimension, leaving aside everything that escapes the logic of profit—this characteristic of the market, in addition to the already mentioned market failures, would justify state intervention. the state can intervene to restore this correspondence, to compensate for market failures—everything that causes general equilibrium to deviate from the pareto optimum. as a consequence, there is no correspondence between ge (general equilibrium) and the pareto optimum. everything that deviates from the walraso-paretian norm is an imperfection and causes a break between collective optimum and the pareto optimum. the state intervenes to correct this correspondence or to bring general equilibrium back. it will intervene according to the walraso-paretian logic. its instruments must be walraso-paretian instruments and coherent with the microeconomic instruments of the reference model. what type of intervention is consistent with the walraso-paretian model? the price must equal marginal cost. if the price is not equal to the marginal cost, its intervention will not be coherent with the walraso-paretian rules and will further deviate general equilibrium from economic optimum. in fact, it is enough that one agent does not apply the rule for us not to reach general equilibrium and, as a result, the correspondence between general equilibrium and the pareto optimum is broken. let us pause on the example of public goods. the state will produce the goods that are not marketable; it will price these goods using the same rule p = mc. if we do not apply this rule, this will deviate from the correspondence. faced with this failure, the state will intervene by introducing a tax intended to finance this good. general equilibrium is normative—this is how the state intervenes without necessarily asking whether it can actually achieve that in practice. some economists tell us that the costs generated by public intervention to compensate for market failures may sometimes exceed those arising from the free functioning of the market. thus, both the state and the market constitute imperfect organs for regulating economic activity. 4. coase: the theory of the firm and the efficiency of the economic system stiglitz (2012) stipulates that public authority, like markets, is subject to a range of imperfections, resulting in state failures that are as significant as market failures. this underscores the necessity for the state and markets to cooperate and complement one another, with each offsetting the weaknesses of the other while leveraging its respective strengths. others say that a failing state, instead of correcting market failures, adds to them, and consequently disrupts market efficiency. when we define efficiency, is it the totality of macroeconomic objectives? is it the total utility? assuming that efficiency is the sum of utility, then humans and animals are endowed with the same utility. in fact, it is generally accepted that « economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses» (robbins, 1935). however, according to coase (1937) in reality, since humans are not the only animals capable of choice, it should not be surprising that this approach can also be applied to rats, cats, or octopuses, all of which, without a doubt, are engaged in maximizing their utility, just like humans. the fact that it has been shown that price theory is applicable to animal behavior is therefore not accidental. thus, the neoclassical model resides more in its epistemological approach than in its object. it is enough to relax a single hypothesis for individual interest to no longer lead to the social optimum. in this logic, individual interest runs counter to the general interest, as demonstrated by the prisoner’s asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 5 © 2025 by the author; licensee online academic press, usa dilemma in game theory. coase2 tells us: “you are not dealing with the real world; you are dealing with a blackboard model.” substantive rationality, one of the foundations of the classical model, is too disconnected from reality. coase wanted to inject some realism into the neoclassical model. more precisely, coase sought to minimize the distance between the blackboard economics and the real world by highlighting the operating cost of a general price system and the social cost. if we relax the hypothesis that the firm is a black box, we enter the box. according to samuelson, “it takes a theory to kill a theory”; another conceptual theory was needed to open the box. coase introduced “transaction costs” — the key to opening and entering the box. to do this, we must consider that information is not perfect, technological opportunities are unknown, the level of uncertainty is high, and agents’ capacities are heterogeneous. according to coase, transaction costs are the costs that allow mutually beneficial exchanges between two or more individuals. these transaction costs generated by coordination can be classified into three categories: information search costs, negotiation and decision-making costs, and monitoring costs, which he supports by stating: when one wishes to carry out a transaction in a market, it is necessary to search for one’s counterpart(s), to provide them with certain necessary information, to set the conditions of the contract, to conduct negotiations thereby establishing a genuine market for concluding the contract, and to put in place a structure to monitor the respective fulfillment of obligations, etc.. this approach assimilates the firm to “a nexus of contracts.” it is analyzed as a form of organization to substitute for transaction costs. azariadis and stiglitz (1983) tells us: earlier theories simply assumed that redirecting and enforcing contracts incurred no costs. all of this is far from the real world: contracts are often ambiguous, they give rise to countless disputes, legal procedures are extremely costly, and most economic transactions are not governed by any formal contract. under these conditions, it is often implicit contracts, tacit agreements, or social norms that allow society to function properly. coase wanted the firm to evolve while being based on his well-known theorem, which advocates: « … a firm tends to grow until the costs of organizing an additional transaction within the firm become equal to the costs of carrying out the same transaction through a market exchange or to the organizational costs in another firm.» (coase, 1937). this means that replacing the market with an organization is only relevant when transaction cost savings exceed organizational costs. therefore, the theory of transaction costs strengthens the neoclassical model and corrects market coordination because market coordination is costly. it relies on a central idea: the chosen institutional arrangement will be the one that minimizes both transaction and production costs. hence, « markets appear as institutions designed to facilitate exchange, that is, their function consists in generating savings on the costs of carrying out transactions. » (coase, 1937). for coase, efficiency is not just about the price mechanism. he emphasized positive and negative externalities. one cannot imagine an economic reasoning that assumes the absence of externalities. in fact, by considering these externalities, what was once a flaw in the neoclassical model becomes a factor. let us return to the example of trade unions. because unions become a collective organ for expressing individual preferences, the free-rider problem — which is costly to the economy in terms of efficiency — can be resolved. thus, coase’s contribution regarding social cost is to integrate law into the functioning of an economic system, meaning that what is exchanged on the market is not physical entities, but property rights. coase also spoke about the role of the entrepreneur in the efficiency of the economic system. this idea is not new. schumpeter3 discussed the entrepreneur’s role in efficiency, stipulating the following idea: for a firm to survive, it must manage intangible resources internally. as our knowledge becomes obsolete, it must be adaptable to an unpredictable economic environment, requiring responsiveness to generate competencies — in which the entrepreneur plays a major role in the process of innovation and competence creation. according to standard theory, system efficiency involves the existence of two siamese twins: privatization and competition. if i privatize in the textbook sense, we simply move from a public black box to a private black box — as if nothing has changed. so, where is the efficiency? if i privatize on the assumption that efficiency is the archetype of the market, i give no role or existence to the firm in coordination. in fact, the neoclassical model does not theoretically imply the existence of the firm. according to stiglitz: “standard neoclassical theory argues that for a market economy to work well (to be pareto efficient), there must be both competition and private property (the 'siamese twins' of efficient wealth creation). both are required, and clearly, if one could wave a magic wand and instantaneously institute both, one would presumably do that. the issue, however, concerns choices: if one cannot have both, should one proceed with privatization alone?”. so, stiglitz aimed to explain that, to achieve pareto efficiency, the system must include both siamese twins. and if one is missing, can the system reach efficiency on its own? looking closely, privatization is not about transferring assets — it is about transferring wealth. where wealth is involved, profit is involved, and the state may lead to “regulatory capture” — a corruption mechanism. according to coase, if we consider privatization through the neoclassical lens, it does not lead to efficiency. 2 "it can, i think, be assumed that the distinguishing mark of the firm is the supersession of the price mechanism. instead of the allocation of resources being determined by the price mechanism, it is the entrepreneur who directs production. [...] the fact of direction consists in deciding the movements of the resources concerned and in deciding the terms on which this is done. the operation of a market costs something and by forming an organisation and allowing some authority (an entrepreneur) to direct the resources, certain marketing costs are saved." 3 "innovation is the key to economic efficiency. it is not limited to the introduction of new products but also encompasses new methods of production, new markets, and new forms of organization. [...] it is through innovation that companies increase their productivity and improve their competitiveness." asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 6 © 2025 by the author; licensee online academic press, usa thus, we need an institutional architecture supported by legal rules; otherwise, we face corruption, and thus a loss of efficiency. therefore, the argument that privatization inherently leads to efficiency falls apart. privatization should lead the firm toward the economy of organizations. hence, the economic system would be, by definition, a set of institutional arrangements (contracts, relationships, firms). if we stop at this definition, we step outside the neoclassical framework. we cannot use it because institutions have no place in the neoclassical model — and because the model itself poses an analytical problem. but that does not mean rejecting the neoclassical model altogether, because efficiency requires coordination. but is it market coordination? we will graft another type of coordination onto market coordination — internalized coordination: contracts between workers and executives, between hierarchy and employees. however, with internalized coordination comes problems of observability, supervision, control, and authority — hence the need for agency theory and incentive theory. according to these theories, for a firm to be efficient, it must manage issues of supervision, adverse selection, moral hazard, opportunism, and hold-up. let us consider two types of problems. akerlof4 tells us that information asymmetry is a source of blockage and generates two major problems in economics: adverse selection and moral hazard. in general, these informational problems prevent the optimal allocation of resources unless all information is common knowledge. thus, to allocate resources optimally, the contract must make the agent reveal private information, and consequently, the agent must receive informational rents, which are generally costly for the principal. stiglitz (2012) tells us: « the smithian logic seemed to suggest that morality had no role to play, that virtues such as loyalty and good faith carried no weight. adam smith, aware of the limits of markets, knew that this was not the case. modern economics has shown why economic systems in which these virtues prevail function better in the real world than those in which they are absent». thus, agency theory emerged as an application of the neoclassical analytical framework in which information asymmetries appear between agents, while retaining the assumption of substantive rationality. in fact, this theory is needed within the firm because coase’s individual is endowed with bounded rationality. this theory is based on the principal–agent principle, in which the relationship is defined as follows: there is an agency relationship when one person, called the agent, acts on behalf of another person, called the principal, who is imperfectly informed. the theory of the firm is central to this relational approach. in practice, since managers are better informed than shareholders about the firm’s quality, a transmission mechanism must be established to allow risk-takers to engage in various business projects. how can we ensure proper transmission of this information? by formulating incentive mechanisms that lead to the truthful revelation of project quality. the agent must be incentivized to send an informative signal about the value of their firm. according to maskin and laffont, for an incentive mechanism to be effective, it must also include rewards and penalties to discourage the agent from sending unfavorable signals (e.g., unemployment as a threat for workers). 5. the contemporary process of transition toward an efficient system according to the standard model in general, it is admitted that the neoclassical model is a weak tool for analyzing economic systems. however, in theoretical terms, the neoclassical model is infallible if all its underlying assumptions are verified. what are the empirical conditions of efficiency? one must still ask: does the real world conform to theoretical assumptions? to answer these questions, stiglitz provides us with two examples of successful and failed economic systems: russia and china. to understand these two experiences, we will first present a brief summary of the main economic crises since 1975, alongside the nature of these systems. since that date, the socialist regime, either soviet-style or chinese, was the most dominant worldwide. during the same period, the western world experienced two oil shocks, recession, and stagflation. the rest of the world tried to generate economic growth and then development. latin america, africa, and asia did not achieve the expected growth rates. however, japan stood out during that period in terms of growth and development. in 1995, the soviet empire disintegrated, the two germanies reunified, the communist bloc no longer existed as an external control organization, china became a growth champion, and markets in asia and latin america turned into global investment hubs. to understand the two examples presented by stiglitz, china and russia, we will make a comparison of how both economies attempted to use the neoclassical "recipe" to transition toward an emerging economy. in fact, in the chinese experience, one must refer back to comparative systems to grasp the system change. the disparity between failure and success is so large: here are two systems that attempt to apply the neoclassical recipe at the same time—one manages to make the invisible hand work, and the other does not. china and russia were characterized by centrally planned economies. these countries moved toward the market to decentralize their economies, following recommendations from the neoclassical framework. china succeeded in its transition. in fact, there was a significant increase in its gdp, from 300 billion usd to 700 billion usd between 1989 and 1997. meanwhile, russia experienced a dramatic decrease in wealth during the 4 " information asymmetry is a fundamental problem in principal–agent relationships, where the principal cannot observe the efforts or actions of the agent. this creates an imbalance that can lead to adverse selection, where the principal struggles to distinguish high-quality agents from low-quality ones. furthermore, moral hazard arises when the agent, due to the absence of effective monitoring, may take excessive risks, knowing that they will not bear the full consequences of their actions. to address these issues, it is essential to design incentive-compatible contracts that align the interests of the parties, while accounting for information costs and the necessary incentives to ensure that the agent acts in the best interest of the principal." asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 7 © 2025 by the author; licensee online academic press, usa same period. russia managed to privatize most of its economy. however, coase tells us that privatization does not mean self-regulation, but rather transaction costs and organization. therefore, an efficiency indicator is absent. (stiglitz, 1999) tells us in whither reform that gross investment is a key and crucial indicator of an emerging market economy, and it is the state that provides the necessary investment conditions, such as a sound legal system. in fact, without a legal system, the economic system collapses, as clearly shown during the subprime financial crisis. referring to russia, the volume of investment dropped dramatically, and russia became a late-developing economy. the failure in russia was so significant that the kuznets model5 was reversed. it is generally accepted that income distribution during economic development follows the inverted u-shaped (kuznets, 1955) according to which inequality increases in the early stages of development and then declines. therefore, the key to russia's efficiency lies in improving living standards and establishing a foundation for sustainable and inclusive development with fewer social disparities. coase (1937) states that « these formerly communist countries are encouraged to adopt a market economy, and this is what their leaders desire; however, in the absence of appropriate institutions, even a minimally functional market economy is impossible. ». the results of these transitions are mixed. the neoclassical model does not apply universally. its universal character is not confirmed—it is essential to consider geopolitical positions, ethnic compositions, and natural resource endowments. the neoclassical model cannot be used as an intellectual framework for evaluating the efficiency of economic systems in countries with different physical capital endowments. it is a weak tool for analyzing efficient economic systems. "a failure arising in part from the neoclassical model itself" (stiglitz)—this sentence alone shows that the inefficiency of an economic system is partly attributable to the neoclassical model itself. stiglitz raises the following questions :« what type of market economy do they wish to create? american-style capitalism or a more humane, softer swedish-style capitalism? on a globalized planet, must we all march in step? what room is there for diversity?». drèze (1985) responds to almost all of stiglitz's questions. in fact, drèze (1985) tells us that a market model does not imply a market economy, meaning that a market economy is not the absence of the state—but rather, what kind of state? it is a regulatory state. if the neoclassical model’s precepts were the recipe for efficiency, one would wonder how an economic system in which the state’s share of gdp exceeds 70%—namely sweden—could be considered the most efficient market economy. drèze (1985) affirms that the state plays an essential positive role in development, stating: we cannot expect the market to provide social security, ensure universal education, manage urban planning, protect the environment, reduce social inequalities, guarantee children’s vaccination, preserve the integrity of the legal system, or even ensure effective regulation of private enterprises. i am tempted to add that we also cannot expect the market to ensure the transition to a market economy ». stiglitz (2012) argues that « a battle of ideas is underway: some wish to reduce the state to a minimal role, while others recognize its important function, even with its limitations, in correcting market failures and advancing social justice. i count myself among the latter, and i intend here to show that markets, even if they are at the heart of our economic success, do not always function properly on their own, that they do not solve all problems, and that the state will always be an important partner for them ». he adds that in the context of globalization, economic conditions evolve, and the state must abandon old tasks and take on new ones. however, pigou asserts that public intervention only appears as a corrective and regulatory action if—and only if—the economic system is marked by dysfunctions. he adds: « we cannot indeed hope that any public authority will achieve, or even sincerely strive for, this ideal. such authorities are equally subject to ignorance, to pressure from a class, and to corruption of individuals by private interests ». in whither reform: ten years later, stiglitz asserts that if the ad (aggregate demand) model were correct, we would expect the market to self-regulate (provide social security, ensure universal education, engage in urban planning, protect the environment, effectively regulate private firms, etc.). thus, all countries transitioning to market economies would have succeeded and should, for instance, have reduced poverty. however, looking at a system like russia’s, we observe that the market did not guarantee the transition to a market economy—just the indicator of market economy performance decreased. this means that without state intervention, one cannot successfully transition to a market economy. nevertheless, i firmly believe that the neoclassical model remains a valid and infallible reference point—if there is a failure, it is because of an externality that distorts equilibrium. it is not the neoclassical recipe itself but the circumstances of transition. references azariadis, c., & stiglitz, j. e. (1983). implicit contracts and fixed price equilibriaa. the quarterly journal of economics, 98, 1-22. https://doi.org/10.2307/1885373 5 "the relationship between the level of economic development and income inequality can be understood by considering that, in the early stages of development, investments and economic opportunities are concentrated in specific sectors, leading to increased inequality. however, as the economy diversifies and education improves, broader segments of the population begin to benefit from growth opportunities. this ultimately leads to a reduction in income inequality, thereby illustrating a cycle of economic transformation." https://doi.org/10.2307/1885373 asian themes in social sciences research 2025, vol. 9, no. 1, pp. 1-8 8 © 2025 by the author; licensee online academic press, usa coase, r. h. (1937). the nature of the firm. economica, 4(16), 386–405. https://doi.org/10.1111/j.14680335.1937.tb00002.x drèze, j. h. (1985). the firm in general equilibrium theory. the economic journal, 95(379), 1–19. kuznets, s. (1955). economic growth and income inequality. the american economic review, 45(1), 1–28. laffont, j.-j. (1984). information imparfaite et rationalité collective. revue economique, 35(1), 163-176. https://doi.org/10.2307/3501590 pareto, v. (1917). treatise on general sociology. lausanne: f. rouge. robbins, l. (1935). an essay on the nature and significance of economic science (2nd ed.). london: macmillan. rosenberg, n. (1982). inside the black box: technology and economics. cambridge, uk: cambridge university press. samuelson, p. a. (1955). readings in economics. new york: mcgraw-hill. simonet, m. (2006). the non-profit sector: between work and commitment.” in a. alter (ed.), sociology of the world of work (pp. 191–207). paris: presses universitaires de france. stiglitz, j. e. (1999). whither reform? ten years of the transition. paper presented at the the annual world bank conference on development economics, washington, dc, april 28–30, 1999. washington, dc: world bank. stiglitz, j. e. (2003). when capitalism loses its head. paris: fayard. stiglitz, j. e. (2012). the price of inequality: how today's divided society endangers our future. new york: w. w. norton & company. https://doi.org/10.1111/j.1468-0335.1937.tb00002.x https://doi.org/10.1111/j.1468-0335.1937.tb00002.x https://doi.org/10.2307/3501590 asian themes in social sciences research issn: 2578-5516 vol. 8, no. 1, pp. 1-23 2024 doi: 10.33094/atssr.v8i1.1598 © 2024 by the authors; licensee online academic press, usa accepted: 13 may 2024 | published: 3 june 2024 1 © 2024 by the authors; licensee online academic press, usa external debt and economic growth in selected african economies: a heterogeneous dynamic panel data analysis innocent u. duru1* --okoroafor, o.k. david2 --ehidiamhen, paul o.3 --iyaji danjuma4 -- fortunatus chikeziem okorontah5 --obisike, ndubueze e.6 --chukwuemeka nwamuo7 -- ojo toluwalashe favour8 1,5,6,7department of economics, rhema university nigeria, aba, abia state, nigeria. 1email: iud3x@yahoo.com 5email: chizim4teens@yahoo.com 6email: obisikendubueze@yahoo.com 7email: mekuzy2002@yahoo.com 2,3department of economics, university of abuja, abuja, nigeria. 2email: okoroafor@uniabuja.edu.ng 3email: ehiobohpaul@yahoo.com 4department of economics, nigerian army university, biu, borno state, nigeria. 4email: danjumaiyaji@gmail.com 8ado-ekiti state university, ekiti state, nigeria. 8email: ojotoluwalashe1995@gmail.com abstract the nexus between external debt and economic growth of ghana, kenya, morocco, nigeria, rwanda, tunisia and zimbabwe from 1981 to 2021 was examined in this study. for analysis, the pooled mean group heterogeneous dynamic panel data approach and the toda yamamoto granger causality tests technique were deployed. the results indicated that external debt had a negative effect on economic growth. moreover, debt service exerted a positive impact on economic growth. the findings of the causality tests showed that there is no causal link between external debt and economic growth. furthermore, no causal link was established between debt service and economic growth. as a result, the study suggests that the capacity of these economies in terms of revenue generation and debt servicing should be reinforced by their governments through the channelling of external debt into long-term productive investments for the realization of positive economic growth. moreover, the policies on debt servicing in these economies should be sustained since it is yielding the desired results. furthermore, thoroughly assessed projects of high significance should be the only yardstick for the contraction of foreign loans in these economies. also, the policy objectives of external debt, debt service and economic growth can be pursued separately from one another in this group of economies in africa. keywords: africa, dynamic heterogeneous panels, economic growth, external debt, pooled mean group estimation, toda yamamoto causality. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific funding institutional review board statement: not applicable. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. this study followed all ethical practices during writing. competing interests: the authors declare that they have no competing interests. authors’ contributions: conceptualization, all authors; methodology, software and formal analysis, i.u.d., o.o.k.d.; validation, e.p.o., o.n.e., o.t.f.; investigation, i.d., c.n., o.t.f.; data curation, i.u.d., o.o.k.d., f.c.o.; writing – https://www.doi.org/10.33094/atssr.v8i1.1598 mailto:iud3x@yahoo.com mailto:chizim4teens@yahoo.com mailto:obisikendubueze@yahoo.com mailto:mekuzy2002@yahoo.com mailto:okoroafor@uniabuja.edu.ng mailto:ehiobohpaul@yahoo.com mailto:danjumaiyaji@gmail.com mailto:ojotoluwalashe1995@gmail.com asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 2 © 2024 by the authors; licensee online academic press, usa original draft, i.u.d.; writing – review & editing, c.n., o.t.f., i.u.d.; visualization, o.n.e., e.p.o., i.d., f.c.o.; supervision, o.o.k.d., i.u.d., f.c.o., o.n.e. all authors have read and agreed to the published version of the manuscript. 1. introduction most economies in africa are plagued with a grave burden of external debt thereby making the realization of fast and viable economic growth and development a mirage. thus, the achievement of rapid and worthwhile economic growth becomes their major objective. however, adepoju, salau, and obayelu (2007) argued that the accomplishment of this economic growth is compounded by dwindling capital formation as a result of low investments and savings in these countries. the quest of the government to address this through a deficit budget has resulted in external borrowings. as was cited in tefera (2019) external debt based on the africa economic chart book 2018, will not constitute a great dilemma if contracted debts are committed to viable projects and debt repayments and further investments are addressed through the resulting economic growth. the aid granted to these economies would have been a source of succour in the financing of some of these deficits. however, as stated by muhanji (2010) ‘’much of the aid was used to finance grandiose projects of little economic value and to underwrite economically ruinous policies’’. the external debt-economic growth debate in the economic literature came to limelight after the assertion of reinhart and rogoff (2010) based on a farreaching experimentation of developing and developed economies that debt to gdp ratio of more than 90% is unfavourable to growth. it was further strengthened by the global economic and financial crisis that began in 2007 and affected several countries in the world. tomaselli (2018) argued that the interest and shift in focus on the subject matter of debt to developed economies was reawakened by it. this recession provoked by dwindling prices of houses in the united states and an increasing number of borrowers incapable of repaying their loans resulted in an extraordinary shock to the financial system that led to one of the most noticeable economic cramps after the great depression. financial experts have expressed their concerns over the decisions of some governments in africa to continue borrowing amid their unsustainable debts. most of these governments have not heeded the advice of alexander hamilton that a state debt that is not too much would amount to a state blessing to us. they argued that the governments of these countries need to slow down on borrowing since their external debt stock is unsustainable. thus, like a ticking time bomb, these growing debts need to be defused to avoid an economic earthquake. the external debt problem in the world undertook a critical reputation and drew the attention of policymakers globally in the wake of the mexican debt crisis that began in 1982. evidence from financial crises after the 1980s showed that high external debt compounded the susceptibility of economies in terms of capital flight and exchange rate oscillations (chen, 2019). several analysts think that hindrances resulting from the burden of external debt of numerous developing economies, ssa inclusive to some extent are responsible for their poor investments and growth outcomes from the time when the debt crisis in the world began in 1982 (eshetu, 2021). this resulted in the implementation of structural adjustment policies enforced by the international monetary fund (imf) and world bank (wb) in most of these economies. however, these programmes did not yield the desired outcomes. the institution of the heavily indebted poor countries (hipc) initiative in 1996 by the imf and wb was a testament by the creditors that sap is deficient in terms of capability to stop the growing debt in developing economies. no wonder, academics, policymakers, and economists have been contemplating the best way in terms of speed and degree to overcome the economic problems of external debt in the world. a painstaking investigation of the nexus between external debt and economic growth in selected economies of africa could serve as a platform that would underpin the development of an efficient strategy for debt management that would sustain economic growth and development in the african continent. the current and future generations of policymakers could resort to the outcome of this study as an uncommon resource for the development of economic plans and the navigation of their economies in an unpredictable world. for the economies under investigation, despite the contracted debt, evidence from figures 8-7 showed that external debt exceeded the gdp growth rates of these economies. this suggests that the contracted debt probably did not yield the desired result in terms of economic growth. again, the negative relationship between external debt and gdp growth rates could be a confirmation that borrowed funds possibly were dispatched by leaders, particularly dictators of these countries to western economies through capital flight rather than utilization in productive investment to boost economic growth. in addition, in the face of external borrowings, figures 15-21 indicated that external debt service diminished the gdp growth rates of these economies for most of the periods under review. furthermore, figures 22 to 28 revealed that the servicing of external debt reduced the foreign direct investment (fdi) inflows in most of these countries for the periods under study. this can unearth further macroeconomic distortions. hence, the dwindling economic growth and the external debt stocks in these economies have drawn the attention of scholars. most of these economies are experiencing fast growth in their external debts, raising doubts about their effect on their gdp growth rates. the questions to address in this paper are: what is the impact of external debt on economic growth in the selected countries of africa? what is the causal relationship between external debt and economic growth in the selected economies of africa? in light of this background and given the ambiguous nature of the link between external debt and economic growth, this investigation seeks to probe the effect of external debt on the economic growth of ghana, kenya, asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 3 © 2024 by the authors; licensee online academic press, usa morocco, nigeria, rwanda, tunisia and zimbabwe from 1981 to 2021. also, it would examine the causal link between the variables of interest. besides the introduction, this study has five sections. the overview and practical evidence of external debt in selected economies are described in section two. the theoretical framework and empirical issues are presented in section three. the fourth section will dwell on the methodology and model specification. the empirical results are discussed in section five whereas section six would concentrate on the conclusion and recommendations. figure 1. external debt of ghana, 1981-2021. 2. overview and practical evidence of external debt in selected countries, 1981-2021 2.1. external debt of selected countries, 1981-2021 the external debt of ghana is depicted in figure 1. the external debt exhibited an upward growth trend from 1981 to 2000. however, the external debt stock declined continuously from 2001 and reached its lowest point in 2008. ghana's external debt to gross national income (gni) moved from 25% in 2009 to 31% in 2012. the external debt stock to gni dropped to 26% in 2013. the external debt to gni rose to 42% in 2015 and became stable from 2016 to 2019. it then rose from 45% in 2020 to 48% in 2021. figure 2. external debt of kenya, 1981-2021. figure 2 revealed that the external debt trend in kenya fluctuated from 1981 to 1994. afterwards, it declined continuously and amounted to 49% in 1998. it fluctuated between 1999 and 2006. however, it became stable from 2007 to 2015. the external debt to gni rose from 29% in 2016 to 38% in 2021. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 4 © 2024 by the authors; licensee online academic press, usa figure 3. external debt of morocco, 1981-2021. the external debt of morocco from 1981-2021 is indicated in figure 3. it showed that the highest external debt to gni recorded by morocco for the period under review was 112% in 1985. it fluctuated between 1986 and 2001. it declined continuously from 44% in 2002 to 26% in 2007. it grew from 23% in 2008 to 47% in 2017. however, it dropped to 43% in 2018. it fluctuated between 2019 and 2021. figure 4. external debt of nigeria, 1981-2021. figure 4 shows nigeria’s external debt from 1981 to 2021. evidence from figure 4 revealed that external debt as a share of gni rose continuously from 1981 to 1989. the execution of the structural adjustment programme (sap) was responsible for the escalation of foreign borrowings during the era. the external debt recorded in 1994 was alarming. it was 103% and the highest for the period under study. the drop in the revenue of the government was partly responsible for the high debt accumulation. another factor was decree no.3 of 1985 which pegged the maximum external loan at n5 billion. after the pronouncement of this decree in 1985, nigeria’s external debt assumed an upward trajectory till 2005. after the 2005 debt relief granted to nigeria, external debt exhibited a downward trend from 2006 to 2016. however, it assumed a growth course from 2016 to 2021 owing to the reappearance of foreign borrowings. it is worth noting that the crash in the international prices of petroleum products was mainly responsible for foreign borrowings from 2012 to 2021. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 5 © 2024 by the authors; licensee online academic press, usa figure 5. external debt of rwanda, 1981-2021. evidence from figure 5 indicated that the external debt stock of rwanda exhibited a rising trend, though on a gradual pace from 1981 to 1987 and fluctuated between 1988 and 1992. the external debt to gni soared from 46% in 1993 to the highest point of 127% in 1994. the external debt value of 1994 which was more than double the rate recorded in 1993 affected the performance of the economy. it fluctuated between 1995 and 2005. it recorded the lowest value of 13% in 2006. it maintained a rising trajectory from 2007 to 2021. figure 6. external debt of tunisia, 1981-2021. the progress of the external debt as a share of gni for the period under investigation is shown in figure 6. the external debt stock revealed a rising trend from 1981 to 1987. the rise in the stock of debt was mainly triggered by the economic recession of the 1970s, which affected the performance of tunisia’s economy. it fluctuated between 1988 and 2015. the external debt to gni maintained an upward trend from 2016 to 2020. in 2021, it recorded a value of 91%. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 6 © 2024 by the authors; licensee online academic press, usa figure 7. external debt of zimbabwe, 1981-2021. figure 7 shows that the external debt of zimbabwe was pronounced throughout the period under review. richardson (2004) argued that unwarranted government expenditure amid available revenues of government resulted in the growth of external debt. richardson (2004) and government of zimbabwe (goz) (1998) maintained that the implementation of structural adjustment reforms in 1991, through the economic structural adjustment programme (esap) and zimbabwe programme for economic and social transformation (zimprest) resulted in additional foreign borrowings that increased the external debt of zimbabwe. in the contention of gono (2008); government of zimbabwe (goz) (1982) and mumbengegwi (2002) the accumulation of external debt arrears owing to the shrinkage of the local economy and the surge in non-concessional external loans were accountable for the rise in external debt between 1980 and 2008. international monetary fund (2001) argued that the obvious drop in external debt between 1998 and 2001 is due to a decrease in external borrowing resulting from the postponement of zimbabwe's right to borrowing by the international monetary fund (imf) and world bank, and other creditors' reluctance to offer new debt. in addition, nyarota, kavila, mupunga, and ngundu (2015) argued that the insufficient inflows of foreign direct investment between 2012 and 2014 was partly responsible for the increment in external debt. figure 8. external debt and gdp growth of ghana, 1981-2021. 2.2. external debt and gdp growth of selected countries, 1981-2021 the external debt and gdp growth of ghana from 1981-2021 is shown in figure 8. for the period under review, the external debt and the gross domestic product (gdp) growth moved in diverse directions. the external debt was higher than the gdp growth throughout the investigation. the highest external debt as a share of gni recorded for the study period was 133% in 2001. however, the highest gdp growth registered by asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 7 © 2024 by the authors; licensee online academic press, usa ghana for the period under review was 11% in 2011. external debt and gdp growth maintained a negative relationship from 1981 to 2021. despite the upward trajectory exhibited by external debt for most of the periods under investigation, the performance of gdp growth was dismal for the entire period. a pictorial assessment of the external debt and gdp growth trend in figure 8 further revealed that high external debt affected the growth rates of gdp adversely for the entire episode. figure 9. external debt and gdp growth of kenya, 1981-2021. the illustration in figure 9 revealed that the external debt was higher than the growth rate of gdp from 1981 to 2021. the upward course of the external debt for the entire period under investigation is an indication that it affected kenya's growth rates of gdp. in 1993, kenya’s external debt as a percentage of gni reached its peak. the growth rate of real gdp maintained a downward course over the study period. figure 10. external debt and gdp growth of morocco, 1981-2021. the relationship between external debt and growth rates of gdp from 1981 to 2021 is depicted in figure 10. visual observation of this relationship gives convincing motivation to contend that the enormous external debt accumulated by the government of morocco led to debt overhang. in addition, the two variables of interest maintained a negative link from 1981 to 2021. the global economic and financial crisis of 2008/2009 accounted for the dismal performance of growth rates of gdp between 2008 and 2009. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 8 © 2024 by the authors; licensee online academic press, usa figure 11. external debt and gdp growth of nigeria, 1981-2021. as indicated in figure 11, the external debt and gdp growth of nigeria moved in reverse directions from 1981 to 2005. the external debt was higher than the gdp growth rates from 1981 to 2005. this suggested that the accumulation of new loans reduced the gdp growth. low external debt co-existed with low gdp growth rates from 2006 to 2014. nigeria experienced negative growth rates continuously from 1981 to 1984 and 2016 to 2020. the structural adjustment loans accounted for the rise in nigeria’s external debt from 1986 to 1989. the negative growth rate recorded in 1987 was made more noticeable by the oil price crash that was prolonged in the world till the mid-1980s. owing to the 2005 debt relief granted to her, the external debt dropped from 2006 to 2014. the gdp growth was affected by the global economic and financial crisis of 2008/2009. after 2014, external debt exhibited an upward course from 2015 to 2021. iyoha (1999) argued that structural adjustment was portrayed as a package for the restoration of short-run stabilization and enablement of medium to long-term sustainable growth. however, the period of sap and the economic recovery program (erp) was portrayed by an increase in overall debt, payments for debt service and little inflow of external resources. figure 12. external debt and gdp growth of rwanda, 1981-2021. the gdp growth and external debt of rwanda from 1981-2021 is presented in figure 12. except for 1982, 1984, 1987, 1989, 1990, 1991, 1993, 1994, 1996, 1997, 2003 and 2020, which had negative gdp growth rates, positive growth rates were recorded for the remaining years under review. also, external debt and gdp growth for rwanda moved in contrary directions throughout the investigation. the accumulated debt was higher than gdp growth throughout the time of investigation. as a result of this, the period under review was characterized by more payments for debt service and little inflow of foreign direct investment (fdi). asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 9 © 2024 by the authors; licensee online academic press, usa figure 13. external debt and gdp growth of tunisia, 1981-2021. evidence from figure 13 revealed that the external debt of tunisia fluctuated between 1981 and 2016. the external debt exceeded the gdp growth rate from 1981 to 2021. also, they moved in opposite directions for the period under study. the implication of this is that the contracted debt did not boost the economic growth of tunisia to the desired level. the inverse link between external debt and gdp growth rates could be a confirmation that contracted funds possibly were dispatched by leaders to western economies through capital flight rather than utilization in productive investment to boost economic growth. figure 14. external debt and gdp growth of zimbabwe, 1981-2021. the external debt and gdp growth trends of zimbabwe between 1981 and 2021 are presented in figure 14. the external debt is stated as a share of gni. the gdp and external debt of zimbabwe moved in different directions for the entire time under investigation. throughout the phase of this investigation, external debt increased while gdp declined. the implication is that as zimbabwe accumulates further debt, her gdp reduces. the gdp fluctuated for the entire period under review while additional debts were accumulated by zimbabwe in the structural adjustment loans fashion. as indicated in figure 14 the changing aspects of gdp growth in zimbabwe in the contention of saungweme (2020) have six phases: the pre-independence era (1965-1979); the corporatism era (1980-1990); the liberalism era (1991-1999); the economic recession era (2000-2008); the economic recovery era (2009-2013); and the economic stagnation and recession-era (2014-2020). a negative relationship between external debt and gdp growth is shown in figure 14. the gdp growth and external debt displayed a downward trajectory and an upward course in the corporatism period respectively. the two variables of interest displayed similar trends in liberalism, the economic recession, the economic recovery and the economic stagnation and recession eras. this probe is in line with the submissions that dwindling gdp growth could result in higher levels of debt at some points. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 10 © 2024 by the authors; licensee online academic press, usa figure 15. gdp growth rates and external debt service for ghana, 1981-2021. 2.3. external debt service and gdp growth rates of selected countries, 1981-2021 as indicated in figure 15 there was an inverse link between real gdp growth rates and external debt service throughout the period under investigation. figure 15 depicts a rising trend for external debt service but a declining trend for the real gdp growth rate for the entire period of study. in addition, external debt service fluctuated between 2000 and 2005. the external debt service and real gdp growth were close to each other from 1981 to 1985. figure 16. gdp growth rates and external debt service for kenya, 1981-2021. figure 16 indicates the real gdp growth and external debt service of kenya from 1981 to 2021. it revealed a negative relationship between growth rates of gdp and debt service. the debt service between 2015 and 2019 put a colossal burden on kenya. the economic growth of kenya is seriously compounded by the debt servicing process in kenya during this episode. the real gdp growth becomes dampened as additional funds are committed to debt service in kenya. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 11 © 2024 by the authors; licensee online academic press, usa figure 17. gdp growth rates and external debt service for morocco, 1981-2021. the relationship between the real gdp growth rates and debt service of morocco from 1981 to 2021 is indicated in figure 17. the two variables of interest maintained a negative relationship throughout the investigation. the implication is that the servicing of debt exerts immense fiscal pressure on morocco. thus; the economic growth of morocco is compounded by the debt servicing process. a visual glance at figure 17 revealed that as additional funds are committed by morocco to service debts, gdp become dampened. figure 18. gdp growth rates and external debt service for nigeria, 1981-2021. as depicted in figure 18 external debt service and real gdp growth had a negative relationship from 1981 to 2021. the servicing of debt exerts a mammoth fiscal burden on nigeria. muhanji (2010) argued that this burden exerted a harmful effect on government investment and the delivery of social services in cote d'ivoire, ghana, kenya, malawi, nigeria, senegal, south africa, tanzania, uganda, zambia and zimbabwe as mirrored in the drop in the percentage of government investment in gdp from the late 1970s and beyond in addition to excessive fiscal deficit level. this corroborates the findings of rugumamu (2001) that the payment of external debt is economically depleting as it prolongs impending development; it is politically undermining as it endangers social unity; and, it is ethically intolerable as it harms the poorest of the poor. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 12 © 2024 by the authors; licensee online academic press, usa figure 19. gdp growth rates and external debt service for rwanda, 1981-2021. the debt service and gdp growth rates trend from 1981-2021 is presented in figure 19. the external debt and external debt service of rwanda displayed a downward trajectory from 1981 to 2011. a rise in debt service payments from 2012 to 2021 was perhaps triggered by an increase in external debt during this episode. the scenario in figure 19 particularly from 2012-2021 could force a crowding out effect problem if the condition remains unchecked. furthermore, the budget deficit would increase as a result of a surge in external debt service worsened by enormous external debt accumulation. figure 20. gdp growth rates and external debt service for tunisia, 1981-2021. figure 20 depicts a rise in the debt service of tunisia from 1981 to 2021. on the other hand, the real gdp growth revealed a declining trend throughout the investigation. the rising levels of debt service could be attributed to an increase in external debt accumulation for the period under review. the remarkable decline in real gdp growth could be a pointer that the contracted funds were not channelled to productive uses. the variables of interest maintained an inverse relationship throughout the period of study. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 13 © 2024 by the authors; licensee online academic press, usa figure 21. gdp growth rates and external debt service for zimbabwe, 1981-2021. evidence from figure 21 revealed that external debt service fluctuated from 1981-2021. the real gdp growth on the other hand exhibited a declining trajectory for the entire period under review. the real gdp growth and external debt service payment of zimbabwe were equal in 2021. figure 22. external debt service and foreign direct investment for ghana, 19812021. 2.4. external debt service and foreign direct investment for selected countries, 1981-2021 the servicing of debt and the foreign direct investment of ghana from 1981 to 2021 is depicted in figure 22. evidence from the figure showed that debt service reduced foreign direct investments from 1981 to 2021. this substantiates the debt overhang theory that maintains that domestic and foreign investments would be suppressed by debt service if the external debt is greater than the nation's ability to repay. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 14 © 2024 by the authors; licensee online academic press, usa figure 23. external debt service and foreign direct investment for kenya, 1981-2021. figure 23 indicates the debt service and the foreign direct investment of kenya from 1981 to 2021. it showed that foreign direct investments are diminished by debt service for the period under review. this is because the government will be forced to raise the tax level because of external debt accumulation to service the debt. thus, foreign investors are expected to share in the tax increment. also, it was evident that debt service and foreign direct investments in kenya moved individually throughout the period under investigation. figure 24. external debt service and foreign direct investment for morocco, 1981-2021. as depicted in figure 24 external debt service and foreign direct investment moved in opposite directions. figure 24 revealed that external debt service lowered foreign direct investment throughout the investigation. the foreign direct investment prospects in morocco are weighed down by payments for debt service. this is because investors, especially private investors; would be expected to pay more tax to the government for the repayment of accumulated debt. the discouragement of domestic and foreign investments corroborates the postulation of the debt overhang theory. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 15 © 2024 by the authors; licensee online academic press, usa figure 25. external debt service and foreign direct investment for nigeria, 1981-2021. the servicing of debt and the foreign direct investment of nigeria from 1981 to 2021 is depicted in figure 25. evidence from the figure showed that debt service reduced foreign direct investments from 1981 to 2001. the foreign direct investment prospects in nigeria are weighed down by payments for debt service. figure 26. external debt service and foreign direct investment for rwanda, 1981-2021. figure 26 depicts the relationship between external debt service and foreign direct investment in rwanda from 1981 to 2021. facts from figure 26 showed that debt service reduced the foreign direct investments of rwanda throughout the period under investigation. this confirms that fear of additional tax payments caused by tax increments by the government to service debt obligations discourages foreign investors from coming to invest in rwanda. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 16 © 2024 by the authors; licensee online academic press, usa figure 27. external debt service and foreign direct investment for tunisia, 1981 – 2021. the servicing of debt and the foreign direct investment of tunisia from 1981 to 2021 is depicted in figure 27. evidence from figure 27 revealed that debt service decreased foreign direct investments throughout the period under review. foreign direct investment would be diminished because of fear on the part of foreign investors that unwarranted debt could result in tax increases to service it. figure 28. external debt service and foreign direct investment for zimbabwe, 1981-2021. figure 28 indicates the debt service and foreign direct investment trends in zimbabwe from 1981 to 2021. it is worth noting that debt service obligations reduced zimbabwe’s foreign direct investment throughout the period under study. the damaging consequences of high external debt on foreign direct investment through tax increases by the government to service debt obligations which foreign investors are not ready to bear confirms the problem of debt overhang. 3. theoretical framework and empirical issues theoretically, the link between external debt and economic growth has diverse explanations. the propositions of the neoclassical, the keynesian and the ricardian equivalence theories concerning the connection between external debt and economic growth were different. thus, the theoretical foundation of this study would be anchored on the neoclassical, the keynesian and the ricardian equivalence theories. these three perspectives would explain the theoretical connection between our variables of interest. the first theory is the asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 17 © 2024 by the authors; licensee online academic press, usa neoclassical theory. this theory proposes that external debt has an unfavourable effect on economic growth. this is because it erodes private investment (diamond, 1965; panizza & presbitero, 2013). investors argued that external debt could be used by the government as an excuse for potential increment of taxes. it could also result in a rise in interest rates or crises motivated by external debt, which could dampen private investment and economic growth. in contrast to the neoclassical theory, the second theory is the keynesian theory. the keynesian theory postulates that growing levels of external debt foster government expenditure, which supports economic growth in succession. thus, external debt increases demand, increasing investment and production. the ricardian equivalence theorist advanced the third viewpoint on the nexus between external debt and economic growth. barro (1979) advocated this theory and it overruled the neoclassical and keynesian standpoints regarding the connection between external debt and economic growth. it postulated that there is no connection between external debt and economic growth (barro, 1989). in conclusion, the position of neoclassical economists is that economic growth is affected negatively by external debt. however, the opinion of the keynesians is that economic growth is affected positively by external debt. all the same, the ricardian equivalence theory maintained that external debt exerted neither positive nor negative impacts on economic growth. numerous studies have investigated the connection between external debt and economic growth in industrialized and developing countries with different results. for example, kharusi and ada (2018) investigated the effect of government external debt on oman’s economic growth between 1990 and 2015 deploying the ardl bounds test method of cointegration. the results demonstrated that external debt hindered economic growth. furthermore, gross fixed capital formation impacted economic growth positively. in a related study, festus and saibu (2019) used the ardl test technique to cointegration to investigate the link between external debt and economic growth in nigeria between 1981 and 2016. the results indicated the detrimental effect of external debt on economic growth. due to the rise in foreign debt levels of several african nations, senadza, fiagbe, and quartey (2018) conducted a related study to examine the relationship between external debt and economic growth in subsaharan africa (ssa). they achieved this by employing the system generalized methods of moments (gmm) and time series data for 39 ssa economies between 1990 and 2013. the findings in line with the assertion of the neoclassical economists showed that external debt impedes sub-saharan africa’s economies from growing economically. the countries were grouped based on the gdp per capita, which had no bearing on the connection between external debt and economic growth. the results further indicated that growth and external debt do not have a non-linear connection. tefera (2019) examined the effect of external debt on the economic growth of ssa economies utilizing the panel threshold model of hansen (1999) and a panel data group of 41 nations between 2000 and 2017. the capacity of the ssa region to repay its external debt was also looked at. the results indicated that the relationship between external debt and economic growth is non-linear. nonetheless, economic growth reacted more strongly to negative external debt levels than to positive ones. the findings showed that, in terms of external debt as a percentage of gdp, there is just one threshold level in ssa. beyond this point, which is set at 21.78 percent, the level of external debt became unmanageable and began to have a detrimental impact on gdp growth. furthermore, the findings indicated that the external debt of ssa was unsustainable. in order to investigate the causal relationship between public and private external debt and economic growth in developing economies, zhang, dawood, and al-asfour (2020) used 18 selected asian developing and transition economies from 1995 to 2019 and the dynamic heterogeneous panel data methodologies, pooled mean group (pmg), robust cross-sectional augmented autoregressive distributed lag (cs-ardl), and granger causality test. the results showed that there is a causal relationship between external debt and economic growth in the short and long runs, respectively, based on the pmg and cs-ardl approaches. a bidirectional association between total external debt and economic growth, private external debt and economic growth and public external debt and economic growth was found by the granger causality test results. didia and ayokunle (2020) investigated the effect of public debt on nigeria’s economic growth from 1980 to 2016 deploying the vector error correction model (vecm). for this investigation, public debt was decomposed into external debt and domestic debt. the results showed that domestic debt exerted a positive impact on economic growth. however, external debt had a negative and insignificant impact on economic growth. ideh and uzonwanne (2021) in a similar manner analyzed the link between external debt and nigeria’s economic growth from 1985 to 2019 using the ols methodology. the findings indicated that external debt exerted a negative and insignificant effect on economic growth. in turkey, uslu (2021) adopted the ardl bounds test for cointegration and the toda yamamoto causality test to investigate the impact of external debt on economic growth from 1970 to 2016. the findings indicated that fixed capital stock, external debt, labour force and human capital had a positive effect on economic growth respectively. the causality result indicated a unidirectional relationship from the labour force and external debt to economic growth respectively. furthermore, the findings revealed a one-way relationship from the labour force to fixed capital stock. also, a one-way link from the labour force to human capital was established. the results further revealed a unidirectional relationship from external debt stock to human capital. oteng (2022) investigated the impact of external debt on ghana’s economic growth from 1970 to 2019 using the autoregressive distributed lag (ardl) model. the results showed that external debt had a negative and insignificant impact on economic growth in the long run. however, it exerted a positive and significant impact on economic growth in the short run. due to asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 18 © 2024 by the authors; licensee online academic press, usa the methodologies used and the diverse geographical context of the reviewed empirical literature, mixed results were generated. the cross-sectional or panel studies conducted in the context of external debt were sparse. for example, deshpande (1997) used the ordinary least squares (ols) methodology to execute work on heavily indebted economies of algeria, argentina, egypt, honduras, cote d’ivoire, kenya, mexico, morocco, peru, philippines, sierra leone, venezuela and zambia from 1971 to 1991. the results indicated that in all the economies, investment revealed an upward movement in the short-run. however, a downward course manifested with the buildup of debt. in the context of the problems of african external debt, edo (2002) carried out a comparative analysis between nigeria and morocco. he deduced that external debt was not severely crowding out investment. schclarek (2004) utilized data from 1970 to 2002 to examine the impact of debt on growth for some developing and industrial countries. the findings showed that lesser external debts resulted in high economic growth in developing countries. however, the nexus between external debt and economic growth in industrial countries was not significant. using the panel data technique, fincke and greiner (2015) examined the impact of public debt on the economic growth of seven developed economies from 1970 to 2012. their findings indicated that public debt exerted a negative effect on economic growth. nsonwu (2016) investigated the impact of debt burden on investment and growth in fifteen sub-saharan africa (ssa) countries of angola, burundi, cameroon, dr congo, ethiopia, ghana, kenya, malawi, mali, mozambique, nigeria, rwanda, tanzania, uganda and zimbabwe from 1998 to 2013. kempa and khan (2016) utilized the extended vector autoregressive (var) methodology to examine the causal link between public debt and economic growth in g7 economies. the findings showed a unidirectional relationship from economic growth to public debt. in another study, gomez-puig and sosvilla-rivero (2015) investigated the impact of public debt on the economic performance of european economic and monetary union (emu) economies. the result of the long run indicated that debt exerted a negative impact on economic growth. on the other hand, there is a likelihood of a positive effect in the short-term but it is contingent on whether debt is allocated to productive or unproductive outlay. saungweme (2020) used the ardl bounds test to cointegration and time series data from 1970 to 2017 to investigate the public debt, public debt service and economic growth connection in southern african countries of south africa, zambia and zimbabwe. in addition, fosu (1996) employed ols to explore the impact of public external debt on ssa economies from 1970-1986. he concluded that the debt burden in ssa accounted for a 33% drop in economic growth. most of these cross-sectional studies dwelt on public debt. in addition, some of the studies combined different economies and regions of the world. the studies that dwelt on external debt only were edo (2002) and fosu (1996). from the perspective of cross-section studies that were conducted in africa with a focus on external debt, fosu (1996) used the ols which would result in biased and inconsistent results due to the bidirectional causality between public external debt and economic growth. again, the scope of the study was short from 19701986. furthermore, limited studies employed panel data in africa. our study would use extended time series data and improve on the previous methodology by employing the heterogeneous dynamic panel data modelling approach – pooled mean group (pmg) to examine the effect of external debt on the economic growth of ghana, kenya, morocco, nigeria, rwanda, tunisia and zimbabwe from 1981 to 2021. to the best of our knowledge, this is the first attempt to study this group of countries using panel ardl, pmg technique. 4. methodology and model specification the study investigated the connection between external debt and economic growth of ghana, kenya, morocco, nigeria, rwanda, tunisia and zimbabwe from 1981 to 2021. the data was derived from the world bank (wb) world development indicators (wdi) database. the economies utilized for this study and period of estimation were informed by data availability. moreover, numerous least developed countries (ldcs) were affected by the debt crisis that started at the beginning of the 1980s. also, the phase of the structural adjustment programme (sap) and the global financial crisis of 2008 were incorporated into our focus. the debt crisis informed the choice of 1981 as a start date. following the study of mavhinga (2015) with some modifications, the model is specified as follows: (1) 𝑊ℎ𝑒𝑟𝑒: ∝0, ∝1 𝑎𝑛𝑑 ∝2= 𝑃𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑚𝑜𝑑𝑒𝑙 𝑙𝑛𝑅𝐺𝐷𝑃𝑃𝐶𝑖𝑡 = 𝐿𝑜𝑔𝑎𝑟𝑖𝑡ℎ𝑚 𝑜𝑓 𝑟𝑒𝑎𝑙 𝐺𝐷𝑃 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎 𝑓𝑜𝑟 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑖 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝑙𝑛𝐸𝑋𝑇𝐷𝑖𝑡 = 𝐿𝑜𝑔𝑎𝑟𝑖𝑡ℎ𝑚 𝑜𝑓 𝑒𝑥𝑡𝑒𝑟𝑛𝑎𝑙 𝑑𝑒𝑏𝑡 𝑎𝑠 𝑎 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝐺𝑁𝐼 𝑓𝑜𝑟 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑖 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝑙𝑛𝐷𝐸𝐵𝑇𝑆𝑖𝑡 = 𝐿𝑜𝑔𝑎𝑟𝑖𝑡ℎ𝑚 𝑜𝑓 𝑒𝑥𝑡𝑒𝑟𝑛𝑎𝑙 𝑑𝑒𝑏𝑡 𝑠𝑒𝑟𝑣𝑖𝑐𝑒 𝑓𝑜𝑟 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑖 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝜀𝑖𝑡 = 𝐸𝑟𝑟𝑜𝑟 𝑡𝑒𝑟𝑚 all the variables were logged and the logarithm symbol is represented by ln. the country and time are denoted by i and t respectively. before the estimation of the growth model, we employed the im, pesaran and shin (ips), adf-fisher chi-square, levin, lin, and chu (llc) and pp-fisher chi-square panel unit root tests to examine the time series features of the data. the analysis was executed using the heterogeneous dynamic asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 19 © 2024 by the authors; licensee online academic press, usa panel data modelling approach, pmg introduced by pesaran, shin, and smith (1999). the e-views software was employed for the estimation of the statistical process of the panel ardl. the standard model for the panel ardl technique is specified in equation 2 as follows: (2) 𝑊ℎ𝑒𝑟𝑒: 𝑝 = 𝑜𝑝𝑡𝑖𝑚𝑎𝑙 𝑎𝑢𝑡𝑜𝑟𝑒𝑔𝑟𝑒𝑠𝑠𝑖𝑣𝑒 𝑙𝑎𝑔 𝑜𝑓 𝑡ℎ𝑒 𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑞 = 𝑜𝑝𝑡𝑖𝑚𝑎𝑙 𝑑𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑒𝑑 𝑙𝑎𝑔 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑟𝑒𝑔𝑟𝑒𝑠𝑠𝑜𝑟𝑠 𝑖 = 1,2, … ,7 𝑡 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠 (1981 − 2021) 𝜀𝑖𝑡 = 𝑒𝑟𝑟𝑜𝑟 𝑡𝑒𝑟𝑚 the reparameterization of equation 2 yields equation 3. (3) 𝑊ℎ𝑒𝑟𝑒: 𝜑𝑖 = 𝑠𝑝𝑒𝑒𝑑 𝑜𝑓 𝑎𝑑𝑗𝑢𝑠𝑡𝑚𝑒𝑛𝑡 𝑝𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑔𝑟𝑜𝑢𝑝 𝛾1 𝑎𝑛𝑑 𝛾2 = 𝑐𝑜𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑡𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑙𝑜𝑛𝑔 – 𝑟𝑢n 𝜔𝑖𝑗 = 𝑠ℎ𝑜𝑟𝑡 − 𝑟𝑢𝑛 𝑝𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟 𝑜𝑓 𝑡ℎ𝑒 𝑙𝑎𝑔𝑔𝑒𝑑 𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝜔1𝑖𝑗 ∗ 𝑎𝑛𝑑 𝜔2𝑖𝑗 ∗∗ = 𝑠ℎ𝑜𝑟𝑡 − 𝑟𝑢𝑛 𝑝𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟𝑠 𝑓𝑜𝑟 𝑜𝑡ℎ𝑒𝑟 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒𝑠 table 1. panel unit root test results. variable adf-fisher ips llc pp-fisher i(d) level first difference level first difference level first difference level first difference lnrgdppc 2.1956 90.6271*** 3.4258 -8.5382*** 0.3806 -7.1556*** 1.5584 146.758*** i (1) lnextd 8.6261 47.7788*** -0.0225 -4.9931*** -0.0888 -4.4835*** 8.8009 104.158*** i (1) lndebts 6.3936 97.5917*** 1.6768 -9.1314*** 0.7614 -8.3917*** 8.9067 186.913*** i (1) note: *** indicate statistical significance at the 1% level. 5. empirical results and discussions the results of the adf-fisher, ips, llc and pp-fisher unit root test in table 1 revealed that all the variables under investigation were stationary at first difference. this sort of integration supports the application of the panel ardl modelling method. the ardl model can investigate causal relationships at diverse orders of stationarity. also, the estimate of the long-run for the ardl model is consistent whether the explanatory variables are stationary at i(0), i(1) or a mixture of the two. table 2. long-run coefficients results. lnextd lndebts -1.2950 0.5868 [-2.8693***] [5.0582***] (0.0045) (0.0000) note: probability values are in bracket ( ). t-statistics are in []. *** indicate statistical significance at the 1% level. the results of the long-run coefficients are indicated in table 2. the findings revealed that external debt had a negative impact on the economic growth of the group of countries under study. this result confirms the asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 20 © 2024 by the authors; licensee online academic press, usa proposition of the neoclassical scholars that debt is detrimental to growth. thus, external debt has adverse effects on the economic growth of these bands of countries. hence, there is evidence of debt overhang problems in these economies. the finding agrees with the submissions of kharusi and ada (2018); senadza et al. (2018) and festus and saibu (2019). it, however, violated the findings of uslu (2021). on the other hand, external debt services exerted a positive impact on the economic growth of these groups of economies. this implies that debt service payments in these groups of economies have a favourable impact on their economies. thus, a 0.59 per cent per unit rise in debt service would increase economic growth. thus, the crowding-out effect theory does not hold in these economies. this result finds an advocate in mavhinga (2015). nevertheless, it contravenes the results of nsonwu (2016); oteng (2022); atoullo (2019); saungweme (2020) and elikana (2019). table 3. short-run coefficients results. dependent variable: lnrgdppc variable coefficient std. error t-statistic prob. δ(lnrgdppc(-1)) 0.0576 0.1181 0.4876 0.6263 δ(lnextd) -0.0773 0.0270 -2.8613*** 0.0046 δ(lndebts) 0.0258 0.0236 1.0949 0.2746 c 0.0901 0.0377 2.3881** 0.0177 ecmt-1 -0.0210 0.0112 -1.8751* 0.0619 note: ***, ** and * indicate statistical significance at the 1%, 5% and 10% levels of significance, respectively. the findings of the short-run dynamics are presented in table 3. the findings demonstrated that changes in external debt had a negative effect on the gdp per capita of the selected economies. this result is consistent with the findings of the long run. however, change in external debt service exerted a positive and insignificant effect on economic growth. the error correction terms (ect) had the right sign and was significant. the ect coefficient value of -0.0210 implies that about 2.1 per cent of departures from long-run equilibrium are corrected in 48 years. thus, this speed of adjustment is considered very low. we can draw some inferences owing to the negative and significant outcome of the ect. it indicates that there is a long-term correlation among the variables. also, it shows evidence of joint causality. hence, extd and debts jointly granger cause rgdppc in the long run. nevertheless, the short-run coefficients per economy represented in table 4 indicated that except for rwanda, where the ect was negative and insignificant, the ect in the remaining economies was negative and significant. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 21 © 2024 by the authors; licensee online academic press, usa table 4. panel ardl estimations results for short-run coefficients by country. country: ghana kenya morocco nigeria rwanda tunisia zimbabwe variable coefficient coefficient coefficient coefficient coefficient coefficient coefficient δ(lnrgdppc(-1)) 0.3482*** 0.1702*** -0.4934*** 0.3598*** -0.0813*** -0.1428*** 0.2424*** δ(lnextd) -0.0136*** -0.0207*** -0.1340*** -0.0551*** -0.1324*** -0.0026 -0.1824*** δ(lndebts) -0.0057*** 0.0143*** -0.0075*** -0.0005*** 0.1660*** 0.0105*** 0.0035*** c 0.1486*** 0.2891*** 0.0329*** 0.0293* 0.0066*** 0.0873 0.0370* ecmt-1 -0.0066*** -0.0149*** -0.0034*** -0.0003*** -0.0006 -0.0799*** -0.0417*** note: *** and * indicate statistical significance at the 1% and 10% levels of significance, respectively. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 1-23 22 © 2024 by the authors; licensee online academic press, usa table 5. results of toda and yamamoto multivariate causality test. dependent variable sources of causation lnrgdp 𝜒2 lnextd 𝜒2 lnrgdp 1.2866 lnextd 0.0064 table 6. results of toda and yamamoto multivariate causality test. dependent variable sources of causation lnrgdp 𝜒2 lndebts 𝜒2 lnrgdp 0.4367 lndebts 3.3250 the findings of the toda and yamamoto multivariate causality tests are indicated in tables 5 and 6. the result in table 5 revealed that there is no causal link between external debt and economic growth. this suggests that the policy objectives of external debt can be pursued separately from that of economic growth in this group of economies in africa. this result agrees with the submissions of iitula (2018). however, the findings of musa (2015); zhang et al. (2020) and uslu (2021) violate it. the results of table 6 also indicated that there is no causal link between external debt service and economic growth. this implies that the policy objectives of servicing of debt can further be pursued separately from that of economic growth. this result is in line with the submissions of saungweme (2020) and musa (2015). 6. conclusion and recommendations the outcomes of this study supported the debt overhang effect theory by showing that the relationship between external debt and economic growth was negative. hence, the debt overhang hypothesis is valid for these economies. this indicates that external debt has an adverse effect on these countries’ economic growth. also, debt service exerted a favourable effect on economic growth. this indicates that the crowding-out effect, time and again branded as the crowding-out hypothesis, is absent in these economies. based on the outcomes of this study, the following were recommended: the capacity of these economies in terms of revenue generation and debt servicing should be reinforced by their governments through the channelling of external debt into long-term productive investments like industrialization among others for the realization of positive economic growth. the dependence on borrowed foreign funds could be reduced in the future through diversification of exports, improvement in internal mobilization of revenue and generation of sufficient returns to repay the external debt. also, the policies on debt servicing in these economies should be sustained since it is yielding the desired results. furthermore, the deficit gap could be filled through the introduction and execution of revenueboosting strategies by policymakers as an alternative to borrowing. thoroughly assessed projects of high significance should be the only yardstick for the contraction of foreign loans in these economies. as was stated by iitula (2018) ‘’effective and efficient utilization of public resources is needed to ensure that the future generation's welfare or economic production is not being mortgaged in continuous indebtedness’’. the governance question in these economies should be critically addressed. sometimes, african leaders contract external loans for unproductive reasons and most of the borrowed funds are diverted to private accounts in western countries. also, the policy objectives of external debt can be pursued separately from that of economic growth in this group of economies in africa. furthermore, the policy objectives of debt service can be pursued separately from those of economic growth. references adepoju, a. a., salau, a. s., & obayelu, a. e. 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(2020). external debt and economic growth: a dynamic panel study of granger causality in developing countries. journal of asian finance, economics and business, 7(11), 607–617. https://doi.org/10.13106/jafeb.2020.vol7.no11.607 https://doi.org/10.17811/ebl.4.4.2015.137-150 https://doi.org/10.1016/s0304-4076(99)00025-1 https://doi.org/10.46827/ejefr.v5i2.1156 https://doi.org/10.1080/13504851.2015.1080797 http://dx.doi.org/10.11130/jei.2018.33.1.1141 https://doi.org/10.1007/bf03399388 https://doi.org/10.2307/2670182 https://doi.org/10.3386/w15639 https://doi.org/10.25103/ijbesar.111.07 https://doi.org/10.33206/mjss.799985 https://doi.org/10.13106/jafeb.2020.vol7.no11.607 asian themes in social sciences research issn: 2578-5516 vol. 8, no. 1, pp. 37-53 2024 doi: 10.33094/atssr.v8i1.1893 © 2024 by the authors; licensee online academic press, usa accepted: 19 september 2024 | published: 2 october 2024 37 © 2024 by the authors; licensee online academic press, usa possibilities to escape the rental trap mar wolfgang mixa1* --kristin erla tryggvadottir2 1university of iceland, saemundargata 2, 101, reykjavik, iceland. email: mwm@hi.is 2reykjavík university, iceland. email: ktryggvadottir@gmail.com abstract despite a resurgence of economic activity since the 2008 financial crisis and longstanding government policies promoting homeownership, the percentage of renters has remained stable over the past decade despite most preferring homeownership. this study examines the time required for various rental market groups to save for a down payment on an apartment in the capital area from 2011 to 2022. we also assess the potential impact of a government program allowing certain low-income groups to set aside just 5% of a property’s price as a down payment. the focus is on people in the lowest 20th percentile group. using data on wages, taxes, compulsory pension contributions, and spending patterns, we analyze how much each group can realistically save, considering both minimal (bare) and typical consumption benchmarks. this analysis reveals how much each group can save for a down payment. our findings show that despite economic prosperity and wage increases outpacing the consumer price index (excluding housing costs), the time needed to save for a down payment in 2022 remains nearly the same as in 2011 due to rising housing prices. single parents face the most difficulty saving for a down payment, but the 5% down payment program offers a more realistic path to homeownership. the implications are that government policies should focus on controlling house prices and continuing the 5% down payment program to enhance homeownership opportunities. keywords: down payment, homeownership, housing prices, rental market, savings. licensed: this work is licensed under a creative commons attribution 4.0 license. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. this study followed all ethical practices during writing. competing interests: the authors declare that they have no competing interests. authors’ contributions: conceptualization, supervision, writing – original draft, m.w.m..; methodology, software and formal analysis, mwm & ket; validation, visualization, writing –review & editing, m.w.m. & k.e.t.; investigation, data curation, k.e.t. & m.w.m. all authors have read and agreed to the published version of the manuscript. 1. introduction the 2008-2012 housing crisis – a part of the global financial crisis (gfc) was characterized by plummeting house prices worldwide and rising foreclosures (mian, sufi, & trebbi, 2015). many lost the safety of homeownership, and a significant portion of their entire savings tied to their home equity. this outcome hit low-income groups the hardest (zwiers, bolt, van ham, & van kempen, 2016). housing issues have again taken center stage in the global north, but now, due to a lack of access to housing. house prices have risen phenomenally in the past decade, much more rapidly than income (tekin, 2022). in iceland, many people struggle to save for a down payment, some of whom lost their homes during the gfc, with wage increases not keeping up with rising housing prices. according to iceland’s housing and construction authority (hms), the homeownership percentage has not reached the same levels as in the pre-crisis period (hms, 2020) and only increased slightly during the onslaught of the covid-19 pandemic (hms, 2021). research has demonstrated that renters in iceland are often characterized by intense precarity (mixa, loftsdóttir, & rúnarsdóttir, 2021) and that most would rather be homeowners (hms, 2021). in other countries, renters often have a more secure https://www.doi.org/10.33094/atssr.v8i1.1893 mailto:mwm@hi.is mailto:ktryggvadottir@gmail.com asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 38 © 2024 by the authors; licensee online academic press, usa legal status, but obtaining affordable rental accommodation might be difficult, as bergsten and hansson (2023) point out (2023). in sweden, official waiting lists for a rental apartment are very long, thus paradoxically often forcing people to settle for inflated rental contracts in the black market (hananel, krefetz, & vatury, 2021). research has drawn attention to the down payment requirement as an essential factor in renting, even though results regarding the possibility of home ownership and interest rate change are unclear. hedlund’s findings regarding down payment requirements show that the relationship with the homeownership rate is not significantly affected in the long run. however, short-term effects may occur while homeownership rates respond to interest rate changes (hedlund, 2019a). this contradicts findings by andrews and sánchez (2011) that show that the relaxation of down payment restrictions results in a rise in the homeownership rate in oecd countries, meaning that more people become homeowners when down payment restrictions are eased. this paper maps out variables that shape the capacity of individuals living in iceland to accumulate savings for a down payment during the 2011-2022 period. the possibility of a home purchase instead of renting depends on the ability to set money aside, i.e., the positive difference between people’s income after taxes and spending. the research questions for this paper are: can renters in the lowest income groups save for a down payment? how long does it take individuals in the rental market to save for a down payment? the paper draws attention to the need to acknowledge different positionality in affording home ownership. scholars have long pointed out that housing issues impact social groups disproportionately (arundel, 2017; howard, 2024; stefani, 2020; timperley, 2020). the same is the case with monetary variables, including access to loans, which can significantly affect differently positioned social groups (baxamusa, 2020). the standard way to measure the affordability index is to compare the percentage of median housing prices to the median gross household income (see, for example, (cox, 2023; lee, kemp, & reina, 2022)). our methodology combines living expenses with other variables and constitutes a novel approach. we take this one step further by comparing various cost-of-living expenditures for different family structures while also considering the interest received on savings, thus gauging state policies’ possible impact on homeownership. we see this as a first step to broaden the scope to incorporate diverse social groups with varying expenses, focusing first on iceland and then for academics to broaden such research in international comparison studies. in our analysis, we compare down payments of 5% and 15%, reflecting changes that were initiated by the icelandic government in 2017, in which first-home-buyers in low-income groups have, with certain restrictions, the opportunity to pay only 5% of the purchase price as a down payment as opposed to the regular 15% requirement (hms, 2024b). this is similar to a recent program in sweden (nordström, svensén, ribbing, & lepola, 2022). the analysis commences from 2011 for three reasons: firstly, during the post-2008 crisis, many icelanders lost their homes (matthíasson, 2021) and savings. many of those then faced financial duress in the rental sector, which, according to a 2011 study, proved costlier than homeownership (institute of economic studies, 2011). real wages fell following the crisis, reaching a low around 2011. the second reason is that a massive increase in tourism characterizes this period (loftsdóttir, 2019). high unemployment, as icelanders witnessed following the 2008 crisis, not only quickly became a distant past but caused an increased speed of migration to iceland, where jobs were abundant and relatively high wages compared to europe became even higher. thirdly, pivotal statistical data, including rental and cost-of-living indices for varied family types, became first available in 2011. we begin this paper with a short historical review of international trends relating to housing and especially renting. we then focus more on iceland, mainly the rental market, and how tourism’s effects have often kept people stuck in rented properties. the data part of our research provides examples of low-income families’ ability to save for a down payment, thus ‘escaping’ the rental market during 2011-2022. we finally discuss the implications of our findings and what they mean for renters’ ability to become homeowners. 2. housing and rental trends internationally and in iceland housing is generally the most significant single asset today but is unevenly distributed (kuo, 2021). this wealth inequality underscores the marked economic distinctions between homeowners and individuals grappling with the challenges of achieving homeownership. the post-2008 financial crisis marked a crucial turning point, leading to widespread home evictions and housing-related setbacks (fields & hodkinson, 2017; immergluck, 2009) with low-net-worth households bearing the brunt (mian & sufi, 2015; waldron, 2024). following the european economic downturn, the younger demographic increasingly relied on assistance to secure housing (mckee, moore, soaita, & crawford, 2017; montanari & staniscia, 2017; preece, crawford, mckee, flint, & robinson, 2020). in the years preceding the gfc in 2008, homeownership percentages progressively rose across most countries (grinstein-weiss, key, & carrillo, 2015; jordà, schularick, & taylor, 2014). after the gfc, many individuals were thrust back into the rental market as foreclosures became distressingly common (hartley, 2011). although some regained a foothold in the rental market, homeownership percentages remained below the zenith achieved just before the gfc (eurostat, 2024). since the gfc, several prevailing factors have significantly influenced the capacity of individuals to save for a down payment. for individuals who previously owned homes but were forced to relinquish them after the gfc, a substantial portion of their savings was often tied up in their homes (mian & sufi, 2015). consequently, this demographic had to commence their savings endeavors anew. due to increased rental rates, it has also become more difficult for people in the rental market to set aside money for a down payment. rental rates between 2011 and 2014 rose, for example, two times faster than wages for renters, and home sale asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 39 © 2024 by the authors; licensee online academic press, usa prices increased four times faster than homeowners’ wages in salt lake city in the u.s. (salt lake city housing and neighborhood development, 2018). gete and reher (2017) show that rental rates in real terms rose during the same 2011-2014 period by more than 23% in the top 10% fastest growing metropolitan areas, yet tighter lending standards during that same period depressed homeowner rates (2017). these higher rates, combined with less accessibility to mortgage loans, may have caused institutional investors to enter the housing market with better access to finance and turn those properties into rentals (lambie-hanson, li, & slonkosky, 2019). u.s. data suggests that buyers are not buying more expensive houses because they earn more than before but because they have taken on more debt. davis, larson, oliner, and smith (2023) show that the average debtpayment-to-income ratio has risen recently. it is considerably higher than most of the 1990s and was only higher than its current percentage during the early 2000s. the prolonged low-interest rate environment during the 2000s up until 2021 (gamber, 2020) not only made real estate more affordable and propelled housing prices upwards, but it also curtailed the interest income generated from savings accounts, adversely affecting those accumulating funds for down payments. consequently, the interest earned on these savings during 2011-2020 lagged the levels experienced in the preceding three decades. a similar development in the international housing market occurred in iceland following the 2008 economic collapse. following the 2008 crisis and subsequent jump in unemployment, many households could not maintain mortgage payments and were thus forced out of their houses and into the rental market (ministry of social affairs, 2015). the percentage of households living in their premises dropped by 4% from 2005 to 2013 (jónsdóttir, 2015) while the percentage of people in the rental market increased from 17% in 2007 to 27% in 2013, with the increase mainly concentrated to people aged 25-34, low-income people and single parents (ministry of social affairs, 2015). the varying average household sizes in rented versus owned properties explain the difference in the growth rates of households and population historically, iceland has strongly emphasized private homeownership, with minimal state intervention in housing policy, primarily favoring self-building endeavors (sveinsson, 2004). iceland’s minister of infrastructure recently reiterated this emphasis during a presentation outlining governmental housing policies (ministry of infrastructure, 2023). studies by iceland’s public housing and construction authority (hms) show that two-thirds of people are in the rental market because of necessity, and less than 10% want to be in it (h. hms (2021). since households in the rental market tend to have lower incomes than homeowners, the question is particularly relevant for the low-income segment. the rental market in iceland is characterized by significant precarity, with the prevailing view that participation therein reflects a certain degree of failure (mixa et al. (2021), which may explain the historically relatively low percentage of people in that market. while the ratio is higher in other countries, the need for home ownership may remain high. for example, bergsten and hansson (2023) show that while around 58% of multi-family housing in sweden is rental, the long queues to access the rental market, income demands, and other factors make it inaccessible for households with limited income and savings. mass tourism has significantly impacted iceland’s housing market since the 2008 crisis, becoming the centerpiece of iceland’s economic resurrection (benediktsson, lund, & huijbens, 2011). the number of tourists arriving annually in iceland was 500,000 in 2007-2011 but then shot up to 2.3 million in 2018 (icelandic tourist board, 2018). that 2018 figure corresponds to approximately sixfold of iceland’s population during the same period. the percentage of iceland’s travel and leisure industry exports rose from 19% in 2009 to 35% in 2019 (statistics iceland, 2024c, 2024e). the massive inflow of foreign currency kept the icelandic currency strong, making imports cheaper than otherwise, thus dampening inflation pressure. this development had extensive implications on the demand for housing due to the increased number of tourists and immigration, mainly due to labor demand in the tourist industry (mixa & loftsdóttir, 2021, 2024). iceland’s housing fund estimated that the proportion of apartments rented out for long-term leasing in iceland had decreased from 10.6% in 2015 to 7.5% in 2019, with the percentage falling most substantially in reykjavík and hafnarfjörður (2019, pp. 7-8). given that the number of registered properties in 2018 was close to 88,000 in that area (registers iceland, 2024a). mermet estimates that around 4.5% of these properties in the capital area were listed on airbnb at some point in the year. the impact was especially significant in the downtown area, where about 20% of properties were short-term rentals; in certain parts, this figure exceeded 50% (mermet, 2019). elíasson and ragnarsson (2018) estimated that 15% of the total rise in house prices in real terms during the 2014-2017 period was due to airbnb short-term renting. their findings are significantly more than those in the united states. barron, kung, and proserpio (2020) estimated an effect of approximately only a fourth compared to iceland, despite pointing out that heavily owner-occupied areas, like most of iceland, were generally less affected. the increase of tourists also attracted foreign labor to iceland to fulfill the demand within the industry. new employment opportunities related to the tourism industry became a significant reason foreign nationals moved to iceland due to short-term and long-term employment opportunities (karlsdóttir & jóhannesson, 2016). in 2008, immigrants comprised less than 10% of tourism workers (vareikaité, minelgaité, & magnússon, 2022). by 2023, that percentage had risen to 44% (statistics iceland, 2024b). elíasson and ragnarsson (2018) estimated that the net inflow of people to the country had a 30% impact on the rise in housing prices during 2014-2017, or twice the effect of the increased housing demand created by airbnb. the added job creation due to the surge within the travel and leisure industry meant that iceland’s economy remained resilient after 2010 despite the massive losses related to the 2008 crisis. this economic expansion led asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 40 © 2024 by the authors; licensee online academic press, usa to higher wages, rising far above the consumer price index (cpi), meaning that real wages during the period rose substantially. the wage increase, however, lagged the rise in housing, with the housing index within the capital area rising almost threefold while the wage rise was just above doubling. as rental rates tend to correlate with housing prices, rental rates in iceland also increased during the period, although not as much as housing prices and close to the wage index. as figure 1. shows, this discrepancy increased considerably following the onslaught of the covid-19 pandemic, when the lower interest rate environment caused housing prices to surge. figure 1. wages, cpi, housing prices, and rental rates in iceland 2011-2022. source: registers iceland (2024b); statistics iceland (2024d) and statistics iceland (2024f). public policies did not react to these forces, such as creating programs to add more housing for the general public or divert new property buildings toward housing for residents. the failure to put a lid on rising real estate prices affects renters most, who tend to be concentrated in low-income groups (hedlund, 2019b). baxamusa raises broader questions about the appropriate role and responsibilities of the public and private sectors when more low-wage jobs are being created, as in iceland within the tourist industry in recent years than housing for them (baxamusa, 2020). while regulatory measures have been introduced in iceland to limit the effects of airbnb rentals (airbnb, 2023) those limitations have been ineffective. this situation rhymes with ireland, where the lightly regulated model of renting has led to an affordability crisis (waldron, 2024). baxamusa (2020) further points out that high-growth industries produce more renter occupations, explicitly listing leisure and hospitality as “renter industries” where most workers in the subsectors are renters. with the increase of immigrants and short-term workers, many of whom work in the “renter industry,” it is possible that a ‘generation rent’ may develop as opposed to the traditional private homeownership model in iceland, where private ownership has been a possibility for most people. 3. the research several variables are necessary to intertwine when estimating people’s chances of saving for a down payment and, if so, how long it takes. we begin by listing those variables, their usefulness, and limitations. they are wages, household consumption, and rental and energy costs, which are used to estimate what is left to save for a down payment. we estimate the housing prices to determine the down payment needed and interest rates a saver receives on accumulated savings. we then list the calculations. we gathered data for each year and assumed that each year would mirror the future. data for each year does hence not move forward to the following year, as if one is looking at a time series, but rather that the data each year is assumed to reflect future data with the variables being constant since that is the assumption each individual can reasonably infer about future expectations at any given point in time. 3.1. wages wage data was collected from statistics iceland (2024a) and wages were defined as total wages. such wages include work done during regular business hours and shift hours, bonus payments and extra hours, and other irregular wage payments. to estimate how much money a person has left to spend on consumption and savings, we look at after-tax wages manually using a calculator from iceland revenue and custom (2024) for each group. the data assumed monthly payments, the renter being single, january being the starting point, and the employee paying 4% to set aside into a mandatory pension. we assumed no money was being set aside for individual retirement savings. defining all renters as single persons simplifies the situation for couples due to tax considerations. different tax asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 41 © 2024 by the authors; licensee online academic press, usa codes for single persons compared to couples defined as married may thus limit the reliability of the results for couples with one child. instead of limiting the data to average wages, we compartmentalize wage groups. such data is available from 2014 and onwards. we adjusted data during the 2011-2014 period for each group using the general wage index for each group. statistics iceland categorizes average wages into different percentile groups, including the 20th, 40th, 60th, 80th, and 90th percentiles (statistics iceland, 2024a). for instance, the 20th percentile wage indicates that 20% of people in iceland earn less than this amount, while 80% earn more. we focus on the 20th and 40th percentile groups, given that most people in the rental market are in low-income groups (baxamusa, 2020). also, the 40th percentile is approximately where the wage limit happens to be for individuals eligible to receive governmental assistance, having to pay only 5% as a down payment for a home (hms, 2024a). we focus on the most common groups in the rental market in iceland: singles or single parents (ministry of social affairs, 2015) while also focusing on couples with one child. additionally, we compare average wages between women and men. it should be noted that migrants receive around 8% lower wages than icelanders for comparable occupations (statistics iceland, 2019). analyzing those effects is beyond the scope of this article, but waits for future analysis. 3.2. household consumption one of the lessons of the 2008 crisis was that many in iceland became heavily indebted due to high consumption during the goldilocks years before the crash. after the 2008 crisis, the icelandic government established a consumption benchmark program to determine household costs to maintain a sensible living (ministry of social affairs, 2011). depending on their structure, these costs are defined as a benchmark for family consumption. financial institutions have since used this database to determine whether families can receive housing loans and to what extent. these costs do not include housing costs, such as electricity and heating, rent, or mortgage. the benchmark consists of two scenarios. the first one aims to determine typical or what can be defined as reasonable costs for each family structure. we simplify by naming that scenario “typical.” the second scenario assumes that consumption is limited to bare necessities. we define that scenario as “bare.” our analysis shows that there is a considerable difference. typical costs are often more than twice the bare costs. in the database, it is possible to manually see how these costs vary by selecting a few predetermined variables. the most significant variables are the number of adults and children in each family. one can choose whether the family lives in the capital area or more rural areas. here, we limit the analysis to the capital area. since houses are most expensive near central places, where one might not need a car, we assume that people in our examples own a vehicle. these assumptions are due to the need to delimit the analysis, while further extensions would be interesting. after considering these costs, they are deducted from the after-tax wages depending on whether one assumes typical or bare costs. this provides information on what money is left for rental costs and energy, which then provides an estimate of what money is left to set aside for savings. direct data is available for 2011-2019. the numbers have not been updated since then, and an estimation is thus needed. the year 2019 has been used as a starting point and adjusted for 2020-2022 by the cpi. 3.3. rental costs registers iceland began estimating rental prices monthly in iceland in 2011, creating a rental index for the capital area. it also began assessing rental prices in 14 regions, of which seven are in the capital area. those estimates differed between apartment size types (registers iceland, 2024c). from such data, one can estimate the average rental cost per square meter for a specific apartment type within each area. we compiled the average annual prices for each apartment type in an area within the capital. we did not focus on the area with the highest turnover since it is also the most expensive. instead, we rely on an area with the second highest turnover but is among the cheapest within the capital area (between kringlumýrabraut and reykjanesbraut). we rely on an area with a large enough sample to be considered somewhat reliable (some areas have small samples). 3.4. energy costs the icelandic regional development institute provides information about electricity and heating costs for general households (icelandic regional development institute, 2024). in our study, we use what the institute defines as the lowest electricity and most common cost for heating in reykjavík. once typical or bare costs, in addition to rental and energy costs, have been deducted from the net income, the remaining money, if any, can be set aside as savings for a down payment. 3.5. housing purchase prices registers iceland provides information about square meter sales prices in various sections of iceland (registers iceland, 2024b). we assume that people in the rental market would buy a home in a relatively inexpensive neighborhood. among the cheapest ones is breiðholt, a neighborhood that is relatively far away from the downtown center. there are also sufficient sales transactions, so the data is reliable. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 42 © 2024 by the authors; licensee online academic press, usa square meter sales data is compiled for that area from 2011-2022. the price of each apartment is then multiplied by the number of square meters of the apartment bought. we assume that a single person buys a 60square-meter apartment. that number rises to 70 for a single person with one child and 80 for a couple with one child. we assume buyers must save for a 15% or 5% down payment, the target price to accumulate. 3.6. interest rates we presume that people invest their savings in a bank account due to stability in returns instead of stocks and bonds. savers in iceland have two options to save in bank accounts: non-indexed accounts and bank accounts indexed to the cpi. there are pros and cons to either choice. the deciding factor in choosing the non-indexed account is that since 2010, people in iceland have received a certain amount of interest on their tax-free savings (including net capital gains and dividends from listed companies and coupon payments from bonds). hence, it is more apparent how much people save from a nonindexed account, while nominal returns from index accounts would fluctuate with inflation. we thus calculate first total interest returns, then consider and apply the capital gains tax only in cases where the annual interest rate income exceeds the tax-free threshold. we assume people put their savings into a one-year time account, which provides slightly higher interest and is available with relatively short-term notice. to estimate the savings in real terms, we deduct the average inflation each year from the nominal savings rate. 3.7. summarization to summarize, we begin by finding the amount available for savings. this is done by finding total wages and subtracting taxes, typical or bare consumption, rent, and energy costs. this gives us the money available to save. 𝑃 = 𝑇𝑊 − 𝑡 − 𝐶 − 𝑟𝑒 (1) we denote p as the annual savings, tw is the total wages, t is taxes, c is consumption (typical or bare), and re is rent and energy costs. 3.8. accumulation of savings savings and interest per year are added up. when savings are negative, or if it takes over 30 years to accumulate, we set the value to zero and assume that saving for a down payment is impossible. the money is assumed to provide a twelve-month interest rate. the sum of that amount is the total annual savings. that value is plugged into a rearranged logarithmic future annuity formula as the future value, which determines the number of years required to save for a down payment. the target amount is the square meter price times the size of the home bought for each type of family unit and the percentage, 15% or 5%, needed for a down payment. in calculating the years it takes to save for a down payment, we rearrange the future annuity formula to find the years it takes to accumulate the target price. this formula takes into account interest on interest, assuming the same annual savings are set aside every year. the rearranged future annuity formula is: 𝑛 = log ( 𝐹𝑉 ×𝑅 𝑃 +1) log (1+𝑅) (2) the number of years needed to save for a down payment is n, the target amount, which is a down payment, is f.v. (future value), p is the annual savings, and r is the interest rate per period in real terms. we thus estimate future interest on annual savings and interest. since we estimate a future target price each year for a target that fluctuates, i.e., a percentage of housing prices, we apply real interest rates within the annuity formula. that is done by subtracting the average inflation for each given year from the nominal returns received in the bank account. this assumption about savings reflects what people might expect in real terms; however, the rising housing prices relative to other goods and services diminish the real value of these savings. 4. results we look at three types of groups. we begin by looking at the average icelandic person income-wise. first, we look at what is categorized as “all” by statistics iceland (2024a) followed by women and men (the only gender categories available). we then focus on groups based on their income: the lowest 20% percentile income and lowest 40% percentile income groups. the third type is subgroups of single individuals, single parents, and couples with one child. 4.1. average income we begin by looking at the years it takes to save for a 15% down payment for an average wage-wise person, man or woman, as seen in figure 2. each case assumes that the person is single and childless, owns a car, and lives in a studio rental apartment in the kringlumýrabraut area. we do not observe the time for a 5% down payment since none of those groups are eligible for such government assistance. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 43 © 2024 by the authors; licensee online academic press, usa figure 2. the time it takes to save for a 15% down payment with typical spending from 2011-2022. since these groups could very quickly save for a down payment during the whole 2011-2022 period by consuming only the bare minimum, or around one year, our focus is on typical spending. it takes an averageincome person and average male a slightly more protracted amount of time to save for a down payment in 2022 as in 2011 when iceland was still reeling from the economic crisis. women need, however, a slightly shorter time to save for a down payment in 2022 compared to 2011, but still a considerably longer time compared to men. even though wage discrepancies between the sexes have diminished, the difference is still visible, partly due to the amplification in the narrow distinction between after-tax wages and consumption. looking at the savings possible by living a typical life for these two genders, as seen in figure 3, one can see the effects of wages constantly rising more than the cpi during 2011-2022, as demonstrated in figure 1. with higher real wages, the average-wage person has been able to set aside more money for savings constantly. during 2011-2014, it remained similar, between 20% and 23%, but it has risen continuously and hovered around 30% during 2015-2022. this trend was reflected in the number of years reaching the target from 2011-2016. after that, however, it remained steady until the covid-19 pandemic hit in march 2020, causing central banks to lower interest rates and a housing boom. interest on savings fell by around 2% of the total annual savings set aside and interest returns, while the housing index rose from late 2019 to late 2022 almost 50%. hence, the years needed to save for a down payment increased from 1.8 to 2.3 during 2020-2022. figure 3. average savings and years needed to save for a 15% down payment 2011-2022 for all genders. as expected, the average-wage man needed fewer years to save for a down payment than the average-wage person. figure 4. illustrates that the time required rose from a low of 1.3 years during 2016-2017 to 1.9 years asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 44 © 2024 by the authors; licensee online academic press, usa in 2022, or around 50%, despite the potential to save each year continued to increase in the following years, although the change was incremental. figure 4. average savings and years needed to save for a 15% down payment 2011-2022 for men. figure 5. illustrates that the average-wage woman must spend more years saving for a down payment, or roughly three years, as opposed to 2 years for an average-wage man. the reason is that the average wages for women have risen (very) slightly more than men’s. men had 13.6% higher salaries in 2011 but 13.3% in 2022 (statistics iceland, 2024a). this slight change still has had the effect that it takes the average-wage woman fewer years to save for a regular down payment in 2022 than in 2011. this trend is also exemplified by the percentage a woman can set aside for savings, which rose 9% versus 8% for men. figure 5. average savings and years needed to save for a 15% down payment 2011-2022 for women. 4.2. 20th percentile income group we first look at a single person in the 20th percentile income group. that person cannot save for a down payment by living a typical consumption standard, so we focus on a bare state of expenditures. figure 6. shows that by living by such bare standards, that person can in 2-3 years save for a 15% down payment and less than a year by only needing to save for a 5% payment. the number of years it took was stable in 2011-2015 but has risen considerably since then, reaching a peak in 2022. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 45 © 2024 by the authors; licensee online academic press, usa figure 6. the time it takes to save for a 15% and 5% down payment with bare spending from 2011 to 2022 for a 20th percentile single person. figure 7 shows that the percentage of money available to set aside as savings remained similar during 20112022. the number of years needed to save for a down payment never-the-less increased and has never been as high as in 2022. figure 7. average savings and years needed to save for a 15% down payment 2011-2022 for a 20th percentile single person. next, we focus on a single parent with one child in kindergarten. like a single person in the same income group, there is no realistic chance of saving for an apartment or living a typical expenditure lifestyle. when saving for a 15% down payment, the task is virtually impossible for 2012-2013 and practically impossible for most other years, being ten years in 2022. the task is much more manageable when aiming for a 5% down payment, which, despite rising housing costs, has been at the lowest levels during the period, hovering between 2-3 years. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 46 © 2024 by the authors; licensee online academic press, usa figure 8. the time it takes to save for a 15% and 5% down payment with bare spending 2011-2022 for a 20th percentile single parent. as figure 9 illustrates, single parents have practically no chance of saving for an apartment, even when spending merely bare expenditures. the lowest figure during 2011-2022 was eight years, which rose to 10 years in 2022. this trend occurred despite wages increasing considerably and an ever-increasing amount available to set aside under bare conditions. figure 8 illustrates that the 5% barrier is a more realistic goal. figure 9. average savings and years needed to save for a 15% down payment 2011-2022 for a 20th percentile single parent. figure 10 shows that a couple with one child should be able to save for a down payment in a relatively short time. even under typical expenditure circumstances, the number of years needed is under three, while it was over five years from 2011 to 2012. if the couple is unmarried, they might still be eligible to receive governmental assistance for the 5% down payment option. here, the increased salary considerably outweighs the increase in housing prices, with the savings years gradually decreasing. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 47 © 2024 by the authors; licensee online academic press, usa figure 10. the time it takes to save for a 15% and 5% down payment with bare and typical spending from 2011 to 2022 for a 20 th percentile couple with one child. the effects are further shown in figure 11., which shows that the couple in this example has been able to set aside much more money (almost a fourth of net wages) in the later part of the period compared to the first years. this trend is amplified with two wage earners in the household. hence, despite typical living standards and being low-income, such a household has opportunities to save for a down payment, which explains why single individuals and single parents are most likely to be in the rental market. figure 11. average savings and years needed to save for a 15% down payment 2011-2022 for a 20th percentile couple with one child. 4.3. 40th percentile income group finally, we look at the same three group samples in the 40th percentile income group. we start again with a single person living in a studio apartment and owns a car. compared to the 20th percentile single person, the possibility of owning a home increases dramatically. while the 20th percentile person could only save by bare expenditures and then need almost three years under such conditions for a 15% down payment, a 40th percentile person could lead a typical lifestyle expenditure-wise and save for a down payment in approximately four years, as figure 12 shows. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 48 © 2024 by the authors; licensee online academic press, usa figure 12. the time it takes to save for a 15% and 5% down payment with typical and bare spending 2011-2022 for a 40th percentile single person. meanwhile, a single person in the 20th percentile could save around a third of net wages. figure 13 shows that the percentage hovers in the mid-40% for the 40th percentile person for most years. it takes only a tad bit less than two years for such a person to save for a 15% down payment by living in bare expenditure conditions. this is almost a year less than a person in the 20th percentile group. figure 13. average savings and years needed to save for a 15% down payment 2011-2022 for a 40th percentile single person. while the situation is better for single individuals in the 40th percentile, it is still strenuous for single parents. they still cannot set money aside for a down payment, living typical lives expenditure-wise. while the 20th percentile single parents needed around ten years of living in bare conditions to save for a down payment, figure 14. shows that it takes a 40th percentile single parent a much more tolerable four years. 2022 is notably the second-highest year in the sample, hovering around or above three years for most of the period. it is, however, possible to reach the 5% threshold in only approximately one year, compared to 2-3 years for a single parent in the 20th percentile group. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 49 © 2024 by the authors; licensee online academic press, usa figure 14. the time it takes to save for a 15% and 5% down payment with bare spending 2011-2022 for a 40th percentile single parent. figure 15 shows that even though more money is available to save, or 25% in 2022 compared to 17% in 2011, the number of years it takes to save for a 15% down payment was practically the same due to higher rental costs and housing prices. figure 15. average savings and years needed to save for a 15% down payment 2011-2022 for a 40th percentile single parent. figure 16. demonstrates that a couple in the 40th percentile with one child can easily save for a down payment. the time it takes has been stable throughout the 2011-2022 period. the amount of time leading a typical expenditure lifestyle saving for a 15% down payment is around a year and a half compared to almost three years for the comparable family in the 20th percentile income category. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 50 © 2024 by the authors; licensee online academic press, usa figure 16. the time it takes to save for a 15% and 5% down payment with bare and typical spending 2011-2022 for a 40th percentile couple with one child. although housing prices have significantly risen, the time it takes to save for a down payment for a 40th percentile couple with one child remains low. figure 17. shows that the percentage of wages available to set aside for savings has canceled out the higher cost associated with a 15% down payment. figure 17. average savings and years needed to save for a 15% down payment 2011-2022 for a 40th percentile couple with one child. 5. discussion we analyzed the time required for individuals and specific family types in the capital area’s rental market to save for a down payment, assessing whether saving is feasible under normal conditions. it appears that, on average, the duration required to save for a down payment in 2022 remains similar to that in 2011. this similar amount of time is particularly striking given the overall economic prosperity. notably, women typically require more time to save for a down payment than men, a discrepancy that greater familial responsibilities, such as child-related sick leaves, may exacerbate. among the three family categories analyzed (single, single with child, married), those in the 20th income percentile, especially single parents, face considerable challenges accumulating enough for a down payment. part of the analysis focused on the difference between the 5% downpayment and 15%. our study shows that lowering the down payment threshold to 5% is essential for the 20th percentile income group´s chances of becoming homeowners. it can be argued that single parents in that category would need additional aid to have a realistic hope of becoming homeowners. in the 40th percentile income-group category, the chances are asian themes in social sciences research 2024, vol. 8, no. 1, pp. 37-53 51 © 2024 by the authors; licensee online academic press, usa considerably better in all three categories. single parents in that group have, however, still difficulties reaching that aim with a 15% down payment threshold. having access to 5% down payments is essential for that group. the icelandic government has stated that it intends to support people willing to become homeowners. our data indicates that the 5% down payment program might be essential in opening doors for such possibilities. while people might eventually manage to save for a down payment, they could ask themselves whether they perceive it to be worth it. as timperley says in her book generation rent, many young people have given up hope of ever being able to save for a down payment and ask themselves if it is worth trying. the yolo (you only live once) attitude has emerged, which can be viewed as a response to an increasingly insecure world despite higher wages due to higher rental rates and rising house prices (2020, pp. 8–23), meaning that becoming a homeowner being is seemingly ever more far-fetched. references airbnb. 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https://doi.org/10.1080/02673037.2021.2022606 https://doi.org/10.1080/02723638.2015.1101251 asian themes in social sciences research issn: 2578-5516 vol. 8, no. 1, pp. 54-68 2024 doi: 10.33094/atssr.v8i1.2080 © 2024 by the author; licensee online academic press, usa accepted: 10 december 2024 | published: 27 december 2024 54 © 2024 by the author; licensee online academic press, usa technical efficiency evaluation of sudan's economy khalafalla ahmed mohamed arabi college of business, king khalid university, saudi arabia. email: karabi@kku.edu.sa abstract this paper aims to estimate the technical efficiency of sudan's economy from 1960 to 2020 and explore the impact of economic policies on technical efficiency. it used stochastic frontier analysis and beta regression to estimate technical efficiency, the dependent variable that economic policy influences. the study preferred the cobbdouglas production function over the transcendental logarithmic production function (translog). the first two years showed an upward technical efficiency trend, followed by a downward trend for 40 years. following the 2005 signing of the peace deal that marked the end of the civil war, the technical efficiency trend rose, accompanied by oil exports. the technical efficiency differed from its optimal value by 20%. policies pertaining to the economy that had an impact on technical efficiency included the devaluation of the currency rate, the increase in ordinary expenditures, indirect taxes, and the ratio of the balance of payments to the gross domestic product. moreover, the elimination of trade barriers is of the utmost importance, and policymakers should be serious about enhancing the competitiveness and productivity of the economy. this may be accomplished by implementing tax reform and shifting the priorities of government expenditure, which will eventually result in the release of additional funds for development. keywords: economic policies, oil exports, tax reform, technical efficiency, trade obstacles. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific funding institutional review board statement: not applicable. transparency: the author confirms that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. this study followed all ethical practices during writing. competing interests: the authors declare that they have no competing interests. 1. introduction 1.1. background through a variety of policies, all nations pursue economic growth as their primary goal. since gross domestic product (gdp) shows the income produced by various economic agents, it is a commonly used metric for assessing a country's economic behaviour. each economic sector uses factor payments and products to measure the cost of producing goods and services in the economy. the level of technical efficiency in utilizing these resources can influence the varying outcomes of resource allocation to achieve a specific aim. technical efficiency refers to the utilization of productive resources to optimize output from a specific combination of inputs. thus, inefficiency can be defined as the discrepancy between actual production values and the highest possible values for a given technology (fuente-mella, vallina-hernandez, & fuentes-solís, 2020; kibara & balazs, 2019). therefore, numerous publications have addressed this topic by examining various products in terms of their production function, cost function, or profit function. pires and garcia (2012) demonstrated that it is possible to use an appropriate breakdown of total factor productivity (tfp) to analyze a diverse set of countries over a long period of time. this breakdown allows for the assessment of not only the contributions of technical progress and technical efficiency change to long-term growth but also the impact of scale and distributive efficiency change. efficiency is the goal of numerous global social and economic initiatives and reforms. the possibility of efficiency gains is a driving force behind the deregulation of markets, the elimination of trade barriers, and the privatization of state-run businesses. sudan's gross domestic product fluctuated around an average growth rate of 0.345; the maximum growth rate is 12.92; and the minimum is -9.11. the country, which has large agricultural and mineral resources, is https://www.doi.org/10.33094/atssr.v8i1.2080 mailto:karabi@kku.edu.sa asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 55 © 2024 by the author; licensee online academic press, usa strategically located between the middle east and west africa. it has received international financial support and implemented economic reform programs. however, it faces weaknesses such as a weakened democratic transition, a dependence on agriculture, oil, gold, and international aid, persistent human and food insecurity, high unemployment rates, corruption, and a reliance on out-dated technology. the agricultural sector contributes about 32% to gdp, followed by industry (18%) and services (50%). 1.2. problem statement effective governance, encompassing economic, social, and political dimensions, is vital for growth and development. it should be participatory, accountable, transparent, and guided by legal principles. poor governance can impede income generation, effective public spending, and trust. the main question is: were the huge investments in development projects supported by effective governance? what is the level of efficiency? what are the main economic policies that affect technical efficiency? 1.3. objectives of the study the objectives of this work are to assess the technical efficiency of the cobb-douglas and transcendental logarithmic production function in sudan using a stochastic frontier approach and to examine the factors contributing to efficiency. 1.4. justification and scope of the study the government's primary goal is economic growth, which should be evident in societal welfare. the economy should operate at full capacity to achieve the target. therefore, measuring the technical efficiency of sudan's economy for the period 1960–2020 is a necessity, using gross domestic product as the primary measure of technical efficiency. 2. current policies 2.1. sudan's development plans the 1940s saw the creation of sudan's first economic plan, an investment program for 1946–1951, and another program for 1951–1956, which succeeded it. however, it is thought that the ten-year plan 61/196270/1971 was the first real attempt at planning because it transformed the economic programs from being haphazard to being based on precise quantitative and qualitative goals. the government in 1970–1975, as part of the socialist approach, drafted the first five-year plan. its principles included centralizing planning and implementation, monopolizing public institutions for investment and commercial activity, and modifying the plan when system orientations changed. according to aliraqi (2018) the nation accumulated enormous debt early in the 1980s because of several issues, including the unreliability of development projects and the lack of objectivity in their planning. during the 1980s, the government established three-year rolling programs. the triple economic rescue program of 1990–1993 reinforced the direction of economic openness that the national salvation revolution of 1989 initiated. the program's goals were to move the sudanese economy away from stagnation and toward production, as well as to alter the institutional, financial, and economic structures required to ensure everyone's participation, achieve social balance, and correct distortions in the country's economic structure. the program included privatizing public-sector utilities, attempting to stabilize the exchange rate, cancelling import and export licenses, and lifting all price restrictions. all of these actions helped to break the government-dependent economic stagnation, and by the middle of 1992, the gdp growth rate had increased by roughly 7.4%, mostly due to the notable 25% increase in agricultural production. the collapse of inflation to record levels in 1996 was an obvious indication of his deficiencies in handling the wider economic crisis in sudan (aliraqi, 2018). after the comprehensive national strategy (1992–2002) failed to achieve its goals, the government introduced the quarter-century national strategy. both strategies are nearly identical in terms of dimensions, objectives, legal framework, planning reference, and pillars. naturally, their theoretical frameworks may have drawn inspiration from the malaysian experience. the former strategy focused on exporting oil. additionally, the end of the civil war resulted in increased efficiency. 2.2. fiscal policy governments use fiscal policy as an important tool to allocate and redistribute resources, especially in developing countries, to offset the private sector's insatiable resource allocation and distribution. it indirectly raises or lowers taxes, causing the economy to spend more or less. fiscal policy can have a beneficial and negative impact on the economy. positive government actions, such as infrastructural services, education, health, and research and development (r&d), can boost employment and lower unemployment. negative government actions, such as expenditures on wages and salaries, administration, the military, and security, can also have a negative economic impact. sudan's government raises funds for public initiatives using both tax and non-tax income. tax revenue encompasses both direct and indirect taxes, whereas non-tax revenue includes contributions from businesses, banks, pension plans, interest, fees, and public service costs. oil revenues were a substantial source of federal revenue in the late 1990s and early 2000s (ahmed, rahamtalla, & michael, 2004). the median shares of direct tax and indirect tax in total taxes are 17% and 83%, the maximum 0.45% and 99%, and the minimum 55% and 0.009%. the direct tax share is more dispersed than the indirect tax, where the coefficients of variation are 0.63 and 0.14, respectively. three chapters cover current expenditures. chapter 1 covers all government employees' earnings and pay, including the federal government's payments to the social security and pension funds. chapter 2 deliberates the items and services asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 56 © 2024 by the author; licensee online academic press, usa obtained by government bodies. this type of spending includes social subsidies. the final chapter looks at the federal rule chamber's compensation for state agricultural taxes, as well as current and development contributions to states. the share of ordinary expenditure in total expenditure exhibited a median of 0.87, a maximum of 0.985, a minimum of 0.38, and a coefficient of variation of 0.021. it is worth noting that education and health receive less than 3% of the budget, whereas the top government receives more than 12% in administrative expenditure. 2.3. external sector policies 2.3.1. exchange rate devaluation since september 1978, the international monetary fund (imf) has advised sudan's succeeding administrations to depreciate the sudanese pound over time to reduce the country's trade imbalance. even though it did not satisfy the marshall-lerner criterion, which stipulates that a nation's total export and import demand elasticities must be greater than one, devaluation proceeded. it is a critical component of the strategy's effectiveness. they did not meet the marshall-lerner criterion, which requires that the total of a country's export and import demand elasticities be greater than one. the maximum growth of supply-side forces determines a country's balance-of-payments limit when its growth rate falls below the maximum growth of its economy. this growth rate must be compatible with a current account equilibrium or a sustainable expansion of foreign borrowing. 2.3.2. foreign trade policies the ministry of foreign trade has implemented protectionist policies, such as import and export levies. another option for limiting imports was to use quota systems, which impose import and export licenses as well as restrict foreign currency transactions using unilateral exchange rates. in february 1992, the finance minister liberalized the economy by removing mechanisms like quotas and licensing to ensure the availability of specific items. the country joined the common market and the customs union of eastern and southern africa (comesa). according to a former minister, corruption is common in the external sector, including tenders, firm registration, concessions, and exemptions. this results in capital transfers that return to the country as foreign investment, taking advantage of the privileges and exemptions offered to foreign investors, which then facilitate the acquisition of privatized public businesses. 3. literature review rosid, xuefeng, hossain, hasan, and sultanuzzaman (2021) used stochastic frontier analysis to investigate the relationship between total net worth and gdp in 106 countries from 2009 to 2018. credit suisse and the world bank provided data on net wealth and global development indicators. they discovered that gdp has a negative impact on wealth maximization efficiency. the robust regression analysis demonstrated that imports, broad money, and the exchange rate have a detrimental effect on a country's wealth efficiency, while the country's historical efficiency has a beneficial impact on the succeeding year's efficiency. kibara and balazs (2019) work examines the use of parametric sfa and non-parametric dea in measuring production efficiency. researchers prefer parametric sfa because it treats deviations in a random manner, taking measurement mistakes and noise into account. they prefer a one-stage latent class stochastic frontier model over standard sfa models, which assume that all production technologies are homogeneous. the study also demonstrates that easing up on the assumptions of random error independence and symmetry can fix the "wrong skewness" problem in stochastic frontiers. when addressing multicollinearity, a principalcomponents-based method does not need to omit irrelevant variables. fuente-mella et al. (2020) study on 34 (organisation for economic co-operation and development) oecd countries from 2003 to 2012, discovered that nations with higher economic growth rates had higher efficiency rankings, with luxembourg and the united states topping the list. the study discovered that we could evaluate a diverse range of countries over time using an adequate breakdown of total factor productivity (tfp). this split enables an evaluation of not just the contributions of technological advancement and technical efficiency change to long-term growth but also the impact of size and allocated efficiency change. auci, laura, and manuela (2019) assessed the productivity of 15 european countries by employing the cobb-douglas and translog models. the researchers found that the size of the government has a beneficial impact on efficiency. they used public expenditure as a measure of government size and found that different types of government might have either a positive or negative effect. from a policy standpoint, it is not advisable to reduce public spending to raise gdp. pires and garcia (2012) estimated the world stochastic frontier (1950–2000) using an imbalanced panel of output and production components from wealthy and poor nations. data from penn world tables supports the normal truncated distribution assumption. the projected value of technological inefficiency over time is positive, indicating a decreasing pace of technological efficiency. yihua (2008) attributed china's irregular economic growth to growing industrial efficiency gaps, a result of government policies and provinces with larger governing bodies, less rigid criteria, more human capital, and international trade operations. ali and hamid (1996) investigated technological advancement and efficiency, as well as their contribution to economic growth and other elements of production, by employing more efficient ways in pakistan's manufacturing and agriculture sectors. they attempted to quantify technical change, technical efficiency, and productivity using both hicks neutral technical change and variable, continuous, and discrete technical asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 57 © 2024 by the author; licensee online academic press, usa change. furthermore, this article examines the impact of technological progress on input demand. they discovered technical change occurring at a continual and variable rate. margono and sharma (2004) examined the evolution of technical efficiency and total factor productivity (tfp) in indonesian provincial economies from 1993 to 2000. they discovered that technological efficiency is only around 50%, with factors such as schooling years and sectorial differences influencing growth. tfp increased between 1.65% and 5.43%, with a 3.59% growth rate. walid and alali (2009) used the stochastic production frontier (spf) technique to assess a country's technological efficiency and economic performance. they discovered a considerable difference between technological efficiency perceptions and traditional productivity indicators. institutional elements such as trade openness, state institutions, and political systems all have a substantial impact on global economic performance. zwane, biyase, maleka, and maluleka (2020) looked at technological efficiency drivers in southern african development community (sadc) nations from 1985 to 2014. they estimated output efficiency using stochastic frontier analysis and a variety of datasets. the results reveal that labour, capital, and human capital all have a favourable impact on economic growth. government spending and trade openness have a negative impact on technological efficiency. the analysis suggests that investing in human capital, labour, and technical efficiency will boost economic growth. christopoulos and mcadam (2015) study scrutinized technical efficiency in the middle east and north africa, and finds that political and social factors, as well as economic indicators, have a major impact on development and frontier efficiency profiles. the study employs a huge data set and robustness checks to provide a thorough baseline for other studies. jajri and ismail (2006) stated that since the 1980s, malaysia's manufacturing industry has played an important role in economic growth by adding to output and jobs. the government's goal is to have an industrialized nation by 2020. however, productivity has not hit its peak, with growth slower than wages. this research examines technical efficiency, technological change, and total factor productivity (tfp) developments in malaysia's manufacturing industry. the results suggest that tfp growth is expanding, with food, wood, chemical, and iron items exhibiting high technical efficiency. shahabinejad, zare mehrjerdi, and yaghoubi (2013) used stochastic frontier analysis to examine the rise of total factor productivity (tfp) in 44 asian nations. they discovered that in 75% of these economies, technological development had a negative influence on productivity growth. japan experienced the highest productivity growth (2.55%), followed by saudi arabia, korea, and hong kong. tfp growth in newly independent countries was the slowest due to a lack of technological progress. moussir and liouaeddine (2022) inspected the effect of technological efficiency on economic complexity in developing countries. using two methods, they discovered that underdeveloped countries produced only 16% of their potential outputs, compared to 51% in high-income countries. the study also indicated that technical efficiency has no substantial impact on economic complexity across regions. barasa, knoben, vermeulen, kimuyu, and kinyanjui (2017) investigated the impact of innovative activities on efficiency in manufacturing enterprises in developing nations. they believe that internal r&d improves efficiency, whereas foreign technology acquisition has the opposite impact. however, combining internal r&d with foreign technology reduces efficiency. the study suggests that domestic r&d may have a dynamic effect on efficiency, whereas poor human capital rates may impede r&d activity and foreign technology adoption. alsaleh and abdul-rahim (2019) study looked at the impact of economic factors on technical efficiency (te) rates in the eu-28 bioenergy sector from 1990 to 2013. it found that labour input and gdp have a substantial impact on te. the findings inspire governors and parliamentarians to look into te rates, provide insights for bio-energy industry senates, and make recommendations to financiers focused on directinvestment income. achirawee and xu (2018) examined thailand's gdp efficiency from 1993 to 2017, finding 2017 as the poorest year in terms of efficiency. data envelopment analysis (dea) was employed to enhance the evaluation. to increase inputs and gdp, the study recommends eliminating negative values associated with slack movement and supporting export-led growth, company incubators, and entrepreneurship. the report offers strategic advice to thailand's government on how to increase its gdp. wijeweera, villano, and dollery (2024) study uses panel data from 1997 to 2004 and a stochastic frontier model to investigate the connection between gdp growth and foreign direct investment (fdi). the findings indicate that while skilled labour from fdi boosts economic growth, corruption has the opposite effect. laurits, dale, and lawrence (2001) demonstrated the duality between price and quantity and emphasized the significance of additive and homogeneous production possibilities in statistical testing of production theory. kumbhakar and tsionas (2011) discussed recent advancements in efficiency measurement using stochastic frontier (sf) models in various fields. they discussed input-oriented technological efficiency, latent class models, and local maximum likelihood approaches. they highlight recent developments in estimating challenging models and include advancements in other fields. romer (1986) study presented specific model of long-term growth, which makes the assumption that knowledge is an input with rising marginal productivity. according to this model of commercial equilibrium, big nations grow more quickly, private agents can magnify minor disruptions, and growth rates can rise over time. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 58 © 2024 by the author; licensee online academic press, usa rusydiana, rani, and cahyono (2021) study examined the stochastic frontier approach (sfa) research on islamic economics and finance (ief) using 109 articles. results show a significant increase in publications from 2009-2019, with the most published in the international journal of islamic and middle eastern finance and management. the sfa application research is divided into four clusters, with cost efficiency being the most widely used. the state-of-the-art in stochastic frontier analysis (sfa) in econometrics is highlighted in nguyen (2020) work, which also emphasizes novel research approaches for more reliable and effective outcomes. although there are still unresolved issues, sfm in microeconomics is helpful for examining regression models and production efficiency. this is the first econometric survey of sfa. mastromarco and ghosh (2009) investigated the effects of r&d spending, imports of machinery and equipment, and foreign direct investment (fdi) on the total factor productivity of emerging nations using stochastic frontier analysis. they discover that while r&d, capital goods, and fdi increase efficiency, their benefits rely on the amount of human capital that has been acquired. for r&d, formal schooling is increasingly crucial. schmidt (2002) comparing various estimation techniques, stated that when estimating production efficiency, stochastic frontier models take maximally or minimally into account. these models' random noise causes a one-sided departure from the frontier, a phenomenon commonly referred to as inefficiency. we also employ data envelopment analysis and other nonparametric methods that do not explicitly incorporate randomness. both authors, lovell and kumbhakar, are prominent figures in the subject; lovell co-authored important papers, while kumbhakar was the most significant. cornwell and peter (2008) a production function provides the maximum possible output with inputs, defining a boundary or "frontier" that deviations from can be interpreted as inefficiency. stochastic frontier analysis (sfa) provides techniques to model the frontier concept within a regression framework, allowing for the estimation of inefficiency. this chapter focuses on estimating production frontiers and measures of technical inefficiency relative to them, using panel data and econometric and statistical detail. wang and schmidt (2002) stated that for stochastic frontier models with one-sided inefficiency u that can be estimated in a single step, this work suggests a class of one-step models. it makes the case that two-step processes are biased and provides monte carlo data that demonstrates this. the study makes the case that one-step models are more suited to comprehending how company features affect efficiency levels. lovell (1995) examined the econometric methodology for efficiency analysis. he differentiated between the econometric methodology and the mathematical programming methodology. he examined several empirical studies that illustrate the utilization of the econometric approach, particularly in the domains of (1) agricultural productivity, (2) labor market efficiency and equity, (3) standard of living assessment, (4) quality service establishment, and (5) environmental externality evaluation. this study is relevant to previous research because it employs stochastic frontier analysis to assess the efficacy of the gross domestic product. beta regression distinguishes the influence of economic policies on the dependent variable, technical efficiency. 4. the methodology 4.1. model specification the data envelope analysis (dea) technique deterministically measures efficiency, assuming that deviations from ideal output levels are due to inefficiency. stochastic frontier analysis (sfa) uses econometric methods to distinguish between technological inefficiency and random shocks, efficiently identifying both. sfa enables departures from the frontier, allowing for differentiation between random shocks and technical inefficiency. we will use the sfa as the analytical method to estimate sudan's production function, which depends on two factors of production: labour force and capital. given the challenges in obtaining comprehensive data on the entire series of capital stock, we opt to use gross fixed capital formation as a substitute. the resulting technical efficiency from equation 3 will serve as the dependent variable in equation 5, which i will estimate using beta regression. this is because the dependent variable's technical efficiency values fall between 0 and 1. 𝑦𝑡 = 𝛼 + 𝑓(𝑋𝑖𝑡𝛽) + (𝑣𝑖 − 𝑢𝑖) (1) equation 1 represents a model where 𝑦𝑡 is the logarithm of production for a given period t, 𝑓(𝑋𝑖𝑡𝛽) is the linear production function (cd, translog), i represents the index for different units, 𝑋𝑖𝑡 is a vector of input variables, 𝛼 is the frontier intercept, β is an unknown parameter, 𝑢𝑖 is a non-negative random variable representing technical inefficiency, assumed to follow a truncated normal distribution with mean μ and variance σ2 u, and 𝑣𝑖 is a random error assumed to follow an independent and identically distributed normal distribution with mean 0 and variance.𝜎𝑣 2. technical efficiency, with the maximum attainable output for given inputs, is: 𝑡𝑒𝑡 = 𝑦𝑡 𝑦𝑡 ∗ = 𝑓(𝑋𝑡;𝛽)𝑒−𝑢𝑡𝑒𝑣𝑡 𝑓(𝑋𝑡;𝛽)𝑒𝑣𝑡 = 𝑒−𝑢𝑡 ∈ [0,1] (2) equation 3 through 5 comprise the empirical models. 𝑙𝑜𝑔𝑦𝑡 = 𝛼 + 𝛽1𝑙𝑜𝑔𝑙𝑡 + 𝛽2𝑙𝑜𝑔𝑘𝑡 + 𝑣𝑡 − 𝑢𝑡; 𝑣𝑡~𝑁(0, 𝜎𝑣 2); 𝑢𝑡~𝐹 (3) where y is the output (real gdp), l is the labour force, and k is a proxy for capital stock (fuente-mella et al., 2020). additionally, we assume that variables and independent and identically distributed (iid) are independent across observations. other options include modified ordinary least squares (ols) or the generalized method of moments estimators, but maximum likelihood (ml) typically provides the best asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 59 © 2024 by the author; licensee online academic press, usa estimate for this model because it satisfies the distributional assumption f, which is necessary to identify the inefficiency term. to determine the technical efficiency level, we utilize the command frontier method. 𝑓𝑟𝑜𝑛𝑡𝑖𝑒𝑟 𝑙𝑜𝑔𝑦 𝑙𝑜𝑔𝑘 𝑙𝑜𝑔𝑙, 𝑣𝑐𝑒(𝑟𝑜𝑏𝑢𝑠𝑡) (4) the predict command 𝑝𝑟𝑒𝑑𝑖𝑐𝑡 𝑡𝑒, 𝑡𝑒 will compute the technical efficiency series. (𝑡𝑒)𝑡 = 𝛼 + 𝛽1(𝑥𝑑𝑣)𝑡 + 𝛽2(𝑖𝑡𝑔𝑟)𝑡 + 𝛽3(𝑏𝑜𝑝𝑟)𝑡 + 𝛽4(𝑜𝑟𝑑𝑔𝑟)𝑡 (5) where (𝑡𝑒)𝑡 is the technical efficiency, (𝑥𝑑𝑣)𝑡 is the sudanese pound devaluation series, (𝑏𝑜𝑝𝑔𝑟)𝑡is the ratio of the balance of payments to gdp, which is a proxy for foreign sector policy. the growth rates of indirect tax to revenue (𝑖𝑡𝑔𝑟)𝑡 and ordinary expenditure. we selected these variables as the primary determinants of technical efficiency using economic theory and empirical investigation, as presented in the following paragraphs. the transcendental logarithmic production function (translog) is an approximation of the constant elasticity of substitution (ces) production function that takes the form of equation 6 that argues log of output explained by logxi and the product logxilogxj : 𝑙𝑜𝑔𝑦 = 𝑙𝑜𝑔𝛽0 + ∑ 𝛽𝑖𝑙𝑜𝑔𝑥𝑖 + 1 2 ∑ ∑ 𝛾𝑖𝑗 𝑛 𝑗=1 𝑛 𝑖=1 𝑙𝑜𝑔𝑥𝑖𝑙𝑜𝑔𝑥𝑗 𝑛 𝑖=1 (6) the efficiency parameter, the input's output elasticity, and the measure of complementarity between them are all present. the function consists of three components: linear, nonlinear, and interactive. this function is unique in that the level of input determines the marginal product, which represents the addition to the total product resulting from the inclusion of an additional factor. 4.2. empirical justification for model variable selection economic growth models that build on kaldor's work argue that the external balance limits total growth. this is because a trade imbalance can only emerge when exports outpace imports, and no nation can sustain a continuous trade deficit. as a result, overall growth is dependent on restoring external balance equilibrium. kaldor has also noted that, according to holland, vieira, and canuto (2004) there is a positive link between the volume of international trade and economic growth as a stylized fact. however, the exact nature of this correlation remains uncertain. indirect taxes have the potential to have a detrimental effect on economic growth by increasing prices, reducing output and circulation, and influencing capital and investment allocation. in addition, these taxes can result in inequitable consumption patterns, as affluent individuals allocate a smaller proportion of their income towards consumer items, while impoverished individuals tend to spend a larger portion of their income on such things. we can reduce or exempt taxes to mitigate their impact on individuals with low incomes. in addition, they can reduce the competitiveness of domestic goods on global markets, which may lead to the implementation of export subsidies. hence, authorities must ascertain the optimal tax rate to prevent detrimental effects on the economy and investments. the empirical findings are diverse; some scholars found public spending to play an important role in economic growth, but at the same time, large government size can contribute to lower growth rates. others hold the belief that reducing spending leads to a reduction in taxes, thereby mitigating distortions and potentially boosting economic efficiency (auci et al., 2019). verifying the continued applicability of stochastic frontier analysis requires extensive diagnostic testing using two statistics. we can split the overall variance of the error term into two halves. both the inefficiency component 𝜎𝑢 2, and the random component 𝜎𝑣 2 contribute to the variance 𝜎2 = 𝜎𝑢 2 + 𝜎𝑣 2. the gamma statistic 𝛾 = 𝜎𝑢 2 𝜎2 represents the fraction of output attributed to technical inefficiency and ranges from zero to one. the calculation entails dividing the technical inefficiency component's variance by the overall error term's variance. if it is close to one, it simply signifies that the technical inefficiencies account for a large amount of variation, and the sf model is the best fit. finally, if it is near zero, it simply indicates that technological inefficiencies account for very little variation. therefore, estimating the stochastic frontier will be unfeasible due to the significant influence of chance. kumbhakar, wang, and homcastle (2015) advise against using this measure to evaluate the sf model's relevance. we may use a likelihood-ratio test statistic to estimate two models: the restricted cobb-douglass model (estimated by glm) and the unrestricted stochastic frontier−2 ∗ (𝐿(𝐻𝑟) − 𝐿(𝐻𝑢𝑟)). when calculating this statistic, we compare it to the vital values stated in kodde and palm (1986). the critical values for one degree of freedom are 5.412 at 1% and 6.635 at 5%. the null hypothesis (h0) states that there are no technical inefficiencies. 5. results and discussion 5.1. data requirement i gathered data from four sources: the central bureau of statistics, the central bank of sudan, the ministry of finance, and the world bank, covering the period 1960 to 2020. the sample includes seven variables: real gdp (y), the labour force (l), and gross fixed capital formation as a proxy for capital stock (k). in addition, a dummy variable represents the series of exchange rate depreciation (xdv), the growth rate of indirect tax (itgr), the growth rate of ordinary (current) expenditure (ordgr), and the ratio of the balance of payments to gdp (bopr). moreover, the sfa produces technical efficiency (tef). asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 60 © 2024 by the author; licensee online academic press, usa 5.2. descriptive statistics according to the data presented in the table the variable that exhibits the greatest degree of dispersion is the logarithm of gross fixed capital formation. next in line are the ratios of the balance of payments to gdp and the budget deficit to gdp. the ratio of the balance of payments to the gross domestic product had the greatest range, followed by the ratio of routine expenditures to the percentage of gdp had the smallest range. table 1 presents descriptive statistics. table 1. descriptive statistics. variable observations mean std. dev. min. max. logy 61 9.29 0.696 8.41 10.640 logk 61 12.81 5.521 6.06 22.103 logl 61 6.95 0.381 6.28 7.584 ordgr 61 0.61 2.398 -0.88 18.728 te 61 0.81 0.077 0.08 0.359 itgr 61 0.501 1.553 -0.879 11.434 bopr 61 -4.19 4.343 -21.61 2.855 while the logarithms of output and labour force are the most widely distributed, the mean logarithm of capital is the highest. ordinary government spending has a somewhat faster average growth rate than indirect taxes, but it is more widely distributed. the balance of payments is growing at a negative mean rate and is spread out more than regular spending. the average technical efficiency is 0.81. the first difference is that the augmented dickey-fuller and phillips-perron unit root tests show that all variables are stationary except for the capital stock proxy and the ratio of the balance of payments to gdp. the balance of payments is static, while the capital stock proxy is stationary via the ng-perron unit root test. johansen's cointegration tests reveal the existence of two integration equations involving the variables in equation 3. this suggests a long-term relationship between output, labour force, and capital stock. at a critical value of 5%, the trace statistic of 0.99 is statistically significant. equation 5 looks at the relationship between technological efficiency, the series of exchange rate devaluations, the growth rates of indirect taxes and ordinary expenditures, and the balance of payments to gdp. at 5%, the trace statistic (46.98) is statistically significant. the augmented dickey-fuller test statistic for cointegration with a structural break for equations two and four (-7.02, -6.91) is bigger than the asymptotic critical value (-5.86, -6.84) at 5% in the gregory-hansen cointegration test with breaks (gregory & hansen, 1996). this means that the null hypothesis of no cointegration is not true. the breakpoint is the forty-third, and the date of the increase in oil production and exports is 2002 (annex). the variables in equation 3 are not collinear because the variance inflation (vif) factor test reveals that both gross fixed capital formation and labour force have a value of 1.49, which is less than the number 5. this indicates that the variables in equation 2 are not collinear. here are the variance inflation factors for the variables in equation 5. the growth rates of indirect tax and ordinary spending are both 1.20, the ratio of the balance of payments to gdp is 1.17, and the exchange devaluation series is 1.13. this means that there is no evidence of multicollinearity between the variables. the vif, on average, is 1.17. table 2 presents empirical results of equation 2 and 5. table 2. empirical results of equation 2 and 5. cobb douglas production function logy coefficient z coefficient z frontier logk 0.124*** 7.6e+07 -0.753*** -3.62 logl 0.121*** 5.7e+07 3.337*** 9.49 logksq 0.001 0.08 loglsq -0.623*** -5.18 logl*logk 0.239*** 2.94 constant 7.117*** 5.5e+07* /lnsig2v -454.080 -38.333*** /lnsig2u -16.300 -2.501*** sigma_v 4.74e-09 sigma_u 0.2863 sigma2 0.082 lamda 6.04e+07 note: the symbol (*) indicates a rejection of the null hypothesis at 10%, (**) indicates a rejection at 5%, and (***) indicates a rejection at 1%. lr test of sigma_u=0 chibar2(01) = 0.90, prob >= chibar2 = 0.171; (-) means not applicable. the scientific number is represented by the letter e to indicate 10 raised to the power: 5.5e+07 = 5.5 × 107. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 61 © 2024 by the author; licensee online academic press, usa because they are positive and substantially different from zero, the estimated capital and labour coefficients are consistent with economic theory. the gamma statistic, which shows a near-one ratio of inefficiency variance to total variance, suggests that stochastic frontier analysis is relevant. at 1% and one degree of freedom, the likelihood ratio is more than 5.412; hence, we reject the null hypothesis of no technical inefficiencies, as stated in kodde and palm (1986). after that, we used equation 4 to make predictions about the technical efficiencies, and figure 1 shows the outcome. the lr test rejects the null hypothesis that the inefficiency's standard deviation (sigma_u) equals zero at 1%, confirming the applicability of frontier analysis, since the probability associated with the chisquare test is 0.000 while accepting that of translog. the graph of equation 5 variables illustrates that the growth rate of indirect tax and ordinary tax hit its peak in 2003, coinciding with the lowest level of technical efficiency. despite fluctuations in the balance of payments ratio to gdp, it is stationary, with a constant and linear trend. table 3 displays the results of equation 5. table 3. results of equation 5. te coefficient robust std. err. z p>|z| xdv -0.651 0.227 -2.87 0.004 itgr -0.199 0.080 -2.50 0.012 ordgr -0.044 0.015 -2.96 0.003 bopr -0.065 0.025 -2.55 0.011 constant 1.598 0.167 0.167 0.000 scale xdv 1.518 0.373 4.07 0.000 constant 1.192 0.242 4.93 0.000 the frequency of exchange rate devaluation (xdv) is a scalar for two reasons. firstly, we feel that it affects the variability of the calculated average, and secondly, it enhances the relevance of the covariates. the results of the margins test indicate that a one-period increase in the devaluation series leads to a 3% decrease in technical efficiency. a 1% increase in indirect taxes results in a 2% decrease in technological efficiency. an increase of 1% in the ordinary expenditure growth rate results in a corresponding decrease of 1% in technical efficiency. nevertheless, a 1% increase in the balance of payments ratio results in a 3% improvement in technical efficiency. indirect taxes (itgr), ordinary expenditures (ordr), exchange rate devaluation, and technical efficiency (te) have an inverse relationship according to the conditional mean of technical efficiency (te) tested by the margins command. conversely, the balance of payments positively correlates with technical efficiency. 5.4. discussion although the cobb-douglas production function violates the constancy of return to scale, the study favoured it over the transcendental logarithmic production function for three reasons. the null hypothesis is initially accepted by the study, which asserts that the sigma of u (technical efficacy) is zero. subsequently, the logarithm of the capital sign is incorrect. thirdly, the squared logarithm of capital is not statistically significant. as a consequence, the scale return decreased as a result of the estimation. the results found the sudanese economy to be inefficient, implying that there is potential for growth of around 20% on average. except for the first two years (1960 and 1961) in the sample period, technical efficiencies remained above 0.96 for eight years. this period coincided with the 10-year development plan's implementation. several large projects were established. only this period has seen a surplus budget and a balance of payments. the government fixed the exchange rate at 2.83 us dollars for one sudanese pound. one of the negative aspects of this period was the increasing budget deficit in the second half of the decade, which escalated to 7% of gdp. this included the cost of debt-to-gdp increases, principal repayment, and debt service. the following ten years saw an oscillation of technical efficiencies around the downward trend. during this period, poor implementation of the five-year plan resulted in its extension for an additional two years. the main economic policies were the confiscations and nationalization of foreign-owned businesses and schemes, which resulted in a contraction in the performance of the real gdp, an increase in imports with fewer exports, and a deteriorating balance of payments, which reached 9% of gdp at the end of the five-year plan. despite this, the government set the exchange rate at 2.83. after two years, the government abandoned the six-year strategy because it failed to implement it. the debt ratio continued to rise, exceeding gdp, with implications for principal repayment and debt servicing that compounded the budget deficit. in september 1978, the imf suggested devaluing the currency rate to cover balance-of-payments deficits. since then, there have been a series of devaluations, along with alternating technical efficiency around the decreasing trend, until the first shipment of oil in late 1999. civil wars and environmental disasters influenced sudan's economic performance. the end of the civil war in 2005 signalled the start of an increasing trend in technological efficiency. the fiscal policy over the sample period relied heavily on indirect tax and service fees, which constituted about two-thirds of government revenue. this problem did not encourage production. indirect taxes have a negative impact on the economy due to inadequate tax administration. regardless of their income, all residents are subject to an indirect tax that includes excise duties, customs duties, and valueadded. indirect taxes increase production costs, reduce demand and supply, and create disparities between asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 62 © 2024 by the author; licensee online academic press, usa sectors and people. however, some groups are exempt from this tax based on their ethnicity or political affiliation. customs duties impose taxes on vehicles and equipment at rates exceeding 350%. in addition, export taxes have diminished export competitiveness due to prolonged procedures, time-consuming processes, and multiple rates. hence, authorities must ascertain the optimal tax rate to prevent any adverse effects on the economy and investment. conversely, the allocation of over two-thirds of public expenditure to military forces and security, at the expense of development expenditure, accounts for the adverse effects of the beta regression results. the 1990s implementation of the federal system led to a significant increase in government size. this system has created new states, ministries, and municipalities, resulting in a decrease in development spending and an increase in administration spending. when the government resorts to deficit finance and money printing, spending indirectly affects the economy by increasing inflation. inadequate governance and corruption can weaken the state's capacity to collect revenue, reduce equity and efficiency of public expenditure, discourage private investment, and create inflation (olusegun, qiaoe chen, & marta, 2020). 6. conclusions and recommendations 6.1. conclusions the study investigated the technical efficiency of sudan's economy for the period 1960–2020. the variance inflation factor demonstrated that the model variables are not collinear. the gregory-hansen test for cointegration with structural breaks in 2002 confirmed the long-term relationship between the model variables. the study employed stochastic frontier analysis to examine the efficiency of sudan's economy by estimating two production functions, the cobb-douglas and the transcendental production functions. the cobb-douglas production function performed better than the translog, which was unable to reject the null hypothesis that the technical efficiency term is not different from zero. the squared capital is not significant in terms of squared capital and the negative capital sign. the results of an investigation using beta regression to detect factors that affect efficiency indicate that both fiscal policy and exchange rate policy have an adverse impact on technical efficiency. nevertheless, the presence of several tax rates and the implementation of multiple currency practices provide obstacles to business operations. since 1990, the widespread prevalence of corruption, lack of accountability, transparency, and rule of law have had a significant impact on technical efficiency, as fiscal and foreign trade policies favoured the ruling party and its members, while the number of deprived people has steadily increased as a result of the adoption of economic policies, particularly after the announcement of the liberalization package. the fiscal structure exhibits deficiencies in both transparency and data quality. contractual monitoring and digitization impede project monitoring. these governance weaknesses increased corruption and eroded public confidence in the administration. 6.2. policy recommendations 6.2.1. revision of liberalization policies the economic liberalization policy reduced the states' grip on economic activity by easing or removing laws and administrative restrictions to enable the private sector. examples of these policies include tax reform, market liberalization, market freedom, trade liberalization, foreign investment, privatization, and the massive devaluation of the exchange rate. these policies have led to a surge in inflation, a decline in food stability, poverty, and production, persistent deficits in the trade balance, and a negative balance of payments. thus, there is a need for sustainable growth through increased production and productivity through the rehabilitation of schemes and, the replacement of outdated technology with a modern one, in addition to reverting to liberalization policies. 6.2.2. exchange rate the stability of the exchange rate is one of the government's main goals, but the submission to the imf and the world bank's recommendations resulted in continuous depreciation. empirical studies revealed that the money supply and the current account balance influence the exchange rate. exporting finished or semifinished goods boosts their value, reducing the trade deficit balance on the one hand and supporting economic growth by creating new jobs on the other. we recommend reducing private luxury imports, as well as government purchases, and establishing an import substitution policy. we also recommend curbing deficit financing, government imports, and boosting locally produced vehicles and furniture. similarly, reforming diplomatic missions can help reduce current account balance deficits. in the oil sector, transparency is crucial, as the cloudy nature of oil proceeds necessitates the transparency of the export of crude oil, its products, and minerals, particularly gold, which can significantly contribute to the building of foreign exchange reserves. the government should also revise its policy on gold production and establish a fair purchase rate that aligns with global prices. 6.2.3. tax reform various modifications to taxation systems, such as modifications to rates, exemptions, deductions, allowances, and other features, are encompassed by the term "tax reform." tax reform is a critical policy instrument that governments can employ to promote economic growth, reduce tax burdens, and stimulate investment. providing incentives for individuals to invest in productive activities can encourage investment and entrepreneurship by reducing marginal tax rates. similarly, the elimination of specific deductions or asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 63 © 2024 by the author; licensee online academic press, usa credits can result in a more efficient allocation of resources and reduce distortions in the economy. an economic equilibrium between direct and indirect taxes is essential for sustainable development and equity. 6.2.4. government expenditure reform sudan could potentially reduce disparities and efficiently deliver essential services to vulnerable communities, as well as address the underlying causes of conflict through the redistribution of public expenditure. the government should reduce the share of current expenditure and prioritize development expenditure instead. states continue to differ significantly in terms of poverty levels and development disparities; therefore, balanced growth should be the main goal of the federal government. the government should take into account the significant variations in each state's ability to generate money as well as the distribution of fiscal spending among states that reflect these regional imbalances. 6.2.5. balance of payments the persistent deficits in the balance of payments primarily stem from the export of raw products like oil seeds, minerals, crude oil, and live animals. if there is a genuine desire to enhance local production, the government should opt to offset the import of consumer goods. enhance the value of exports and limit luxury imports to increase their worth. the services account should be revised. the government also needs to address the proper pricing of export goods, prevent export smuggling, and harmonize the various levels of the central bank of sudan's regulation of the foreign exchange market. the multiplicity of regulation circulars could lead to unfavourable outcomes, such as an increase in parallel market transactions and a surge in demand for foreign exchange resources. the approval of the advance payment in the regulation circular will prompt exporters to purchase foreign exchange on the black market for their goods, thereby exacerbating smuggling issues and depleting the country's foreign exchange reserves. the exportation of female livestock should be prohibited and criminalized because it affects directly the number of births. 6.2.6. corruption and law enforcement authority is an effective tool for corruption, creating an environment that fosters and protects fraudulence. it encourages and supports corruption's spread and expansion. corruption develops into a robust network that regulates legislation, prosecution, and accountability. when political, moral, and national systems fail, corrupt institutions attract vulnerable and dishonest individuals, resulting in poverty and illiteracy. various methods of making money may lead to corruption. as previously stated, sudan's lack of openness and accountability promotes extensive corruption. the corruption perceptions index (cpi) found that in most periods, perceived levels of public sector corruption scored 173 out of 180, particularly in the second half of the sample period. the auditor general's report reveals that there is no accountability for fraudsters' annual cash misuse. enforcement of the law is a priority. abbreviations symbol description cd cobb douglas production function. translog transcendental logarithmic production function. logy logarithm of real gdp. logl the logarithm of the labour force. logk the logarithm of gross fixed capital formation (capital). te technical efficiency. xdv series of exchange rate devaluation. itgr indirect tax growth rate. ordgr ordinary (current) expenditure growth rate. bopr balance of payments ratio to gdp. lsq squared logarithm of labor force. ksq squared logarithm of capital. lk interaction between logarithms of labour and capital. tfp total factor productivity. vif variance inflation factor. lr likelihood ratio. references achirawee, k., & xu, h. 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(2020). technical efficiency and economic growth in the sadc region. international economics/economia internazionale, 73(2), 307-324. https://doi.org/10.1016/j.respol.2016.11.008 http://www.ecb.europa.eu/pub/scientifi http://www.ecb.europa.eu/pub/scientifi https://api.semanticscholar.org/corpusid:154127399 https://doi.org/10.1080/1331677x.2019.1685397 https://doi.org/10.1016/0304-4076(69)41685-7 https://mpra.ub.uni-muenchen.de/1956/ http://dx.doi.org/10.2307/1912331 https://doi.org/10.1155/2011/603512 https://doi.org/10.1016/0377-2217(94)00130-5 http://opensiuc.lib.siu.edu/econ_dp/26 https://doi.org/10.1016/j.worlddev.2008.05.009 https://doi.org/10.1108/ajeb-07-2020-0032 http://www.imf.org/ https://doi.org/10.1155/2012/584869 https://doi.org/10.1086/261420 https://mpra.ub.uni-muenchen.de/114336/7/mpra_paper_114336.pdf https://mpra.ub.uni-muenchen.de/18171/ asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 65 © 2024 by the author; licensee online academic press, usa annex 1 shows the results of the gregory-hansen cointegration test of equation variables. the null hypothesis of the gregory-hansen test states that there is no cointegration, in contrast to the alternative of cointegration with a single shift at an unknown point in time. according to the provided values of the three test statistics, we reject the null hypothesis of no cointegration, and accept that there is cointegration with a single shift at unknown point in time. annex 1. gregory-hansen test for cointegration with regime shifts. model: change in regime and trend number of obs. = 61 lags = 0 chosen by downward t-statistics maximum lags = 2 equation 2 test statistic breakpoint date asymptotic critical values 1% 5% 10% adf* -7.02 43 2002 -6.45 -5.96 -5.72 zt -7.03 43 2002 -6.45 -5.96 -5.72 za -49.65 43 2002 -68.43 -100.47 -63.10 note: *adf stands for augment dickey fuller. in contrast to the alternative, which proposes cointegration with a single shift at some undetermined moment in time, the null hypothesis of the gregory-hansen test indicates that no cointegration exists. below this paragraph, in annex 2, we can see the outcomes of the gregory-hansen test for equation variable cointegration. we reject the null hypothesis that there is cointegration with a single shift at an unknown point in time, based on the values of the three test statistics that were presented. annex 2. gregory-hansen test for cointegration with regime shifts. model: change in regime and trend number of obs. = 61 lags = 1 chosen by downward t-statistics maximum lags = 2 equation 4 test statistic breakpoint date asymptotic critical values 1% 5% 10% adf -6.91 43 2002 -7.31 -6.84 -6.58 zt -6.43 45 2004 -7.31 -6.84 -6.58 za -42.76 44 2004 -100.69 -100.47 -82.30 figure 1 illustrates the shares of direct and indirect tax to the total tax, as well as the share of ordinary government expenditure to the total expenditure. the indirect tax share significantly surpasses the direct tax share and exhibits a strong upward trend in relation to government ordinary expenditure. however, the direct tax shares show a downward trend. figure 1. share of direct and indirect tax in total tax. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 66 © 2024 by the author; licensee online academic press, usa figure 2. variables of equation 5. figure 2 depicts the remaining model variables, indicating a declining trend in the share of the balance of payments to gdp, while the growth rate of indirect tax and ordinary expenditure exhibits an anomaly in 2002, coinciding with the signing of the peace treaty that concluded the civil war. technical efficiency demonstrates a downward trend from 1965 to 2004, followed by an upward trend in subsequent years. figure 3. average marginal effects. figure 3 presents that the exchange rate devaluation has the lowest average marginal effect at 95% confidence limits, followed by the growth rate of ordinary expenditure, while the ratio of the balance of payments to gdp has the most average marginal effect. annex 3 provides the time series of the ratios of direct and indirect tax to total tax, as well as the ratio of ordinary expenditure to total expenditure for the period 1960–2020. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 67 © 2024 by the author; licensee online academic press, usa annex 3. explanation of the direct, indirect and current shares. year it/ttax dtax ord/gx te 1960 0.605 22.000 0.449 0.805 1961 0.647 21.000 0.522 0.877 1962 0.730 16.200 0.485 0.978 1963 0.676 22.000 0.537 0.989 1964 0.577 34.000 0.505 1.000 1965 0.601 24.000 0.581 1.000 1966 0.667 20.000 0.516 0.978 1967 0.606 27.600 0.379 0.961 1968 0.553 40.200 0.492 0.965 1969 0.588 41.200 0.456 0.887 1970 0.840 13.200 0.898 0.928 1971 0.841 16.200 0.672 1.000 1972 0.831 18.500 0.873 0.953 1973 0.820 21.400 0.878 0.871 1974 0.835 23.600 0.819 0.848 1975 0.828 30.900 0.733 0.805 1976 0.869 32.200 0.728 0.803 1977 0.841 41.700 0.594 0.862 1978 0.869 47.100 0.673 0.822 1979 0.860 55.000 0.781 0.779 1980 0.797 79.900 0.796 0.764 1981 0.804 109.000 0.887 0.785 1982 0.791 139.000 0.888 0.840 1983 0.791 207.000 0.855 0.825 1984 0.793 236.000 0.829 0.758 1985 0.792 241.000 0.931 0.685 1986 0.768 324.000 0.879 0.695 1987 0.730 470.000 0.908 0.738 1988 0.746 613.000 0.895 0.713 1989 0.641 950.000 0.959 0.725 1990 0.930 585.414 0.966 0.662 1991 0.578 5108.713 0.852 0.663 1992 0.805 4099.791 0.883 0.644 1993 0.793 10815.460 0.787 0.609 1994 0.862 9816.357 0.965 0.576 1995 0.614 78795.580 0.932 0.727 1996 0.765 124167.100 0.910 0.580 1997 0.853 104737.100 0.916 0.612 1998 0.854 144799.800 0.911 0.639 1999 0.884 154812.800 0.865 0.561 2000 0.762 381000.000 0.887 0.561 2001 0.922 147200.000 0.884 0.601 2002 0.919 172500.000 0.718 0.595 2003 0.804 523000.000 0.731 0.620 2004 0.824 740000.000 0.714 0.719 2005 0.810 951000.000 0.750 0.737 2006 0.838 951000.000 0.808 0.800 2007 0.860 916500.000 0.829 0.871 2008 0.885 884300.000 0.878 0.808 2009 0.893 930200.000 0.843 0.844 2010 0.886 1136000.000 0.853 0.877 2011 0.905 1061200.000 0.910 0.878 2012 0.908 1432600.000 0.887 0.869 2013 0.929 1713700.000 0.902 0.888 2014 0.914 3016800.000 0.920 0.912 2015 0.991 398000.000 0.902 0.949 2016 0.838 7678000.000 0.902 0.971 2017 0.933 4270000.000 0.939 0.991 2018 0.926 6791000.000 0.957 0.983 2019 0.923 9377000.000 0.974 1.000 2020 0.873 20354000.000 0.985 0.894 asian themes in social sciences research 2024, vol. 8, no. 1, pp. 54-68 68 © 2024 by the author; licensee online academic press, usa annex 4 displays the model variable's time series from 1960 to 2020. the variables are in logarithmic form. annex 4. model variables year ordgr bopr logy logl logk 1960 0.072 2.846 8.409 6.281 6.061 1961 0.086 -1.068 8.506 6.304 6.128 1962 0.071 -0.717 8.629 6.327 6.219 1963 0.134 -3.039 8.645 6.349 6.234 1964 0.010 -1.932 8.660 6.371 6.249 1965 0.019 -1.232 8.663 6.393 6.253 1966 0.234 -0.662 8.646 6.414 6.270 1967 0.108 -1.567 8.632 6.435 6.285 1968 0.050 -2.914 8.650 6.455 6.369 1969 0.034 0.290 8.569 6.484 6.372 1970 0.447 -1.876 8.620 6.504 6.401 1971 0.130 -3.059 8.704 6.523 6.458 1972 0.050 -1.569 8.680 6.550 6.623 1973 0.121 1.004 8.613 6.569 6.799 1974 0.102 -0.265 8.623 6.541 7.128 1975 0.393 -8.830 8.599 6.585 7.320 1976 0.148 -2.067 8.627 6.629 7.522 1977 -0.253 -1.180 8.730 6.655 7.758 1978 0.681 -1.338 8.712 6.694 7.966 1979 0.539 -3.045 8.678 6.732 8.088 1980 0.169 -3.530 8.687 6.771 8.287 1981 0.407 -5.998 8.745 6.810 8.507 1982 0.178 -2.794 8.859 6.833 8.859 1983 0.234 -2.597 8.880 6.844 0.234 1984 0.162 0.349 8.828 6.910 0.162 1985 0.175 1.905 8.764 6.946 0.175 1986 0.458 -0.209 8.816 6.983 0.458 1987 0.557 -1.897 8.949 7.001 0.557 1988 -0.003 -2.491 8.946 7.006 -0.003 1989 0.700 -0.696 9.031 7.012 0.700 1990 0.733 -1.107 8.975 7.011 0.733 1991 0.061 -2.162 9.044 7.009 0.061 1992 2.859 -7.198 9.111 7.018 2.859 1993 0.454 -2.277 9.156 7.037 0.454 1994 -0.715 -4.703 9.166 6.904 -0.715 1995 0.877 -3.615 9.534 6.947 0.877 1996 18.728 -9.167 9.400 6.991 18.728 1997 0.467 -7.089 9.519 7.034 0.467 1998 0.299 -8.502 9.606 7.076 0.299 1999 0.288 -4.036 9.485 7.113 0.288 2000 0.591 -4.224 9.509 7.147 0.591 2001 0.097 -3.321 9.608 7.170 0.097 2002 0.100 -5.368 9.632 7.191 0.100 2003 0.468 -4.395 9.691 7.212 0.468 2004 0.434 -3.071 9.868 7.234 0.434 2005 0.315 -7.028 9.918 7.258 0.315 2006 0.410 -14.351 10.017 7.282 0.410 2007 0.183 -6.052 10.119 7.306 0.183 2008 0.306 -5.543 10.061 7.329 0.306 2009 -0.075 -8.448 10.121 7.351 -0.075 2010 0.149 -2.327 10.184 7.371 0.149 2011 0.183 -3.384 10.205 7.390 0.183 2012 -0.081 -9.904 10.228 7.409 -0.081 2013 0.377 -8.818 10.294 7.428 0.377 2014 0.392 -4.615 10.362 7.448 0.392 2015 0.089 -6.426 10.430 7.468 0.089 2016 0.234 -2.597 8.880 6.844 0.234 2017 0.162 0.349 8.828 6.910 0.162 2018 0.175 1.905 8.764 6.946 0.175 2019 0.458 -0.209 8.816 6.983 0.458 2020 0.557 -1.897 8.949 7.001 0.557 asian themes in social sciences research issn: 2578-5516 vol. 8, no. 1, pp. 24-36 2024 doi: 10.33094/atssr.v8i1.1770 © 2024 by the authors; licensee online academic press, usa accepted: 24 july 2024 | published: 12 august 2024 24 © 2024 by the authors; licensee online academic press, usa digital transformation: a pillar of structural transformation of moroccan economy mustapha amzil1* --abdelhamid ait bihi2 --amina tourabi3 --lahoucine asllam4 1,4faculty of legal, economic and social sciences, ibn-zohr university agadir, morocco. 1email: mustapha.amzil@edu.uiz.ac.ma 4email: laho11@gmail.com 2national school of commerce and management, ibn-zohr university agadir, morocco. 2email: a.aitbihi@uiz.ac.ma 1,3national school of applied sciences, ibn-zohr university agadir, morocco. abstract this article examines the crucial role of digital transformation in the success of the moroccan economy's structural transformation (st) process between 2015 and 2023. based on this period, the study captures the hollow effects of digital transformation on morocco's sustainable development. analysis of this time series also enables us to identify the opportunities and challenges associated with implementing digital transformation in the moroccan economy. it also offers valuable insights for guiding sectoral public policies and development strategies, maximizing the benefits of the digital revolution while minimizing potential risks. after establishing the theoretical foundations of st, the study explores the complex dynamics between observed socioeconomic mutations and the adoption of advanced technologies in morocco. these theoretical frameworks help contextualize the empirical study that follows. the study continues with an in-depth econometric study, estimating a non-linear autoregressive distributed model (nardl). this estimation aims to analyze the effect of various variables, such as high-tech exports, gross fixed capital formation, diversification of production and export structures, as well as gdp per capita in constant dollars, on the economic complexity index considered in this study as a proxy for the st process of the moroccan economy. the outputs of the econometric study highlighted the significant importance of these variables in the success of the moroccan economy's st process. these results demonstrate the potential of digital transformation as a catalyst for st in the moroccan economy, paving the way for a resilient and more dynamic economic future for morocco. keywords: digital transformation, morocco, nardl, structural transformation, sustainable development. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific funding institutional review board statement: not applicable. transparency: the authors confirm that the manuscript is an honest, accurate, and transparent account of the study; that no vital features of the study have been omitted; and that any discrepancies from the study as planned have been explained. this study followed all ethical practices during writing. competing interests: the authors declare that they have no competing interests. authors’ contributions: all authors contributed equally to the conception and design of the study. all authors have read and agreed to the published version of the manuscript. 1. introduction digital transformation is considered a phenomenon at the heart of contemporary economic dynamics, shaping the contours of our societies and overturning traditional paradigms. this digital transformation, marked by the emergence of nicts (new information and communication technologies) and the rapid https://www.doi.org/10.33094/atssr.v8i1.1770 mailto:mustapha.amzil@edu.uiz.ac.ma mailto:laho11@gmail.com mailto:a.aitbihi@uiz.ac.ma asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 25 © 2024 by the authors; licensee online academic press, usa spread of digital tools in the economic, financial, social and even cultural spheres, represents a key driver of change and innovation on an international scale. digital transformation, a notion with far-reaching implications and multiple facets, transcends the traditional boundaries between sectors of economic activity, and re-explains modes of production, consumption and interaction in contemporary societies. it encompasses a wide range of processes and phenomena, from the digitization of companies to the emergence of new business models, via the spread of cutting-edge technologies such as the internet of things, blockchain and artificial intelligence (ai) (benedetto-meyer & boboc, 2019). in this wake, the concept of structural transformation (st) assumes decisive importance often linked to profound changes in the organization and composition of economic activities, st can be defined as a process by which countries evolve and adapt to socio-economic and technological fluctuations. typically, it involves transformations in the distribution and diversification of production between sectors of economic activity and the modernization of infrastructure (cadot & de melo, 2016). the aim of this article is to explore the relationships that might exist between digital transformation and the st of the moroccan economy, by studying the effect of digital transformation on the evolution of the moroccan economy during the 2015-2023 period. as such, we aim to understand how advanced technologies and transformations in production and consumption patterns impact morocco's development path? this article is of specific interest in the moroccan context, where digital transformation has become a national prerogative to encourage inclusive growth, promote competitiveness and achieve sustainable development. however, despite the efforts made by economic players and public authorities to promote the digitalization of the moroccan economy, important questions remain as to the implications of this process for the country's socio-economic structure. the issues addressed in this article crystallize around a number of essential questions, all centered on the link between digital transformation and the st process of the moroccan economy. how does digitalization impact morocco's economic structure, and what are the mechanisms by which it influences structural transformation? what are the drivers of digital transformation and to what extent are they contributing to the modernization and diversification of economic sectors? finally, what are the specific challenges faced by morocco in its transition to a digital economy, and how do these challenges influence the dynamics of the structural transformation of the moroccan economy? these questions guide our analysis and enable us to explore in depth the complex links between digitalization and the structural transformation of the moroccan economy, thus offering enlightened perspectives on the stakes and opportunities of this process of change. to answer these questions, this paper is divided into three basic segments. the first segment addresses the conceptual foundations of structural transformation, drawing on two major theories: regulation theory and third world development theory. the second segment highlights the interconnection between digital and structural transformation. finally, the third segment conducts an empirical analysis of the correlation between digital transformation and structural transformation of the moroccan economy over the study period, through the application of a nonlinear distributed lag autoregressive (nardl) model. 2. theoretical approaches to structural transformation 2.1. structural transformation: a particular mode or regime of accumulation from 1928 to 1939, structuralist thinking on development was influenced by anthropological and linguistic structuralism1. here, however, we will only consider the theory of structuralism through its marxist approach and its extension2, notably via the school of regulation3. this is approached as structuralist economic4 thinking that could explain certain causes and determinants of st. in the sense that it emphasizes the passage of economies through different stages of development, through phases of social reorganization of production relations, and even through situations of crisis and economic cycles that can trigger structural change. during these stages, phases, situations and crises, economies acquire forms of resilience in the face of different shocks affecting their accumulation regime5 and their specific institutions. indeed, the regulation of these economies at different levels of their development would depend on the said institutions, norms, conventions and rules that underpin the way their wealth is created and distributed. hence a cyclical rather 1 originally, structuralist development thinking was linked to the work of linguistic anthropologists such as de saussure (1987) the french school of paris, and the prague school of linguistic structuralism. 2 in 1956, the communist party of the soviet union held its 20th congress, following stalin's death in 1953. nikita khrushtev, the new general secretary, presented his report, criticizing stalin and launching de-stalinization. the two leading thinkers of the french communist party, sartre and garaudy, felt that this change should be reflected in a shift in party thinking in favor of socialists, left-wing christians and existentialists, so that marxism would reconnect with its humanist roots. 3 regulation theory is the work of several of althusser's disciples: economists from the french communist party, the communist party of the soviet union and maoists. this theory stems from the marxist treatment of capitalism. its analytical tools were borrowed from american institutionalism and postkeynesianism. the books "régulation et crises du capitalisme" by aglietta (1976) "accumulation, inflation and crises" by boyer and mistral (1979) "crisis and inflation: why?" by lipietz (1980) and the collective research work by the centre d'études prospectives d'économie mathématique appliquées à la planification, "approches de l'inflation: l'exemple français" by boyer and mistral (1979) are the reference works for the regulation school. 4 however, in order to raise the principles of st according to the regulation school, it is interesting to begin by situating the philosophical framework of this school's theory, starting with its precept of althusserism, founded by louis pierre althusser (lubitz, 2009). 5 the accumulation regime can be described as the iterative data of the productive branches and the demand or production of sections, and is called the macroeconomic structure or reproduction scheme. in effect, this regime is a mode of joint accounting transformation of the rules of production and consumption. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 26 © 2024 by the authors; licensee online academic press, usa than linear vision of st. this transformation would be the result of technological changes arising from innovations or political or other evolutions, and would affect overall social and economic regulation. regulation theory, which is an economic approach that deals with the temporal evolution of economic and social structures, therefore historically and concretely analyzes the accumulation system as a structural scheme for the reproduction of social relations in time and space, in the knowledge that structural forms constitute the mode of regulation that ensures this reproduction. this assumes that the object of st is to study the specific development models and modes of operation of capitalism, treated as combinations of a mode of regulation6, a regime of accumulation and a particular technological paradigm. the latter is not sufficiently developed by the regulation movement. this current could refer the st process to the idea that there is a relationship between the innovation process existing in the secondary sector, macro-economic dynamics and overall technological structures in an economy. this way of looking at macroeconomic dynamics would also be a schumpeterian vision of st. moreover, this school of regulation believed that each stage in the development of capitalism corresponds to technological and technical structures that influence the country's macro-economic dynamics. but this school of thought did not address this issue sufficiently. indeed, it saw the technological paradigm that characterized the glorious thirty years under the name of fordism as a regime of intensive accumulation7. it would therefore favor intensive st. this was in contrast to the regime of extensive accumulation that had prevailed prior to this period. it would favor extensive st. hence the interest in using macro-economic data from national accounts to characterize the st following the rhythms of variations in savings, investment, consumption, productivity, profits, wages, prices, value, surplus value... on the other hand, st would be approached, via the current mode of regulation, by consumer structures adapting to productive structures. for st to be successful, it is not enough to adapt rigid structures to the new demands of transformation, but rather to ensure the joint compatibility of the transformation of two structural forms: the social and institutional forms contributing to the imposed mode of economic regulation, and the instances, procedures and social norms ensuring this accounting. these two structural forms at the origin of st also deal with questions of currency, modes of state intervention, inter-capitalist market relations, and the form of insertion of the economy in question, and its wage relations, into global economic relations. the evolution of these structural forms underlying the st process had been the subject of in-depth study by the regulation school. each theorist of this school, in his own field of expertise, contrasted the post-war monopolistic or fordist mode of regulation with the older competitive mode of regulation of the nineteenth century. the latter was characterized by low wages, no social benefits and the circulation of metallic money. in this mode, there was also strong price competition between firms and between the gendarmerie state, which ensured the safety and external defense of capitalist economies, and their agents. here, st would be dictated more by competitive market mechanisms than by public policy. on the other hand, in the monopoly mode of regulation, which combined rising wages with strong social protection under a monetary credit regime, st would be achieved through controlled competition under the aegis of a rent and technological quality that differentiated economies. in this st, the welfare state, which ensured the extension of social rights and the generalization of social protection, would have a fundamental role to play. what's more, the regulatory theory that had first succeeded in explaining the beginnings of the crisis of the thirty glorious years would also explain the genesis of a st stemming from the major economic imbalance of the time: stagflation opposing unemployment and inflation via the philips curve. this type of st was unimaginable in standard classical and neo-classical theoretical schemes. then, in 1989-1991, with the fall of the berlin wall and the soviet union, the washington consensus8, which had founded today's liberalism through the deregulation of economies, heralded a new generation of st, particularly in the brics (brasil, russia, india, china, and south africa) and other world's emerging countries. thus, in this new st, or new mode of regulation, of emerging economies, it was deregulation and market liberalization that had provided a way out of the crisis experienced by the regime of fordist accumulation. since then, however, regulation theory has been eclipsed. as a result, the explanation of st expanded into other registers of thought. it was particularly thanks to successive technological and scientific revolutions, which had given rise to a number of disruptive innovations from the 90 onwards, that emerging economies had been transformed differently and more radically. st can be explained in terms of a new capitalist mode of production, in which the classic distinction between consumption and production is completely challenged. in this mode, would the production of material goods and the wage relation still be the determinants of such st, or would it already spill over into other, more essential factors? in this respect, the theoretical explanation of st would then require an assessment of the mode of development, or regime of accumulation, dominating the economy concerned by this st. 2.2. structural transformation, a third world development approach 6 mode of regulation: for more details, see "de l'althussérisme à la théorie de régulation" (lipietz, 1988) orange cover n°8920, 1988. 7 national accounting was used to describe these regimes of intensive and extensive accumulation, showing the dynamic equilibrium between accumulation and consumption; that is, between value added and its uses. 8 the washington consensus is a set of liberal-inspired measures taken during the reagan period in the usa to boost economic growth and economic regulation worldwide. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 27 © 2024 by the authors; licensee online academic press, usa in sauvy (1952)9 coined the term "third world" following the independence of latin american countries between 1810 and 1830. after the second world war, supranational organizations such as the bretton woods institutions, the united nations (un) and the world bank were particularly concerned with the development and underdevelopment of third world economies10. in this respect, stage-growth theorists observed that third world countries were lagging behind other developed countries. they would go through stages of growth in order to achieve and ensure sustained, sustainable development that would enable them to catch up and emerge from underdevelopment. in many respects, st would fit in well with these stages of development. 2.2.1. structural transformation "from within": import-substitution industrialization the explanation of st could be inspired by the theory of economic dependence. indeed, raúl (1981)11, in agreement with rostow, had considered the process of development, or structural change, as a continuous evolutionary and dependent phenomenon. indeed, the author assumed that underdevelopment would only be a stage preceding development proper. he also recognized that the latter requires indispensable conditions, such as the political, institutional, economic and social modernization of structures in developing countries. in his analysis of the colonial period, and of south american economies and societies, he noted a modern agriculture run by the colonizers, the beginnings of an industry that essentially met their needs, and few services and financial institutions. after this period of colonization, when foreign companies left these countries, they found themselves with juxtaposed, unconnected sectors. on the one hand, a primary sector subdivided into two, a traditional food-producing sector run by indigenous companies, and another mechanized sector geared towards export markets, which was mainly the preserve of foreign firms. on the other hand, a modern secondary sector alongside an ageing craft industry, and an underdeveloped tertiary sector. the author called this a situation of structural dualism. a situation, according to the author, which hinders development, and which would then pose a problem, even today, to any successful st in developing countries, including morocco. in this respect, the st to be implemented in these developing countries would be that geared towards import-substitution industrialization (isi). isi would enable them to avoid dependence12 on foreign trade and international exchange in general. this st, based on isi rather than on the principle of comparative advantage underpinning free trade and the usual income redistribution policies, would boost domestic productivity, lower production costs and improve the social and economic conditions of the population. fundamentally, it would be a nationalist development strategy, favoring economic patriotism in favor of domestic industry and its jobs, to the detriment of foreign industry. thus, in this register of economic dependence theory, st would be designed either to encourage the isi strategy, particularly in high value-added industries (electronics, semiconductors, metallurgy, steelmaking, chemicals and parachemistry). or to put private initiative by national players, in preference to foreign players, back at the heart of the country's economy. or to maintain state control over large public firms in strategic sectors. or to free up the exchange rate to guarantee the competitiveness of the national economy. or, finally, to privatize hitherto state-owned sectors lacking in competitive efficiency, such as transport, network industries and other non-performing public firms. this st would therefore be a tool for reducing economic inequalities between the south and the north. it would promote the development of both metropolises, or centers, and peripheral areas in satellite13 developing countries. on the other hand, the catching-up of development gaps between developing and developed countries, which would be induced by this st, would not be tolerated by the lack of conditions for wealth creation or by the survival of old, unproductive socioeconomic structures. rather, it would be the developing countries contribution to international trade based on the principle of comparative advantage that would favor their dependence and accentuate the imbalances in their economic structures. these structural imbalances would further deepen their underdevelopment, calling more than ever for oriented st, far removed from the unequal exchange that resulted in the brigandage and exploitation of such developing countries. st would therefore be relative, evolving over time and multiple depending on the territories undergoing transformation. what it would have in common, however, is that it would pave the way for the integration of its developing countries, whatever their structural rigidities on the supply or demand side, into the new international division of labor. this is a division of labor that, completely independent of foreign competition, rebases the internal specialization of economies on the specific capacities of their territories and indigenous players. 9 alfred sauvy: french historian, demographer and anthropologist. for him, the third world wants to have a say in international relations, after a phase of colonization and dependence. 10 walt whitman rostow was one of the most influential of the early economists to address this issue within the un framework. in rostow (1960) was on the un economic commission for europe. rostow wrote "the process of economic growth", as well as "the stages of economic growth: a non-communist manifesto" in 1959. see also clark (1967). the conditions of economic progress, myrdal (1957). economic theory and underdeveloped regions et tinbergen (2013) optimal regime theory. in economic models, risk estimation and programming: essays in honor of gerhard tintner. 11 raul prébisch: argentina's keynes, he drew up an emergency plan for the ailing argentine economy, whose situation is characterized by a 400% inflation rate, unsustainable foreign debt and a 4% recession. he also held many important positions, such as governor of the argentine central bank between 1935 and 1948, director of united nations conference on trade and development (unctad), and advisor to the argentine president in 1983... 12 the egyptian economist samir amin, the frenchman françois perroux and other economists such as: kunibert raffer, keith griffin, pablo gonzález casanova, walter rodney, andre gunder frank, ernest feder, kurt rothschild, herb addo, walden bello, fernando henrique cardoso, enzo faletto, theotonio dos santos, ruy mauro marini, armando cordova and paul israel singer have all participated, outside the united nations economic commission for latin america, in research related to the dependence of developing countries. 13 satellite countries: are de jure independent countries, but under the strong military, economic and political impact of another country, resembling moons, which revolve around the planet. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 28 © 2024 by the authors; licensee online academic press, usa 2.2.2. structural transformation "from the outside" or through integration into the global economy the historic failure of the isi strategy, particularly in latin america and many other developing countries, would also call into question the success of st based on structuralist theories of economic dependence. st through self-centered development, the original isi policy, would no longer be intelligible in economic contexts that are increasingly interdependent and open to global competition. hence the need, in order to define st in the context of developing countries, to rework the theory of early structuralism to adapt it to the external constraints of these countries. the shift from introverted (inward) development via isi to development from the inside out towards the rest of the world would then be the new foundation of all successful st. this new model of st would be the basis for a industrialization, with production destined for both internal and external markets. this would involve st by integrating the economies of developing countries into the global value chain (sunkel, 1989). this st, based on integration into the global value chain, would be centered more on a supply-side economy than a demand-side one. indeed, it would be based on neo-structuralist arguments, making the selfsustained development of territorial wealth-creation capacities, which comes purely from within, the lever for local industrialization that is integrated into global value chains. this local industrialization could be fuelled from abroad, in particular by foreign direct investment (fdi) from multinational companies. this would make it possible to raise, since the washington consensus, a neo-structuralist st model, more precisely just after the economic and financial crises that had revealed the failure of neoliberalism in both developed countries and the associated structural adjustment programs in developing countries. a model that links countries' macro-economic balances and development more closely to foreign trade, economic openness (including through the attractiveness of fdi) and industrialization, with the aim of integrating local territorial capacities into the global value chain of multinational firms, now considered an essential partner for all st. the latter combines the constraints of external trade openness and international industrial competitiveness with those of territorial attractiveness for fdi projects. in this logic of openness to the outside world, and through its various advantages for the host country, the latter would be an essential instrument of industrialization, development and st. consequently, in the sense of this neo-structuralist st, the neo-liberal state would be a democratic actor, more participatory than classic interventionist, and under the constraint of preserving the main macroeconomic balances, such as price stability (inflation, wages, exchange and interest rates), budgetary equilibrium, economic growth, purchasing power and employment. it would be a development process requiring the use of all available domestic resources to consolidate capital accumulation and technical progress. in developing countries particularly affected by chronic unemployment, its primary objective would be to achieve full employment of available labor resources. such full employment would increase the sectoral productivity of these developing countries, ensuring a continuous process of transfer and migration of labor from low-value-added primary sectors to more productive, high-value sectors. this self-sustaining process would take place within a keynesian logic of interdependent markets (for goods and services, labor, money, finance and foreign exchange), with the state playing an indispensable role in providing and guaranteeing adequate and appropriate institutions for successful st. these institutions would accompany the evolution of social, economic, financial and political structures in the service of diversified, more sophisticated and high value-added production, in order to consolidate the structural competitiveness of the national economy. in this way, st in developing countries, which is not on the margins of globalization, would require a national strategy that takes advantage of all global opportunities in terms of various sources of technological learning, notably through the attractiveness of fdi projects, the removal of barriers to innovation determined by intellectual property rights, and global economies of scale on a planetary scale. despite the relevance of industrial economic policy and the schumpeterian model of development, the demand aspect would be just as important for any st in developing countries. in the latter, rigid structures would slow down investment and demand: wage growth is less proportional to that of factor productivity. in these countries, this wage trend can be explained by the rigidity of the labor market and the abundance of an often low-skilled workforce, which has a negative impact on productivity and leads to a worsening of income inequalities. a social policy of guaranteed inter-professional minimum wage (gipmw), in favor of the destitute, should neutralize the consequences of this trend. furthermore, the st of developing countries would be limited by the ongoing overvaluation of their respective currencies. in particular, this overvaluation is encouraged by the ricardian rent generated by the export of either cheap labor-intensive production, or primary natural resources with little or no processing, which would lead to a "dutch disease"14 st. the latter would block the development of high value-added, capital-intensive tradable goods industries. the latter would require strong national savings, which the economies of developing countries cannot easily generate. hence their growing interest in attracting external savings and investment to serve their st. for this reason, the long-term relationship between gross domestic 14 dutch syndrome: inspired by the case of the netherlands in 1960, an economic phenomenon that describes the adverse consequences caused by a remarkable rise in natural resource exports to the decline of domestic manufacturing. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 29 © 2024 by the authors; licensee online academic press, usa product (gdp) and public debt would need to be balanced, under the constraint of a real exchange rate that takes into account the negative influences of dutch disease on the manufacturing sector. in order to catch up with other developed countries, developing countries would have to rethink their st model, going beyond an isi strategy or integration into the global economy via the global value chains of multinational firms, according to a new vision: that of the "sao paolo consensus". from this point of view, st would operate through very specific mechanisms. these would be made more fluid by public policies giving greater importance to education, higher education, scientific research, digitalization, innovation and sectoral priority to trades and activities in the information economy, the blue economy, the green economy and new renewable energies. 3. structural transformation through digital transformation st, a process of profound change in the composition and distribution of economic activities within a society, is increasingly influenced by digital transformation. this evolution, fueled by the rise of digital technologies, is redefining business models, production processes, human resource management and even relationships between economic players. the question is how digital transformation contributes to st? in fact, digitization is opening up vast economic horizons by introducing new business models and fostering the emergence of innovative sectors that are key to the success of the st process in developing countries. these include artificial intelligence, which opens up possibilities for data analysis and processing on an unprecedented scale, and the platform economy, which is revolutionizing the way goods and services are exchanged. in addition, the internet of things (iot) aims to transform everyday objects into connected devices, paving the way for new applications in fields as diverse as logistics, agriculture and healthcare. finally, blockchain technology is revolutionizing transaction verification and validation processes, opening up opportunities in logistics, finance and supply chain management (world bank, 2020). these highly advanced technologies not only enable the creation of new products and services, but also bring about profound changes in production and consumption patterns. for example, the platform economy facilitates direct contact between service seekers and service providers, bypassing traditional intermediaries and reducing market friction. similarly, artificial intelligence makes it possible to automate tasks that were previously performed by humans, also improving firms' performance and productivity. these sts are leading to a reorganization of economic activity sectors and the emergence of new dynamics of innovation and competitiveness on a national and international scale (world bank, 2020). the effect of digitalization on the st of economies is also noticeable in job creation. while some tasks are being robotized, new job opportunities are emerging in nicts-related sectors, as well as in cybersecurity, data management and software design. however, these transformations require rapid adaptation of workers' qualifications and skills, posing challenges for education and training (world bank, 2020). in fact, advanced digitalization technologies offer firms undeniable opportunities to optimize their operational tasks at every level. the robotization of the latter with the help of ai and robots makes it possible to both reduce labor costs and improve production time and quality. in addition, companies can make more informed decisions, thanks to the use of data analytics, fueled by the vast amounts of information available and anticipate market trends, which strengthen their ability to avoid risks and seize opportunities (unctad, 2019). the application of cloud computing solutions also represents a key lever for process optimization. by opting for cloud-based services and outsourcing their it infrastructures, firms can benefit from greater flexibility, reduced costs, lower repair rates and greater resilience in the face of failures and cyber-attacks. this shift to cloud computing opens up the possibility of more efficient collaboration between a firm's various departments and subsidiaries, facilitating the integration and coordination of different activities (unctad, 2019). in addition, the digitization of logistics and distribution processes helps to improve inventory management, reduce delivery times and optimize the entire supply chain. thanks to the use of highly advanced technologies such as iot sensors, radio frequency identification (rfid) and real-time tracking systems, companies can perfectly control and track the movement of products, from manufacturing to delivery to end consumers. this increased visibility of the supply chain helps optimize the use of resources, anticipate potential problems and ensure optimal customer satisfaction (unctad, 2019). digitalization has paved the way for a new development model characterized by their adaptability, capacity and agility to respond to different customer needs. for example, the sharing economy enables people to leverage their under-utilized assets by making them available to others via online platforms. in fact, the sharing economy is revolutionizing sectors such as accommodation, self-employment and transportation (with companies like uber and airbnb), offering new sources of income and encouraging more efficient use of resources (unctad, 2019). at the same time, on-demand services are gaining in popularity, offering customers immediate access to a range of products and services via online platforms and mobile apps. multinational firms such as ubereats, glovo and deliveroo offer a variety of fast delivery services, while apps such as taskrabbit offer the opportunity to quickly find free workers for particular tasks. this trend towards immediacy and convenience is transforming the way firms interact with their consumers, and opening up new prospects for growth. personalizing products and services is also seen as an indispensable aspect of new business models. thanks to asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 30 © 2024 by the authors; licensee online academic press, usa ai and data analysis, firms can now grasp consumers' individual needs and preferences and present them with tailor-made offers. multinational firms like spotify and netflix use recommendation algorithms to persuade content tailored to each user's preferences, while fashion brands like nike offer individualization options for their products. indeed, this increased personalization incentivizes consumer engagement and strengthens long-term loyalty (unctad, 2019). thanks to the decisive role played by digital transformation in promoting economic inclusion, marginalized populations can gain access to essential services. indeed, advanced technologies offer individuals in remote or disadvantaged regions the possibility of benefiting from various public services such as financial, educational, health and other services through digital platforms. by way of example, mobile payment services enable unbanked individuals to access basic banking services and carry out financial transactions without having a personal bank account (korovkin, 2019). this financial inclusion brought about by digitization helps to reduce socio-economic inequalities between social strata, enabling a large cross-section of people to access economic opportunities and participate fully in the formal economy. by guaranteeing accessible and secure means of payment, advanced technologies offer merchants, self-employed workers and entrepreneurs the chance to access new markets and develop their activities, fostering both financial autonomy and economic resilience. similarly, the digitization of education and healthcare is opening up new prospects for inclusion by enabling excluded populations to access essential public services. for example, students living far from traditional teaching centers can access courses and educational resources via e-learning platforms. and patients living in rural areas can obtain medical advice and diagnoses remotely, thanks to teleconsultation services. these initiatives help to lower disparities in access to education and health services, also strengthening social cohesion and consequently human development (korovkin, 2019). although digital transformation brings with it socio-economic opportunities, it also generates complex challenges that require special attention from economic players and political decision-makers alike. among the major challenges of this transformation is that of data security, which is of paramount importance. indeed, with the increasing storage of sensitive data on automated platforms and the multiplication of online transactions, the prevention of cyber-attacks and the protection of personal information have become major issues. recent large-scale cyberattacks have highlighted the vulnerability of it systems and the need to reinforce security measures to ensure data integrity and confidentiality (litvinenko, 2020). this confidentiality represents another major challenge linked to digital transformation. with the huge collection of individual data by governments and firms, issues related to the control of people's individual information and confidentiality have become progressive concerns. at european level, the general data protection regulation (gdpr) aim to support the protection of individual data, but their application is finding major challenges in many countries. in addition, the ethics and regulations surrounding the use of highly advanced technologies open up more complex debates. for example, rapid advances in automation and ai raise ethical questions in relation to the effect on automated decision-making, employment and corporate social responsibility. policymakers need to strike a balance between promoting innovation and protecting the rights of workers, consumers and society as a whole (litvinenko, 2020). despite these challenges, digital transformation also offers unprecedented opportunities to promote sustainable and equitable st. by investing in digital technologies and promoting the widespread adoption of innovative solutions, governments and businesses can boost economic growth, increase productivity and improve citizens' quality of life. however, this requires a holistic approach that takes into account the technological, regulatory, ethical and social aspects of digital transformation to ensure positive long-term results. 4. empirical study: impact of digital transformation on the structural transformation of the moroccan economy, what relationship? after discussing the theoretical underpinning of st, then the relationship between the latter and digital transformation, this third axis serves to verify the existing relationship between digital transformation and st in the moroccan economy between 2015 and 2023. the econometric model of this work corresponds to a nonlinear distributed lag autoregressive model (nardl), and its processing goes through a set of steps, with the aim of defining the structure of the econometric model. to do this, we will specify the model, determine the steps involved in processing it and discuss the main results obtained. 4.1. model specification to verify whether digital transformation impacts the st of the moroccan economy over the period 20152023, and to deduce whether it is the right tool to boost the st of the moroccan economy, we will estimate a nardl model. this model belongs to the class of dynamic models. it is used to model long-term relationships between variables, taking into account the possibility of asymmetric and non-linear responses to shocks. nardl can be used to analyze the shortand long-term effects of explanatory variables on a dependent variable, taking into account adjustment lags and threshold effects. in this work, we seek to capture the effects of digital transformation (high technology exports (hte)) as a variable of interest on st (economic complexity index (eci)) as a dependent variable and proxy for the moroccan economy's st, during the study period, taking into consideration the other control variables asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 31 © 2024 by the authors; licensee online academic press, usa essential for the model, whose influence improves the results. these variables are commonly used in many studies relating digital transformation and st, namely: diversification of production and export structure (dpes), gross fixed capital formation (gfcf), gross domestic product per capita expressed in current dollars (gdppc) and trade openness rate (tor). the variables in the empirical study are drawn from the atlas of economic complexity, unctad, world-development-indicators (wdi) and our world in data databases. if we propose to capture the shortand long-term effects of explanatory variables on st, the nardl representation will be as follows: ∆𝐿𝑛𝐸𝐶𝐼𝑡 = 𝐿𝑛𝛼0 + ∑ 𝛼1∆𝐿𝑛𝐸𝐶𝐼𝑡−1 𝑔−1 𝑖=0 + ∑ 𝛼2∆𝐿𝑛𝐻𝑇𝐸𝑡−1 𝑝−1 𝑖=0 + ∑ 𝛼3∆𝐿𝑛𝐷𝑃𝐸𝑆𝑡−1 +𝑟−1 𝑖=0 ∑ 𝛼4∆𝐿𝑛𝐺𝐹𝐶𝐹𝑡−1 + ∑ 𝛼5∆𝐿𝑛𝐺𝐷𝑃𝑃𝐶𝑡−1 𝑚−1 𝑖=0 ℎ−1 𝑖=0 + ∑ 𝛼6∆𝐿𝑛𝑇𝑂𝑅𝑡−1 𝑞−1 𝑖=0 + 𝜃1𝐿𝑛𝐸𝐶𝐼𝑡−1 + 𝜃2𝐿𝑛𝐻𝑇𝐸𝑡−1 + 𝜃3𝐿𝑛𝐷𝑃𝐸𝑆𝑡−1 + 𝜃4𝐿𝑛𝐺𝐹𝐶𝐹𝑡−1 + 𝜃5𝐿𝑛𝐺𝐷𝑃𝑃𝐶𝑡−1 + 𝜃6𝐿𝑛𝑇𝑂𝑅𝑡−1 + 𝜀𝑡 with: ∆: the first difference operator; α1α6: the error-correction model representation; θ 1θ 6: signifies long-term relationships; g-1, …, q-1: are the lag numbers of the variables. however, the initial structure of this model does not take into account the direction of digital transformation. in other words, it does not take into account the possible asymmetrical effects that this transformation could have on the structural transformation of the moroccan economy. various events, such as cyber-attacks and hacking, political instability, regulatory impediments, major technological breakdowns, disparities in access to technology, digital skills deficits, lack of investment in infrastructure, as well as threats to privacy and security, could contribute to significant institutional degradation. consequently, it is imperative to use a more suitable model to accurately reflect the complexity of the real context. with this in mind, we turn to the nardl model developed by (shin, yu, & greenwood-nimmo, 2014). several previous researches such as schorderet (2003) and shin et al. (2014) have shown that the starting point is to decompose digitalization (hte) time series (hte) into its positive (htet +) and negative (htet -) partial sums: 𝑃𝑜𝑠𝑖𝑡𝑖𝑣𝑒 = 𝐻𝑇𝐸𝑡 + = ∑ ∆𝐻𝑇𝐸𝑗 +𝑡 𝑗=1 = ∑ 𝑚𝑎𝑥( ∆𝐻𝑇𝐸𝑗 , 0)𝑡 𝑗=1 𝑁𝑒𝑔𝑎𝑡𝑖𝑣𝑒 = 𝐻𝑇𝐸𝑡 − = ∑ ∆𝐻𝑇𝐸𝑗 −𝑡 𝑗=1 = ∑ 𝑚𝑖𝑛( ∆𝐻𝑇𝐸𝑗 , 0)𝑡 𝑗=1 with: ∆ htet + and htet capturing improvements (+) and degradations (-) evolutions in digitalization. hence, the model to be estimated follows the demonstration of shin et al. (2014) as follows: ∆𝐿𝑛𝐸𝐶𝐼𝑡 = 𝐿𝑛𝛼0 + ∑ 𝛼1∆𝐿𝑛𝐸𝐶𝐼𝑡−1 𝑔−1 𝑖=0 + ∑ 𝛼2∆𝐿𝑛𝐻𝑇𝐸𝑡−1 +𝑝−1 𝑖=0 + ∑ 𝛼2∆𝐿𝑛𝐻𝑇𝐸𝑡−1 −𝑝−1 𝑖=0 + ∑ 𝛼3∆𝐿𝑛𝐷𝑃𝐸𝑆𝑡−1 + ∑ 𝛼4∆𝐿𝑛𝐺𝐹𝐶𝐹𝑡−1 + ∑ 𝛼5∆𝐿𝑛𝐺𝐷𝑃𝑃𝐶𝑡−1 𝑚−1 𝑖=0 ℎ−1 𝑖=0 𝑟−1 𝑖=0 + ∑ 𝛼6∆𝐿𝑛𝑇𝑂𝑅𝑡−1 𝑞−1 𝑖=0 + 𝜃1𝐿𝑛𝐸𝐶𝐼𝑡−1 + 𝜃2𝐿𝑛𝐻𝑇𝐸𝑡−1 + + 𝜃2𝐿𝑛𝐻𝑇𝐸𝑡−1 − + 𝜃3𝐿𝑛𝐷𝑃𝐸𝑆𝑡−1 + 𝜃4𝐿𝑛𝐺𝐹𝐶𝐹𝑡−1 + 𝜃5𝐿𝑛𝐺𝐷𝑃𝑃𝐶𝑡−1 + 𝜃6𝐿𝑛𝑇𝑂𝑅𝑡−1 + 𝜀𝑡 with: −𝜃2 𝜃1 ′⁄ −𝜃3 𝜃1 ′⁄ −𝜃4 𝜃1 ′⁄ −𝜃5 𝜃1 ′⁄ −𝜃6 𝜃1 ′⁄ are the long-run coefficients. we anticipate that the readjustment coefficient θ1< 0. thus, we can rewrite the long-run coefficients form of as follows: 𝐸𝐶𝐼𝑡 = 𝜋0 + 𝜋1𝐿𝑛𝐸𝐶𝐼𝑡−1 + 𝜋2𝐿𝑛𝐻𝑇𝐸𝑡 + + 𝜋2𝐿𝑛𝐻𝑇𝐸𝑡 − + 𝜋3𝐿𝑛𝐷𝑃𝐸𝑆𝑡 +𝜋4𝐿𝑛𝐺𝐹𝐶𝐹𝑡 + 𝜋5𝐿𝑛𝐺𝐷𝑃𝑃𝐶𝑡 + 𝜋6𝐿𝑛𝑇𝑂𝑅𝑡 + 𝜀𝑡 4.2. estimation procedure of nardl model in any time-series analytical approach, the first step is to evaluate the order of integration of the variables. for a nardl model, it is imperative to guarantee the absence of second-order integration, noted as i(2), for any variable under consideration. the second step involves an examination of co-integration between the variables to validate the existence of a long-term relationship between them. in light of the results of the unit root tests, the use of the pesaran, shin, and smith (2001) test proves crucial in establishing this co-integration. unlike the approaches of engle and granger (1987); johansen (1988) and johansen (1991) the co-integration limit test advanced by pesaran et al. (2001) stands out for its ability to handle series with mixed orders of integration. in our analysis, where some variables show stationarity while others do not, this test formulates the hypothesis accordingly. h0: θ1= θ2=…= θ6. contrary to the alternative hypothesis: h0: θ1≠θ2≠ …≠ θ6. we therefore need to compare fisher's values with the simulated critical values. if we assume that lb is the lower bound and ub is the upper bound. we then have: f < lb ➔ no co-integration; f > ub ➔ existence of co-integration; lb < f < ub ➔ no conclusion. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 32 © 2024 by the authors; licensee online academic press, usa the third step in this methodology involves the evaluation of long-term 𝜃2 + = 𝜃2 − and short-term ∑ 𝐻𝑇𝐸𝑡 + + 𝑝−1 𝑖=0 ∑ 𝐻𝑇𝐸𝑡 −𝑝−1 𝑖=0 symmetry, achieved by comparing the sum of positive and negative dynamic coefficients. similarly, the fourth step is to evaluate the model's resistance using various diagnostic tests. 4.3. discussion of results achieved 4.3.1. stationarity test to avoid misinterpreting the regressions, it is imperative to examine the presence of unit roots in the series in order to assess their stochastic characteristics. this check is carried out using two well-known tests, namely the augmented test of dickey and fuller (1981) and the test of zivot and andrews (2002). under the null hypothesis, these tests are based on the idea that the series has a unit root, either with or without interruptions. the alternative hypothesis is that the series is stationary, either consistently or with a single break. in the event of a discrepancy between the results of the two tests, preference is given to the conclusions drawn from the zivot-andrews test. based on the results of the stationarity tests (table 1), the adf test showed that the lneci, lnhte and lngfcf series are stationary at first difference, while the lndpes, lngdppc and lntor series are stationary at level. compared with the za test, the results show that all series are stationary at first difference. table 1. results of the stationarity test. variables stationarity augmented dickey and fuller (1981) (adf) zivot and andrews (za) logarithm of economic complexity index (lneci) i(1) i(1) logarithm of high technology exports (lnhte) i(1) i(1) logarithm of diversification of production and export structure (lndpes) i(0) i(1) logarithm of gross fixed capital formation (lngfcf) i(1) i(1) logarithm of gross domestic product per capita expressed in current dollars (lngdppc) i(0) i(1) logarithm of and trade openness rate (lntor) i(0) i(1) 4.3.2. cointegration test table 2. pesaran boundary cointegration test. f-bounds test model test statistic value signif. i(0) i(1) lneci-lnhte f-statistic 4.68 2.5% 3.08 4.15 pesaran cointegration test reveals the existence of a long-term relationship between the variables studied. indeed, the value of the f statistic, evaluated at 4.68, exceeds the upper limit of 4.15 at the 2.5% threshold. consequently, the null hypothesis of no cointegration between the variables is rejected. the results of the cointegration test are summarized in table 2. 4.3.3. estimation and asymmetry results table 3. non-linear results of long-term estimation. variable coefficient std. error t-statistic prob. logarithm of economic complexity index (lneci)* -0.078 0.002 -2.143 0.978 logarithm of high technology exports (lnhte) 0.032 0.040 2.001 0.001 logarithm of diversification of production and export structure (lndpes) 0.012 0.055 3.001 0.010 logarithm of gross fixed capital formation (lngfcf) 0.035 0.001 2.453 0.000 logarithm of gross domestic product per capita expressed in current dollars (lngdppc) 0.022 0.022 1.987 0.040 logarithm of and trade openness rate (lntor) -0.067 0.000 -1.564 0.965 note: * dependent variable of the model asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 33 © 2024 by the authors; licensee online academic press, usa table 4. short-term estimation results. variable coefficient std. error tstatistic prob. logarithm of economic complexity index (lneci)* 0.980 0.140 2.100 0.311 logarithm of high technology exports (lnhte) 0.356 0.731 2.745 0.242 logarithm of diversification of production and export structure (lndpes) 0.111 0.696 2.786 0.263 logarithm of gross fixed capital formation (lngfcf) 0.261 0.040 2.678 0.367 logarithm of gross domestic product per capita expressed in current dollars (lngdppc) 0.011 0.527 3.008 0.246 logarithm of and trade openness rate (lntor) 0.540 0.023 2.831 0.924 cointeq(-1) -0.731 0.300 -4.322 0.000 r-squared 0.775 mean dependent var 0.034 adjusted r-squared 0.743 s.d. dependent var 0.501 s.e. of regression 0.044 akaike info criterion -3.001 sum squared resid 0.501 schwarz criterion -2.145 log likelihood 48.001 durbin-watson stat 2.134 hannan-quinn criter. -2.233 note: * dependent variable of the model table 3 presents the results of the long-run estimation of the econometric model to explain the dependent variable lneci. in fact, the variables lnhte, lndpes, lngfcf and lngdppc are significant at the 5% level. the other two variables, lneci and lntor, are not significant at the 5% level. in fact, a 1% increase in high-tech exports (lnhte) boosts the st of the moroccan economy by 3%. similarly, a 1% increase in public and private investment (lngfcf) as a percentage of gdp accelerates the kingdom's structural transformation by 3%. in addition, increasing the diversification of production and export structures (lndpes) by 1% improves the success of morocco's st by 1%. finally, a 1% increase in gdppc encourages the st of the moroccan economy by 2% between 2015 and 2023. the short-term estimation results (table 4) showed non-significant probabilities exceeding the 5% threshold for all the variables in the study. as expected, the restoring force cointeq (-1) is negative and significant, guaranteeing a long-term relationship between the sub study variables. this model also has a predictive power of 77%. table 5. asymmetry test. wald test lneci-lnhte x2 chi-square probability wsr 5.050 0.022 wlr 0.020 0.779 note: the null hypothesis assumes that the coefficients are symmetrical. the terms wsr and wlr refer respectively to the symmetries of the shortand long-term wald statistics. table 5 shows the results of the symmetry test. the statistic calculated for the model's long-term term is 0.020, with a probability of 0.779, thus exceeding 5%. consequently, the null hypothesis is confirmed, while the alternative hypothesis of asymmetry is rejected. this finding suggests that the st of the moroccan economy, represented by the lneci as a proxy, reacts similarly in the long term to positive and negative variations in digitization. in contrast, for the short term, the calculated statistic is 5.050, with a probability of 0.022, below the 5% threshold. consequently, the null hypothesis is rejected in favor of the alternative hypothesis. this discrepancy indicates that the effects of digitization on st are asymmetrical in the short term. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 34 © 2024 by the authors; licensee online academic press, usa table 6. assumption testing. model autocorrelation breusch godfrey heteroscedasticity test breuschpagan-godfrey (bpg) heteroscedasticity test autoregressive conditional heteroskedasticity (arch) normality test ramsey test lneci-lnhte 0.19 > 5% 0.75 > 5% 0.84> 5% 0.25 > 5% 0.56>5% 4.3.4. diagnostic tests nardl table 6 shows the results of the autocorrelation, heteroscedasticity, error normality and specification tests. the breusch-godfrey test is used to test error autocorrelation for the model. this test confirms the absence of error autocorrelation at the 5% threshold for the model. the breusch-pagan-godfrey and arch tests are used to test for error heteroscedasticity. these tests show values of 0.75 and 0.84 for model (the values of these tests are greater than 5% for model). the null hypothesis of no error heteroscedasticity is therefore accepted for model. the jarque-bera and anderson darling tests show that the errors follow a normal distribution in the estimated models (0.25 > 5% for the model). the ramsey test shows that no variable is omitted and that the estimated model is therefore well specified (0.56 > 0.05). 4.3.5. discussion of results the results obtained from the nardl econometric model provide valuable insights into the determinants of the st of the moroccan economy between 2015 and 2023. looking at the long-term effects, we find that lnhte play a positive and significant role in promoting this transformation. this indicates that developing and promoting exports of high value-added products contributes to the diversification and evolution of morocco's economic structure towards more innovative and technology-intensive sectors. similarly, investment (lngfcf) is another key driver in the success of the st process. indeed, encouraging domestic public and private investment will lead to a significant and positive improvement in this transformation. this shows the decisive importance of investment in consolidating productive and exporting capacities, as well as modernizing the country's infrastructure, thus fostering a shift towards more diversified, sophisticated and competitive productive activities. furthermore, this article has shown the major role that horizontal and vertical diversification (lndpes) can play as an indispensable element in stimulating the success of the moroccan economy's st process. certainly, increasing diversified products and exports upwards from primary production to complex products and services both enables a more balanced distribution of resources and contributes to the achievement of future inclusive and sustainable growth. in relation to gdp per capita (lngdppc), the study highlights its positive effect on the success of morocco's st process. this underlines the fact that improving the standard of living of the moroccan population stimulates domestic demand, fostering growth and innovation in the various economic sectors. on the other hand, the econometric results indicated non-significant probabilities for the other control variables, namely: the trade openness rate (lntor) and the lagged value of the economic complexity index (lneci), raising questions about their participation in the success of the moroccan economy's st process between 2015 and 2023. thus, the results obtained from the short-term model highlight a negative and significant cointegration relationship, which guarantees the presence of a long-term relationship between the variables in the study. this shows certain stability in the economic relationships between the various factors of the st process analyzed. finally, the results of the nardl econometric model provide valuable insights into the stimulators and mechanisms of the moroccan st process, highlighting the importance of developing policies and strategies conducive to digital transformation, through different indicators such as investment, high-tech exports, diversification of productive structures, integration into global value chains, creation of decent employment and improvement of living standards to achieve future, inclusive and sustainable economic growth. 5. conclusion currently, digital transformation is considered a ubiquitous phenomenon that has emerged and in the international economic landscape, assumes a primordial place to succeed in the st process of economies, including that of morocco. in this article, we take a close look at the implications of digitization for promoting sustainable development in morocco between 2015 and 2023. the econometric results obtained are the fruit of a rigorous study based on a nardl econometric model, taking into consideration several determining aspects that deserve to be highlighted and explained in greater depth. at the outset, this study has shown that upward exports, i.e. high-tech exports, exert a significant and positive influence on the success of the moroccan economy's st process. this underscores the need to promote sectors characterized by high added value and advanced technologies, in order to diversify and sophisticate economic activities and ensure the international competitiveness of the moroccan economy. asian themes in social sciences research 2024, vol. 8, no. 1, pp. 24-36 35 © 2024 by the authors; licensee online academic press, usa similarly, investment appears to be an indispensable catalyst for the success of the st process, helping to build productive capacity and modernize the country's infrastructure. this underlines the crucial role of domestic public and private investment in sustainable development and the creation of decent jobs in morocco. moreover, the diversification of production and export structures also appears to be a key lever in the success of this process within morocco, as it encourages an equitable distribution of resources while fostering the emergence of new, more productive sectors of activity. of course, diversifying production and exports helps to strengthen economic resilience and stimulate inclusive long-term growth. however, a number of factors, such as the economic complexity of the previous year and trade openness, did not have the desired impact on the moroccan st process during the study period. thus, the results underlined the need for an in-depth analysis of the underlying mechanisms of the st process and the identification of the most relevant levers of inclusive growth for morocco. in addition, it is important to realize that digital transformation encompasses economic, social, cultural and environmental aspects. in this respect, it is imperative to adopt a holistic and integrated approach to digital transformation, focusing on the multidimensional implications for morocco's inclusive and sustainable development. in this wake, economic players and public authorities should implement 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(2013). trade policy and employment growth. international labor review, 152, 86-92. unctad. (2019). digital economy report. value creation and capture: implications for developing countries. (unctad/der/2019). https://doi.org/10.18356/c7dc937a-en world bank. (2020). digital economy for africa. (de4a). retrieved from https://www.worldbank.org/en/programs/allafrica-digital-transformation zivot, e., & andrews, d. w. k. (2002). further evidence on the great crash, the oil-price shock, and the unit-root hypothesis. journal of business & economic statistics, 20(1), 25-44. https://doi.org/10.1198/073500102753410372 https://doi.org/10.18356/c7dc937a-en https://www.worldbank.org/en/programs/all-africa-digital-transformation https://www.worldbank.org/en/programs/all-africa-digital-transformation https://doi.org/10.1198/073500102753410372 asian themes in social sciences research issn: 2578-5516 vol. 6, no. 1, pp. 1-11 2022 doi: 10.33094/atssr.v6i1.65 © 2022 by the authors; licensee online academic press, usa accepted: 14 march 2022 | published: 28 april 2022 1 © 2022 by the authors; licensee online academic press, usa exchange rate and trade balance in nigeria: testing for the validity of j-curve phenomenon and marshall-lerner condition innocent. u. duru1* --millicent adanne eze2 --abubakar sadiq saleh3 --abubakar yusuf4 --kelechi uzoma5 1,5department of economics, rhema university nigeria, aba, abia state , nigeria. 1email: iud3x@yahoo.com tel: +2348154827934 5email: uzksboy@gmail.com tel: +234-7030138482 2school of business, law and social sciences, abertay university, dundee, united kingdom. 2email: ezemillicent@gmail.com tel: (+44)7459452103 3department of banking and finance, university of abuja, abuja, nigeria. 3email: abubakar.saleh@nileuniversity.edu.ng tel: +234-8055252193 4national metallurgical development centre, jos, plateau state, nigeria. 4email: bbkr_yusuf2000@yahoo.com tel: +234-8063001010 abstract this study examined the validity of the j-curve phenomenon and marshall-lerner condit ion in the nigerian context using data from 1982-2020. the autoregressive distributed lag bounds test method of cointegration was employed for the analysis of short-run and long-run effects of exchange rate uncertainty on the trade balance. the long-run result endorsed the validity of the marshall-lerner condition in nigeria. thus, a depreciation of the naira improves the trade balance in the long run. however, the results of the short-run dynamics revealed that there is no j-curve phenomenon in nigeria. the study recommends diversification of exports to improve the performance of nigeria’s non-oil exports. in addition, fiscal, monetary and exchange rate policies should be properly harmonized to tackle trade deficits. furthermore, there should be more investment in research and development in nigeria to improve the value of goods exported and the competitiveness of its exports in the arena of international trade. keywords: exchange rate, trade balance, j-curve phenomenon, marshall-lerner condition, nigeria. jel classification: c22; f10; f31. licensed: this work is licensed under a creative commons attribution 4.0 license. funding: this study received no specific financial support. competing interests: the authors declare that they have no competing interests. 1. introduction the nexus between exchange rate and trade balance have been studied comprehensively by policymakers, intellectuals, economists and researchers in both the emerging and developed economies of the world. to date, the mounting trade deficit is among the main challenges of the nigerian economy. dependence on exports of primary products, a large percentage of agricultural goods in total exports during the pre -1986 era, slow development of industries in the post-1986 era, the heavy dependence of industries on imported inputs, large import of refined fuel and manufactured goods, weak exchange rate policies and poor economic reforms strategies are some of the factors responsible for this. this development had resulted in rising trade imbalances for nigeria. bhattarai and armah (2013) stated that ‘’the exchange rate has been used as a tool for regulating http://doi.org/10.33094/atssr.v6i1.65 mailto:iud3x@yahoo.com mailto:uzksboy@gmail.com mailto:ezemillicent@gmail.com mailto:abubakar.saleh@nileuniversity.edu.ng mailto:bbkr_yusuf2000@yahoo.com asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 2 © 2022 by the authors; licensee online academic press, usa flows of trade and capital by many developing economies, which tend to have persistent deficits in the balance of payments’’ (p. 1126). this is a precondition for stable and sustainable economic growth in these emerging economies. this implies that devaluation of the exchange rate could be utilized by these developing countries as a normal policy prescription to survive trade deficits by improving the competitiveness of exports thereby guaranteeing some extent of macroeconomic stability in their countries. thus, depreciation of the domestic currency in these economies makes export cheaper while imported goods become expensive, therefore, exports would increase and imports would decrease. however, the opposite effect would result from the appreciation of the domestic currency. even though trade deficits could be tackled through the exchange rat e, world bank (2020a), maintained that the competitiveness benefits of a devaluation or real depreciation have not been adequately utilized by economies in africa. for an emerging economy like nigeria, serious policy issues arise from the link between exchange rate and trade balance. thus, this study would give empirical ideas to policymakers about whether depreciation or devaluation of the naira is an efficient means of mending the trade deficit. as was documented by nusair (2017), the link between exchange rate and trade balance is very vital since it gives ideas to policymakers regarding the formulation and application of a regional policy of trade. furthermore, information on the nexus between trade balance and exchange rate in nigeria would arm policymakers with weapons of trade negotiations resulting in good trade agreements with trading partners. also, knowledge of the link between trade balance and exchange rate helps policymakers in nigeria to realize desired macroeconomics results through designing and managing exchange rates and policies of trade. the outcome of this study could also serve as a foundation stone in the formulation of policies of trade. one of the policy measures introduced in nigeria between 1986 and 1988 as a result of the introduction of the structural adjustment programme (sap) was the export promotion strategy. this was a result of the drawback of the import substitution strategy. it was meant to transform the nigerian economy from an inward-oriented one to an outward-oriented one through the competitiveness of trade. theoretically, numerous methodologies have been used in the investigation of the relationship between trade balance and exchange rate. those are the elasticity technique, the absorption method and the monetary method. however, the elasticity approach serves as the cornerstone for these other approaches. from the perspective of theory, the marshall-lerner condition postulated that devaluation of currency improves the trade balance of an economy in the long run if the sum of the price elasticities of exports and imports is greater than unity. conversely, the j-curve hypothesis advocates that devaluation of a country’s currency deteriorates the trade balance first before improving it afterwards (magee, 1973). hence, from the point of view of theory, the devaluation of the real exchange rate is anticipated to result in an enhancement of the trade balance in the long run following a deterioration in the short run. in the contention of marwah and klein (1996), many economies drifted to the flexible exchange rate with increased interests in the impact of devaluation on the trade balance of both emerging and developed countries following the collapse of the breton woods agreement in 1973. despite the export -oriented policies and successive exchange rate reforms introduced in nigeria to enhance trade balance, trade deficits had continued to persist. furthermore, regardless of the mushrooming of literature on the link between exchange rate and trade balance from both developed and developing economies employing various econometric methods, the evidence remains diverse and inconclusive. thus, as a result of the lingering trade imbalance in nigeria, an investigation of the connection between exchange rate and trade balance is imperative. the questions that would be addressed in this study are: is the marshall-lerner condition valid in nigeria? does the j-curve phenomenon hold in nigeria? hence, the main objective of this study is to investigate the validity of the j-curve phenomenon and marshall-lerner condition in nigeria. the study is organized into five sections as follows: following the introduction in section 1 is the literature review and theoretical framework in section 2. section 3 discusses the methodology. data presentation, analysis and discussion of results would be the focus of section 4 whereas the conclusion and recommendations would be presented in section 5. 2. literature review and theoretical framework 2.1. empirical literature several studies have employed diverse datasets and methodologies to examine the short-run and long-run connection between real exchange rates and trade balance for numerous developing and developed economies. however, the findings of this empirical literature have been conflicting. furthermore, the practical evidence on the j-curve phenomenon and the marshall-lerner condition remains unsettled. some of these papers are: adeniyi, omisakin, and oyinlola (2011) employed data from 1980q1-2007q4 and the autoregressive distributed lag (ardl) technique to cointegration to probe the presence or otherwise of the j -curve phenomenon in four west african monetary zone (wamz) economies of sierra leone, nigeria, ghana and the gambia. the results of cointegration tests revealed that a long-run relationship exists between trade balances and the explanatory variables for all economies. in addition, the results showed that the j -curve hypothesis is valid for sierra leone and nigeria. in another study, chiloane (2012) used the johansen cointegration and vector error correction modelling (vecm) techniques and quarterly data from 1995-2010 to examine the short and long-run impacts of the rand real exchange rate on the manufacturing trade balance of south africa. the validity of the j-curve effect in asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 3 © 2022 by the authors; licensee online academic press, usa south africa and the existence of the marshall-lerner condition in the manufacturing sector of south africa were investigated as well. the findings revealed that real effective exchange rate (reer), foreign and real domestic incomes are vital determinants of the trade balance in the manufacturing sector. also, there is a presence of cointegration among these variables. the real domestic income and reer exerted a negative relationship with the trade balance in the long run. however, real foreign income had a positive relationship with the trade balance of the domestic manufacturing sector in the long run. the results of the short-run model showed that a devaluation of the domestic currency leads to a deterioration in the trade balance of the manufacturing sector. this fact with the results of the long-run indicates proof of the presence of the j-curve effect in the trade balance of the manufacturing sector of south africa. evidence from the long-run dynamics shows that the marshall-lerner condition holds. evidence from this study revealed that the rand devaluation is needed to improve the trade balance of the manufacturing sector. similarly, saqib (2013) used the engel-granger co-integration approach to examine the long-run link between exchange rate oscillation and trade balance in saudi arab ia. the result revealed a positive and significant long-run relationship between the exchange rate oscillation and trade balance in the long run but not in the short run. piskin (2014) in a related study employed data from 1987q1-2013q3 and ardl methodology to test the existence of the marshall-lerner condition and j-curve hypothesis in turkey. the findings revealed that a long-run relationship exists among trade balance, domestic income, real exchange rate and foreign income. the long-run result showed that the marshall-lerner condition is valid in turkey. however, the result of the short-run dynamics revealed that there is no j-curve effect in the turkish economy. in addition, eke, eke, and obafemi (2015) utilized the error correction model (ecm) and annual data from 1970 to 2012 in another study to examine the impact of exchange rate on the trade balance in nigeria. the result of the test of co-integration showed the presence of a long-run relationship between trade balance and the explanatory variables. the finding revealed that the exchange rate had a negative and significant impact on the trade balance. this finding implies that depreciation of the domestic currency leads to improvement in the trade balance. utilizing cointegration, vecm and data from 1980 to 2013, anning, sunday, and pacific (2015) as well investigated the impact of exchange rate on ghana’s trade balance and tested the presence of the marshall lerner condition. the findings revealed that reer is negatively linked to trade balance in the long run. in the short-run, the coefficient of reer at lag two (the previous year) was negative and significant. however, the coefficient of reer at lag one was negative and not significant. this defies the j-curve phenomenon that states that depreciation may not make trade balance improve in the current period but will meaningfully influence the trade balance thus making it improve in later periods. thus, the j-curve hypothesis does not hold in ghana. however, the negative and significant relationship between the reer and trade balance, in the long run, implies that a devaluation of the cedi would result in an improvement in the trade balance of ghana. this result confirms that the marshall lerner condition holds in ghana. likewise, matlasedi, ilorah, and zhanje (2015) used the ardl methodology to investigate the relationship between reer and trade balance of south africa and whether the j-curve phenomenon and the marshal-lerner condition hold in south africa. the results showed the presence of a long-run equilibrium relationship among trade balance, reer, terms of trade, domestic gdp, foreign reserves and money supply. furthermore, the findings revealed that the devaluation of the zar improves the balance of trade in the long run. this evidence shows that marshal-lerner condition holds in south africa. however, in the short run, depreciation of the zar results in a deterioration of the trade balance. this evidence confirms that the j-curve effect holds in south africa. akosah and omane-adjepong (2017) employed linear and threshold ardl, threshold regression and impulse response functions (irfs) techniques to investigate the impact of real exchange rate on external trade performance in ghana. the validity of marshall-lerner condition, the j-curve and kulkarni hypotheses in ghana were evaluated as well. the result revealed a steady long-run association between movements of real exchange rate and trade balance in ghana. however, the real exchange rate exerted an asymmetric effect on the trade balance in ghana. empirical evidence in support of the marshall-lerner condition (mlc), the j-curve effect and the kulkarni hypothesis in ghana were found during the eras of marginal real depreciation or a tranquil government. however, during the eras of unwarranted real depreciation or an intemperate government, there was less noticeable proof of the j-curve effect. using data from 2000q1-2016q4, the vector auto-regressive (var) model and the granger causality test, man (2018) in a similar study, examined the relationship between reer and trade balance in vietnam. the finding of the granger causality test showed that the uncertainty of reer causes the oscillation of export import value in vietnam. furthermore, the results of the impulse response function test showed that the j-curve phenomenon holds in vietnam. furthermore, onakoya, johnson, and ajibola (2019) used the johansen cointegration technique, the granger causality test and data from 1981-2016 to examine the existence of the jcurve effect in nigeria. the results revealed that the exchange rate had a positive and significant impact on the trade balance in the short-run and long-run respectively. furthermore, there was no evidence to support the existence of the j-curve effect in nigeria. employing linear and nonlinear ardl and data from 1980 to 2018, shuaibu and isah (2020) investigated the link between exchange rate and trade balance in five african economies of algeria, cameroon, nigeria, south asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 4 © 2022 by the authors; licensee online academic press, usa africa and uganda. findings based on the linear model showed that the j-curve phenomenon is valid in uganda in the short run. however, evidence supporting the j-curve effect, in the long run, was only found for algeria. on the other hand, the results of the nonlinear analysis revealed that the j-curve phenomenon is valid in south africa and uganda in the short run. however, evidence in support of a j-curve effect, in the long run, was only found in algeria and uganda. in the same vein, kansel and bari (2020) utilized data from 2003q1-2018q4 and the ardl methodology to examine the impact of exchange rate uncertainty on the trade balance of turkey after she drifted to the floating exchange rate. the results showed that the j-curve phenomenon does not hold in turkey. thus, the impact of the exchange rate on trade balance defies expectations of theories. in another similar study, mhaka (2020) used the ardl and pooled mean group (pmg) estimators to investigate the relationship between exchange rates and bilateral trade balances of southern african customs union (sacu) member countries of swaziland, south africa, namibia, lesotho and botswana with their trading partners. furthermore, the existence of the purchasing power parity (ppp) theory, the marshall-lerner condition and the j-curve effect in the sacu economies were tested in this study. data from 1995m01-2017m11 was used to test for the evidence of the ppp. the results revealed that there was no evidence of ppp in sacu member countries based on their nominal effective exchange rate (neer). however, there was evidence of the ppp condition in only south africa from the perspective of the reer. furthermore, unit root examinations were executed applying the panel data. the findings of the fractional frequency flexible fourier form (fffff) test using panel data revealed a strong indication of the ppp. however, evidence of the ppp theory using the sacu's neer was rejected by the standard dickey-fuller (df) test. both the standard df and the fffff investigations indicated strong proof of ppp theory from the angle of sacu’s reer. furthermore, annual data from 1980-2017 was employed to test for the presence of the marshall-lerner condition. the ardl (pmg) model was employed to examine the time series data. however, the panel data utilized the panel ardl, fully modified ordinary least squares (fmols) technique and the dynamic ols (dols) technique of estimation. the short-run result of the pmg/ardl model displayed no proof to support the presence of the marshall-lerner condition for all sacu member countries. on the other hand, just two outside the five economies revealed evidence of the marshall-lerner condition in the long run. in the long run, the pmg/ardl model showed robust proof of the marshall-lerner condition in namibia and botswana. likewise, the panel models (pmg/ardl, the fmols and dols) demonstrated no proof of the marshal lerner condition in the sacu states. finally, annual data from 1995 to 2016 was utilized to test for the presence of the j-curve effect in the sacu economies. the findings indicated that devaluations of the exchange rate would be helpful in 8 outside the 19 trade industries in the sacu area whereas 11 industries left over would be hurt. from the angle of theory, j curve effects were unearthed in 6 out of the 19 industries that depreciation of exchange rate origina lly ruined trade balances and subsequently adjust to positive long-run effects. ibrahim and bashir (2021) in another study used the ardl, granger causality test methodology and data from 1978 to 2017 to investigate the impact of real exchange rate uncertainty on the external trade balance of sudan. the results showed that exchange rate depreciations do not affect the trade balance. hence, j-curve phenomenon does not hold in sudan. the result of the granger causality test revealed a unidirectional relationship from trade ratio to the real exchange rate. using the ardl method of cointegration, keho (2021) in a similar study investigated the association between real exchange rate and trade balance in cote d’ivoire from 1975 -2017. the findings revealed that domestic income had a negative and significant impact on the trade balance in the short -run and long-run respectively. furthermore, a devaluation of the real exchange rate results in an improvement in the trade balance in the short and long run respectively. thahara, rinosha, and shifaniya (2021) utilized data from 1977-2019, ardl methodology and granger causality test to examine the short-run and long-run link between the exchange rate and trade balance in sri lanka. the short-run results revealed that inflation had a positive effect on the trade balance. however, in the long run, the exchange rate and the gdp had adverse impacts on the trade balance. in addition, the results showed that the j-curve phenomenon exists in sri lanka. furthermore, the findings revealed that the marshall-lerner condition holds in sri lanka. the results of the granger causality test revealed a unidirectional causality from exchange rate to trade balance and from gdp to trade balance. evidence from the growing literature from developing and developed economies reviewed indicates that the short and long-run connection between exchange rate and trade balance has been explored widely using diverse econometric methodologies and datasets. the considerable empirical literature on the marshall -lerner condition and j-curve phenomenon is flooded with contradictory results contingent on the country, stage of development, models, period of estimation and the technique of estimation utilized for investigation. while some empirical studies found no support for the j-curve phenomenon (adeniyi et al., 2011; bahmani-oskooee & brooks, 1999; bahmani-oskooee & ratha, 2004; bahmani-oskooee, economidou, & goswami, 2006; bahmanioskooee & cheema, 2009; bahmani-oskooee & gelan, 2012; halicioglu, 2007; halicioglu, 2008; hsing & savvides, 1996; meniago & eita, 2017; moodley, 2010; oyinlola, omisakin, & adeniyi, 2013; perera, 2011; saqib, ahmad, faraz, muhammd, & shehzadi, 2014; singh, 2004; umoru & eboreime, 2013; wilson, 2001; ziramba & chifamba, 2014), others (adeniyi et al., 2011; anju & uma, 1999; anning et al., 2015; bahmani-oskooee & alse, 1994; bahmani-oskooee & kantipong, 2001; bahmani-oskooee & goswami, 2003; bahmani-oskooee & kutan, asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 5 © 2022 by the authors; licensee online academic press, usa 2009; bahmani-oskooee & fariditavana, 2015; bahmani-oskooee & fariditavana, 2016; bhattarai & armah, 2013; chiloane, pretorius, & botha, 2014; doroodian sr, jung, & boyd, 1999; hacker & hatemi-j, 2003; hussain & haque, 2014; iyke & ho, 2017; iyke & ho, 2018; kulkarni, 1996; kyophilavong, shahbaz, & uddin, 2013; marwah & klein, 1996; matlasedi et al., 2015; narayan, 2004; onafowora, 2003; petrović & gligorić, 2010; rawlins, 2011; schaling & kabundi, 2014; shirvani & wilbratte, 1997) found support for the j-curve phenomenon. on the other hand, while some empirical studies found no evidence supporting the marshall -lerner condition (alege & osabuohien, 2015; bahmani, harvey, & hegerty, 2013; dong, 2017; loto, 2011; lucy, sunday, & pacific, 2015; meniago & eita, 2017; sek & har, 2014; shahbaz, awan, & ahmad, 2011), others (arize, 1994; bahmani-oskooee, 1998; bahmani-oskooee & niroomand, 1998; bahmani-oskooee & kara, 2005; brahmasrene & jiranyakul, 2002; cambazoglu & gunes, 2016; eita, 2013; hooy & chan, 2008; hsing, 2010; jamilov, 2013; mahmud, ullah, & yucel, 2004; matlasedi et al., 2015; mwito, muhia, kiprop, & kibet, 2015; pandey, 2013; rafindadi & yusof, 2014; reis gomes & senne paz, 2005; sastre, 2012; smal, 1996) found evidence supporting the marshall-lerner condition. however, facts from this expanding literature remain diverse and unconvincing due to the data employed, methodology of investigation and the period studied. besides, the practical proof on the j-curve phenomenon and the marshall-lerner condition is still unsettled. given the contradictory results, the efficacy of exchange rate depreciation in correcting trade balance remains a debatable issue. the majority of these studies reviewed are on developed economies and developing economies of the world besides africa. the link between the exchange rate and trade balance of nigeria remains a research area that few scholars have probed (see, for instance, (adeniyi et al., 2011; eke et al., 2015; loto, 2011; onakoya et al., 2019)). also, the empirical studies investigating the j-curve phenomenon and the marshal-lerner condition in nigeria are inadequate. hence, this study intends to strengthen the empirical literature on nigeria in particular and africa in general by investigating the case of nigeria using data from 1982 to 2020. 2.2. theoretical framework three main approaches have been employed in the investigation of the link between exchange rates and trade balance. these are the elasticity approach, absorption approach of sydney alexander and the monetary approach to the balance of payments adjustment. however, harberger (1950); meade (1951) and alexander (1952); alexander (1959), modelled the absorption approach at the start of the 1950s to examine the impacts of devaluation on national income. thus, they brought new insights in terms of analysis with regards to the absorption approach (kenen, 1985; krueger, 1983). the absorption theory of balance of payments adjustment is also known as the keynesian approach. the advocates of the absorption and monetary approaches to adjustment in the balance of payments elucidated, reframed and integrated the shortcomings of the elasticity approach in arriving at their approaches. for instance, the absorption approach resolved some of the initial flaws of the elasticity approach thereby modifying the focal point of this method which is analysing the balance of payments from the economic angle (hernan, 1999). the absorption approach dwelled on economic aggregates which keynes is known for in terms of its analysis against the elasticity approach that based its findings on the impacts of exchange rate uncert ainties on individual microeconomic behaviour. however, the central point of this approach is that a rise in income above overall national expenditures is a sine qua non for any improvement in the trade balance. however, the theoretical foundation of this study would be anchored on the elasticity approach. this is because it can be applied to the trade balance or balance of payments on the current account. the groundbreaking article of bickerdike (1920) was the first attempt to model the link between exchange rates and trade balance. however, it continued with the papers of robinson (1947) and metzler (1948) respectively. this resulted in the emergence of the bickerdike-robinson-metzler (brm) model or the elasticity approach to adjustment in the balance of payments. hence, the elasticity approach laid the foundation stone in terms of investigating the link between exchange rates and trade balance. furthermore, marrewijk (2005) maintained that the elasticity approach dwells on the link between real exchange rates and the movement of goods and services. the volume effect and price effect of devaluation or depreciation on the current account balance is the foundation of the elasticity approach (piskin, 2014). in the first place, devaluation or depreciation of the local currency in contrast to the foreign currency results in comparatively cheaper local goods for both local populations and aliens. comparatively, commodities imported would become more expensive. the resultant effect would be a rise in the volume of exported commodities and a decline in the volume of imported commodities known as the volume effect. because of this, there would be an improvement in the trade balance. however, owing to devaluation or depreciation extra money comparatively would be dedicated to the purchase of imported commodities and this condition is termed the price effect (piskin, 2014). even though there is an improvement in the balance of trade as a result of the volume effect, the price effect worsens it. ultimately, the net impact of devaluation or depreciation on the balance of trade would depend on which of the two effects (volume or price effect) dominates the other based on elasticities of imports and exports demand (pilbeam, 1992). the contributions of marshall (1923) and lerner (1944) brought the elasticity approach to the limelight. they opined that a real devaluation or a depreciation of the local currency would improve the trade balance if the sum of the price elasticities of exports and imports exceeds one. asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 6 © 2022 by the authors; licensee online academic press, usa 3. methodology and model specification the ardl bound test methodology was used to unearth the short -term and long-term effects between exchange rate and trade balance. the annual time series data employed in this study was from 1982 to 2020. the period of study was informed by the different policy episodes of the exchange rate in nigeria. cbn (2016) maintained that the regime of the exchange rate from 1957 to 1985 was fixed. however, 1986 to 2014 was a period of the flexible exchange rate. finally, from 2014 to date was a period of managed float characterized by intentional central bank of nigeria (cbn) intervention, realignment of the naira and bureaux de change (bdc) reforms. except for the world gdp (constant 2015 us$ in millions) obtained from the database of the united nations conference on trade and development (unctad), the rest of the data were derived from the world bank development indicators database. the time series characteristics of the variables were checked for unit root using the augmented dickey fuller (adf) test. since there were more trade deficits than surpluses during the sample period, following (baharumshah, 2001) and to ensure that our model was stated in logarithm form, the trade balance was measured as the ratio of merchandise exports to merchandise imports. this would not be possible with the conventional trade balance expressed as exports minus imports characterized by negative values indicating trade deficits that are incapable of being logged. under this situation, the estimated coefficients would be considered as elasticities. the model used by eke et al. (2015) and bahmani-oskooee and brooks (1999) would be utilized in this study with modification in equation 1 as follows: 𝐿𝑇𝐵𝑡 = 𝛽0 + 𝛽1𝐿𝑅𝐸𝐸𝑅𝑡 + 𝛽2𝐿𝐺𝐷𝑃𝑡 + 𝛽3𝐿𝐹𝑂𝑅𝑌𝑡 + 𝜖𝑡 (1) 𝑊ℎ𝑒𝑟𝑒 : 𝐿𝑇𝐵𝑡 = 𝐿𝑜𝑔 𝑜𝑓 𝑡𝑟𝑎𝑑𝑒 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑚𝑒𝑎𝑠𝑢𝑟𝑒𝑑 𝑎𝑠 𝑡ℎ𝑒 𝑟𝑎𝑡𝑖𝑜 𝑜𝑓 𝑚𝑒𝑟𝑐ℎ𝑎𝑛𝑑𝑖𝑠𝑒 𝑒𝑥𝑝𝑜𝑟𝑡𝑠 𝑡𝑜 𝑚𝑒𝑟𝑐ℎ𝑎𝑛𝑑𝑖𝑠𝑒 𝑖𝑚𝑝𝑜𝑟𝑡𝑠 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝐿𝑅𝐸𝐸𝑅𝑡 = 𝐿𝑜𝑔 𝑜𝑓 𝑟𝑒𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑒𝑥𝑐ℎ𝑎𝑛𝑔𝑒 𝑟𝑎𝑡𝑒 𝐼𝑛𝑑𝑒𝑥 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝐿𝐺𝐷𝑃𝑡 = 𝐿𝑜𝑔 𝑜𝑓 𝑑𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑖𝑛𝑐𝑜𝑚𝑒 𝑝𝑟𝑜𝑥𝑖𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝑟𝑒𝑎𝑙 𝑔𝑟𝑜𝑠𝑠 𝑑𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝑜𝑓 𝑁𝑖𝑔𝑒𝑟𝑖𝑎 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝐿𝐹𝑂𝑅𝑌𝑡 = 𝐿𝑜𝑔 𝑜𝑓 𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝑖𝑛𝑐𝑜𝑚𝑒 𝑚𝑒𝑎𝑠𝑢𝑟𝑒𝑑 𝑎𝑠 𝑡ℎ𝑒 𝑟𝑒𝑎𝑙 𝑔𝑟𝑜𝑠𝑠 𝑑𝑜𝑚𝑒𝑠𝑡𝑖𝑐 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑊𝑜𝑟𝑙𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝜖𝑡 = 𝐸𝑟𝑟𝑜𝑟 𝑡𝑒𝑟𝑚 the model is specified in logarithm form. the logarithm sign is denoted by l. the world real industrial production index used as a proxy for income of trade partners was dropped from the model. we incorporated foreign income that is proxied by the real gross domestic product of the world. furthermore, contrary to the trade balance measured as the difference between exports and imports in the adapted models, our trade balance was measured as the ratio of merchandise exports to merchandise imports. the effect of reer changes on the trade balance is ambiguous. it is anticipated to be positive or negative. theoretically, the j-curve suggests that a devaluation of the local currency deteriorates the balance of trade in the short run. however, it enhances it in the long run. the link between domestic income and trade balance is anticipated to be negative. thus, growth of the domestic income in nigeria would raise imports than exports thereby deteriorating the balance of trade. in addition, foreign income or trading partners' income is expected to have a positive link with the trade balance. hence, as the income of trading partners’ increases, the exports of nigeria would increase and consequently enhance the trade balance. stating equation 1 in ardl form yields: 𝐿𝑇𝐵𝑡 =∝0+ ∑ ∝1 𝜌 𝑖 =1 ∆𝐿𝑇𝐵𝑡−𝑖 + ∑ ∝2 𝜌 𝑖 =1 ∆𝐿𝑅𝐸𝐸𝑅𝑡 −𝑖 + ∑ ∝3 𝜌 𝑖=1 ∆𝐿𝐺𝐷𝑃𝑡 −𝑖 + ∑ ∝4 𝜌 𝑖 =1 ∆𝐿𝐹𝑂𝑅𝑌𝑡−𝑖 + 𝛽1𝐿𝑇𝐵𝑡 −𝑖 + 𝛽2𝐿𝑅𝐸𝐸𝑅𝑡 −𝑖 + 𝛽3𝐿𝐺𝐷𝑃𝑡 −𝑖 + 𝛽4𝐿𝐹𝑂𝑅𝑌𝑡−𝑖 + 𝜇𝑡 (2) where p, δ, α0, µt, α1-α4 and β1-β4 denote the lag length, difference operator, the drift, disturbance term, parameters of the short-run dynamics and the parameters of the long-run relationship respectively. under the bounds testing approach to cointegration, the wald-test would be utilized to unearth the presence of cointegration relationship between tb and its determinants in levels with a null hypothesis of absence of cointegration. 𝐻0: 𝛽1 = 𝛽2 = 𝛽3 = 𝛽4 = 0 against: 𝐻1: 𝛽1 ≠ 𝛽2 ≠ 𝛽3 ≠ 𝛽4 ≠ 0 if the f-statistic is greater than the upper critical value bound, then there is cointegration among the variables. however, if it is below the lower critical value bound, then there is no cointegration. if it falls between the lower and upper critical value bounds, then the results are inconclusive. the error correction form of the ardl model is stated in equation 3 as: asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 7 © 2022 by the authors; licensee online academic press, usa ∆𝐿𝑇𝐵𝑡 =∝0+ ∑ ∝1 𝜌 𝑖=1 ∆𝐿𝑇𝐵𝑡 −𝑖 + ∑ ∝2,𝑖 𝜌 𝑖=1 ∆𝐿𝑅𝐸𝐸𝑅𝑡 −𝑖 + ∑ ∝3 𝜌 𝑖=1 ∆𝐿𝐺𝐷𝑃𝑡 −𝑖 + ∑ ∝4 𝜌 𝑖 =1 ∆𝐿𝐹𝑂𝑅𝑌𝑡−𝑖 + 𝜋𝑒𝑐𝑚𝑡 −𝑖 + 𝜇𝑡 (3) where π and ecmt-1 denote the speed of adjustment and the error correction term respectively. 4. data presentation, analysis and discussion of results 4.1. results of augmented dickey-fuller (adf) test. the results of the adf unit root test in table 1 revealed that the variables were either i(0) or i(1). table 1. adf unit root test results. variable augmented dickey-fuller (adf) level first difference i(d) ltb -2.9052** i (0) lreer -3.2964** i (0) lgdp -0.8806 -5.0803*** i (1) lfory -1.8728 -3.1351** i (1) note: *** and ** indicate statistical significance at the 1% and 5% levels. table 2. bound test results. f-statistics significance level lower critical value bound i (0) upper critical value bound i (1) 5.5161 1% 4.29 5.61 5% 3.23 4.35 10% 2.72 3.77 note: critical value bounds for the f-statistic from pesaran, shin, and smith (2001). 4.2. results of bound test the results in table 2 revealed that the calculated f-statistics was greater than the upper critical value bound i(1) at a 5% significance level. this implies the presence of cointegration or long-run relationship among the variables. the long-run link among the variables was estimated as a result of the presence of cointegration. table 3. diagnostic results. test type of statistic test statistic p-value breusch-godfrey serial correlation lm test 𝜒2 5.3056 0.0705 ramsey reset test f 0.1890 0.6677 jarque-bera normality test 𝜒2 1.2845 0.5261 heteroskedasticity test: arch 𝜒2 6.2899 0.8533 4.3. results of diagnostic tests in table 3, the results of the diagnostic tests revealed that the model passed all the diagnostic tests. based on the findings, there were no problems of serial correlation and misspecification in the model. also, the residual was normally distributed. furthermore, the result showed that the model had no problem with heteroscedasticity. the probability values exhibited by these tests were greater than the 5% level of significance . table 4. long-run estimates for trade balance model. lreer lgdp lfory c -0.2129 -0.118 -0.0564 3.0194 [-2.6526***] [-0.3799] [-0.2365] [1.2408] (0.0137) (0.7072) (-0.815) (0.2262) note: probability values are in bracket ( ). t-statistics are in []. *** denote statistical significance at 1% level . 4.4. results of estimated long-run coefficients based on the long-run result represented in table 4, the reer had a negative impact on the trade balance. this corroborates that as the reer declines, there will be an improvement in the trade balance. thus, a devaluation of the nigerian naira by 1% would result in a 0.2129-unit expansion in the trade balance. since the long-run coefficient of the reer was negative and significant, the marshall-lerner condition holds. thus, the marshall-lerner condition is valid in nigeria. this finding suggests that depreciation of reer leads to an enhancement of trade balance. this finding agrees with the submissions of thahara et al. (2021); bahmani-oskooee (1998); bahmanioskooee and niroomand (1998); bahmani-oskooee and kara (2005); hsing (2010); sastre (2012); chiloane asian themes in social sciences research 2022, vol. 6, no. 1, pp. 1-11 8 © 2022 by the authors; licensee online academic press, usa (2012); pandey (2013); piskin (2014); rafindadi and yusof (2014); anning et al. (2015); matlasedi et al. (2015); cambazoglu and gunes (2016); thahara et al. (2021). however, it violates the results of loto (2011); shahbaz et al. (2011); bahmani et al. (2013); sek and har (2014); lucy et al. (2015); alege and osabuohien (2015); meniago and eita (2017) and dong (2017). the domestic income had a negative and insignificant impact on the trade balance. furthermore, foreign income had a negative and insignificant impact on the trade balance. table 5. results of estimated short-run error correction model. dependent variable: lvexp variable coefficient std. error t-statistic prob. δ(ltb(-1)) 0.1390 0.1551 0.8965 0.3786 δ(reer) -0.1994 0.1356 -1.4706 0.1539 δ(reer(-1)) 0.2128 0.1192 1.7855* 0.0863 δ(lgdp) 4.4183 1.1407 3.8732*** 0.0007 δ(lgdp(-1)) 0.7364 1.3734 0.5362 0.5966 δ(lfory) 9.3899 2.3994 3.9134*** 0.0006 δ(lfory(-1)) 2.5729 3.5129 0.7324 0.4707 ecmt-1 -1.1477 0.2595 -4.4225*** 0.0002 ecm = ltb – 0.2129*lreer – 0.1180*lgdp 0.0564*lfory + 3.0194*c note: *** and * denote statistical significance at 1% and 10% levels. 4.5. results of the short-run dynamic model table 5 shows the results of the short-run dynamics. the coefficient of trade balance in the past year was positive and insignificant. in addition, the reer at lag 1 was positive and significant. this implies that during that time, a 1% appreciation of the nigerian naira results in a 0.2128 unit’s appreciation in the trade balance. this is not in harmony with the j-curve phenomenon, which states that devaluation may not instantly improve trade balance in the immediate time but will exert a significant effect on the trade balance thus making it improve in the following periods. hence, the j-curve phenomenon does not exist in nigeria. however, the reer was expected to exert a negative impact on trade balance at lag 1 and a positive impact on it in the current period for the j-curve phenomenon to hold. this result agrees with the findings of piskin (2014); anning et al. (2015);onakoya et al. (2019); kansel and bari (2020);ibrahim and bashir (2021). on the other hand, it violates the results of adeniyi et al. (2011); matlasedi et al. (2015); man (2018) and thahara et al. (2021). the gdp of the current short-run era had a positive relationship with the trade balance. this implies that gdp had a positive impact on the trade balance in the short run. furthermore, the foreign income of the current short-run period had a positive effect on the trade balance. a 1% increase in foreign income resulted in a 9.3899-unit increase in the trade balance. according to expectation, the error correction term (ect) of -1.1477 had a negative sign and was also highly significant . this implied that the speed of adjustment towards long-run equilibrium would be at 114.78%. 5. conclusion and recommendations this study utilized the ardl bounds testing methodology to cointegration to analyze the short-run and long-run impacts of exchange rates uncertainty on the trade balance in nigeria from 1982-2020. the long-run findings showed that devaluation or depreciation of exchange rates results in improvements in the trade balance of nigeria. however, the short-run results showed that the j-curve phenomenon does not exist in nigeria. the study recommends diversification of exports to improve the performance of non-oil exports. in addition, fiscal, monetary and exchange rate policies in nigeria should be properly harmonized in the country to tackle trade deficits. furthermore, there should be more investment in research and development (r&d) in nigeria to improve the value of goods exported and the competitiveness of its exports in the arena of international trade. references adeniyi, o., omisakin, o., & oyinlola, a. 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