A Romerian contribution to the empirics of economic growth

Mankiw, Romer, and Weil (1992) made the Solovian set up widely used to test the determinants of economic growth and the speed of convergence. In accordance with the nature of the Solow framework, almost all empirical growth studies considered technological progress constant and identical across countries and over time, and hence underemphasized its role. In this study, in order to overcome this weakness, we propose that the Mankiw, Romer, and Weil (1992) set-up should be replaced by the Solovianized Romer (1990) framework, thus allowing the role of technology to be considered in the empirical analysis. In particular, within this framework, the growth rate of technology varies across economies and over time. We estimate the convergence equation derived from Solovianized Romer model for 31 OECD countries for the period 1980–2008 by applying the system GMM approach. The empirical findings of the model support the conditional convergence hypothesis, but reveal a lower convergence rate than that predicted by the existing literature. As a policy implication, we argue that, investment in R&D and human capital are important determinants of convergence, and in cases where economies are unable to allocate sufficient resources to R&D, policy makers should ease the diffusion of technology (e.g., via FDI or trade) in order to retain a high convergence rate.     

Institutional reforms for economic growth in the Western Balkan countries

The paper presents an empirical analysis of the impact of institutional reform policies and institutional quality on the economic growth of five Western Balkan countries (WB countries: Serbia, Montenegro, Bosnia and Herzegovina, Northern Macedonia and Albania) in the period 2006-2016. It was developed its own model of quantification concerning the impact of the most important indicators of the quality of institutions on the economic growth of these countries, which are in a delayed phase of transition and at some stage in the EU accession process. Achieving high and stable rates of economic growth for WB countries becomes the ultimate prerequisite for completing the EU transition and accession process. In order to improve growth dynamics, among other things, it is necessary to identify key drivers of growth and to model appropriate growth and development policies based on the results obtained. In the paper, WB countries were viewed as a whole. By empirically testing the impact of individual quality indicators of institutions on economic growth, according to the World Bank Governance Indicators methodology by using panel data multiple linear regression analysis, the largest statistically significant and positive impact came from the Government Effectiveness and Regulatory Quality variable. The intensity of the impact of the Control of Corruption and Rule of Law variable on GDP per capita is slightly weaker, but it is also very pronounced. In this respect, the empirical results obtained can be a useful framework for modeling the development policies of WB countries. They represent an important guide for policy makers to implement measures aimed at improving the quality of institutions and at the same time modeling economic growth policies.     

Does country-risk influence electricity production worldwide?

This paper investigates the relationship between country-risks (or conflicts) within countries and electricity production. The determinants of electricity production have been neglected in the literature that favours the relationship between energy consumption, growth and development, and despite of the major challenges on electricity supply systems. We empirically establish that weighted conflict index, as well as sub-items as anti-government demonstrations, government crises and riots negatively influence electricity production per capita, after controlling for income per capita. Country conflicts affect electricity production mostly in the long-run. Our results imply that conflicts may affect electricity production substantially and consequently the economy as a whole. Policy should emphasize the institutional framework to avoid conflicts within countries in order to secure electricity production.     

Effect of financial development on economic growth in sub-Saharan Africa

This paper examines the overall economic growth effect when the growth in finance and real sector is disproportionate relying on panel data for 29 sub-Saharan African countries over the period 1980–2014. Results from the system generalized methods of moments (GMM) reveal that, while financial development supports economic growth, the extent to which finance helps growth depends crucially on the simultaneous growth of real and financial sectors. The elasticity of growth to changes in either size of the real or financial sector is higher under balanced sectoral growth. We also show that rapid and unbridled credit growth comes at a huge cost to economic growth with consequences stemming from financing of risky and unsustainable investments coupled with superfluous consumption fueling inflation. However, the pass-through excess finance–economic growth effect via the investment channel is stronger.     

The TRIPs agreement and technological innovation

In this paper we attempt to evaluate the possible spill-over of the international agreement on Trade-Related Aspects of Intellectual Property rights (TRIPs for short), underwritten in 1994, regarding economic growth for both wealthy and developing countries. We find that the TRIPs convention has prompted, at the same time, innovation in developing countries and a rise in the per capita income for all the economies involved in international commerce. As a by-product of our research we find that, despite the strong growth of resident patents application after 1995 (the year in which TRIPs came into force), most of the increase in the gross domestic product per capita in developing countries is attributable to the international transfer of technologies, via foreign direct investments.     

Remittances,growth and poverty: New evidence from Asian countries

The present study re-examines the effects of remittances on growth of GDP per capita using annual panel data for 24 Asia and Pacific countries. The results generally confirm that remittance flows have been beneficial to economic growth. However, our analysis also shows that the volatility of capital inflows such as remittances and FDI is harmful to economic growth. This means that, while remittances contribute to better economic performance, they are also a source of output shocks. Finally, remittances contribute to poverty reduction – especially through their direct effects. Migration and remittances are thus potentially a valuable complement to broad-based development efforts.     

Capital goods imports and long-run growth: Is the Chinese experience relevant to developing countries?

In this paper, we analyze the role played by capital goods imports in the long-run growth of developing countries. We focus in the case of the Chinese economy in the last few decades. We find evidence that the ratio of imported to domestic capital goods, that is, the composition of investment, as well as the capital accumulation (both physical and human), was key determinants of the long-run growth rate of per capita GDP over the analyzed period. Furthermore, our results are also consistent with the hypothesis that the link between trade openness and long-run growth operates mainly through imports. This finding supports some recent developments of Schumpeterian models of growth, and the very specific economic policy recommendations arising thereof. In short, these models state that, in the early stages of growth, government intervention to encourage an investment-based strategy, with emphasis on large investment efforts and the adoption of foreign technology, could be an appropriate strategy for development.     

Impact of finance on growth: Does it vary with development levels or cyclical conditions?

Financial systems are complex and may support economic growth differently at various stages of economic development. This study of 90 countries extends the financial development-economic growth literature by using four proxies of financial development (banking, stock market, bond market and insurance), and considering a country’s level of economic development, on both a full and pre-global crisis sample. As expected financial markets have different effects on growth where the level of economic development vary. Policy makers should find that the insurance sector offers the most benefit for economic growth at all levels of development. Stock markets promote growth for middle income countries. Similarly bond markets promote growth with middle and high income countries. Some bond market and stock market results differed in the pre-crisis sample. Policies which promote trade but limit other areas such as inflation, government consumption and crises, should also support growth.     

Halving poverty in HIPC countries by 2015: How costly if achievable?

This article assesses the likelihood and costs of halving the poverty headcount ratio by 2015 from its 1990 levels in sixteen post-HIPC-MDRI countries. An optimistic pro-poor growth scenario indicates that, on average, they will attain this goal 2 years before the end date. An estimated annual cost of 16 percent of the recipients’ GDPs suggests that currently available funds will be sufficient to finance the MDG poverty target, provided that they achieve a 6 percent annual economic growth, improve their equality of incomes and implement policies to raise absorptive capacity to levels obtained by East Asian countries in the mid-1990s.     

The Meaning of Globalization for Development Policy

The Secretary of State for International Development reviews the Government's development strategy. The core commitment is to help mobilize the international political will to meet the aims of the UN international poverty eradication strategy. This will require resource transfers in the form of aid as investment, if the poorest countries are to be enabled to develop more trade and become part of the global economy. Globalization increases wealth creation, yet there is a danger that some countries could become marginalized from the world economy. To avoid this, developing countries must become full participants on the global economic stage, shaping and influencing the global rules in line with their interests and needs. There are three key challenges at the top of the Government's agenda: (1) the mainstreaming of development issues in the formation of UK and EU policy, (2) encouragement and active support for the efforts of developing countries themselves to become active players on the world economic stage, (3) the building of partnerships to make this happen—with governments, with global economic institutions, with the business sector, with donors and with NGOs. Globalization is characterized by the pace of technological change, the emergence of a more sophisticated system of global economic rules—with the World Trade Organization now at centre stage alongside the IMF and the World Bank—and the increasingly important role of multinational companies. Responding to globalization is not an optional extra. The old models of development need to be rethought. The Department for International Development has a key role to play in this, by ensuring that policy-makers in the UK, within the EU and internationally take full account of development aspects from the outset.     

The Influence of “Made in China” on the Great Moderation of the Global Economy：An Empirical Test Based on Value Chains*

We have collected data on China’s 22 main trading partners for 1984-2012 and used System GMM to study the influence of “Made in China” on the “Great Moderation” of the global economy. Our research shows that although trade scale, real effective exchange rate, oil prices, fixed capital investment and other variables have significantly expanded global economic volatility, “Made in China” has markedly restrained output growth rate fluctuations in countries around the world and price fluctuations in developed countries, helping the global economy develop with “high growth, low volatility.” “Made in China” is a long-term variable in the context of the global value chain. China needs to take advantage of global value chain restructuring to further upgrade and develop processing and manufacturing industry and expand its presence in the international market. It could choose to adopt a “mirror strategy” and launch trade sanctions targeting counterpart industries or enterprises to counter irrational trade sanctions from the developed countries. At the same time, however, it is important for China to make its own contribution to improve global economic governance and building a new international economic order in the era of global value chains by strengthening its policy coordination with other countries.     

The impact of government expenditure on economic growth: How sensitive to the level of development?

Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. In this paper, we re-examine the causal relationship between government expenditure and economic growth by conducting the panel Granger causality test recently developed by (Hurlin, 2004) and (Hurlin, 2005) and by utilizing a richer panel data set which includes 182 countries that cover the period from 1950 to 2004. Our empirical results strongly support both Wagner's law and the hypothesis that government spending is helpful to economic growth regardless of how we measure the government size and economic growth. When the countries are disaggregated by income levels and the degree of corruption, our results also confirm the bi-directional causality between government activities and economic growth for the different subsamples of countries, with the exception of the low-income countries. It is suggested that the distinct feature of the low-income countries is likely owing to their inefficient governments and inferior institutions.     

Economic performance under different monetary policy frameworks

We examine the economic performance (inflation and growth) associated with different monetary policy frameworks, presenting unconditional and conditional analyses, and using predictions of countries’ monetary policy framework choices to address the issue of endogeneity. We find some differences in performance associated with the different monetary policy frameworks, together with a general improvement over time which is explained in part by the trends towards inflation targeting and more precise monetary control, that is from changes in the choice of framework, but in part, and perhaps more strongly, reflects a more general trend towards better economic performance related to changes in decision-making within the frameworks. Our results suggest that the choice of MPF is an important, but by no means the only, determinant of economic performance, and therefore not the only consideration for policymakers looking to improve economic performance.     

Renewable energy,CO2 emissions and economic growth in sub-Saharan Africa: Does institutional quality matter?

Renewable energy appears to be the most optimal alternative to fossil fuel and the widely accepted pathway towards the mitigation of climate change. However, the costs of adopting renewable energy are high, and it appears the wealth of nations, the stages of economic development and growth and institutional willingness and quality are important in winning this global challenge. However, there is limited information on the interplay of all the factors that are perceived as critical in moving the world towards the use of renewable energy sources to meet most of the domestic and industrial energy needs. This study investigates the inter-temporal causal relationship between institutions, renewable energy, carbon emissions and economic growth for 45 sub-Saharan Africa countries using annual data for the period 1960–2017. We used the generalised method of moment panel vector autoregression (GMM-PVAR) technique to explore the linkages. From a general perspective, the results reveal that no causal relationship exists between institutions and economic growth, but a bidirectional causality exists between economic growth and renewable energy. Our results indicate that economic growth causes carbon emissions, and institutions are more likely to respond to carbon emissions and renewable energy but prompts no causality exists between carbon emissions and renewable energy. Interestingly, these results differ between countries with different institutional origin. The policy implications are discussed.     

Growth and trade in the United States and the world economy: Overview

After the slow recovery from the 2008–2009 global financial crisis, the world economy faced slower growth than in the previous decade and even the prospect of a new global financial crisis. This paper starts by examining the reasons for the slow economic recovery and growth in the after the 2008–2009 global financial crisis and "great recession". Then, it examines the reasons the United States grew faster than other advanced countries (especially Europe and Japan), the slowing growth of emerging market economies (and even economic crisis in some of them), and whether the world is now (February 2020) sliding toward a new global financial crisis and recession.     

Can oil-led growth and structural change go hand in hand in Ghana?

Unlike in Asia, the manufacturing sector has not (yet) become a driver of structural change in Africa. One common explanation is that the natural resource-focus of many African economies leads to Dutch disease effects. To test this argument for the case of newly found oil in Ghana we develop a multi-sector intertemporal general equilibrium model with endogenous savings and investment behavior. Results show that in addition to the well-known short-term Dutch disease effects, long-term structural effects can indeed impede Asian-style economic transformation in Ghana (and other resource rich countries). We also demonstrate how oil wealth may go hand in hand with structural change in the future.     

Financial efficiency and accounting quality: The impact of institutional micro-factors on FDI

In this paper, we explore whether factors such as financial markets and accounting qualities contribute to foreign direct investment (FDI). We use a unique data source: the survey data from World Economic Forum, to measure the efficiency of the financial markets and the quality of accounting standards. With this unique data, we demonstrate that financial markets and accounting quality are important factors of FDI inflow into a country. In particular, FDI is positively correlated with the strength of financial audits and reporting standards and venture capital availability for all countries. We also show that accounting quality measures are more important for developing and emerging countries than for developed countries. On the other hand, financial market measures, especially the access to venture capital, have a bigger impact in attracting FDI flow into developed countries. These results support the hypothesis that local financial markets and accounting quality affect FDI. The results have strong policy implications for governmental regulatory agencies.     

Market potential, European Union and growth

The successive enlargements of the European Union have implied an important increase of the market where European firms can supply their products. In this paper we analyze the influence of this process on the economic growth of EU members by including the market potential as a scale indicator in a Solow-type model. The main results are: first, the integration in the EU, specially for new members, explain a substantial fraction of subsequent growth (between 15% and 40%); second, this effect diminishes over time; third, the GDP of new members appears to have a greater positive influence than its population; and fourth, peripheral countries and those less open to trade are in a worse position to appropriate such benefits.     

国内外生产性服务业发展现状与趋势分析

生产性服务业是西方发达国家经济中增长幅度最快的行业之一,甚至成为了许多发达国家的支柱产业,生产性服务业对发展中国家经济发展的作用也日益得到体现。本文从发达国家和发展中国家两个层面总结了生产性服务业发展的总体状况,并分析了全球生产性服务业发展的趋势,即新的生产性服务业类型不断涌现;服务外包化;生产层级化、集聚化发展以及服务协同与融合发展。可以认为,生产性服务业的发展成为了国家竞争优势和区域竞争力提升的重要动力。     

The impact of informality on inclusive growth in Sub-Saharan Africa: Does financial inclusion matter?

Rising poverty levels in Sub-Saharan Africa requires a better understanding of inclusive growth determinants to develop effective policy responses. Using panel data from 44 Sub-Saharan African countries for the period 1990–2018, we compute measures of inclusive growth based on gender and the rural–urban divide. We account for endogeneity, cross-sectional dependence, and heteroscedasticity, and estimate an inclusive growth model using the instrumental variable generalized method of moments (IV-GMM) estimator. The empirical evidence indicates that the impact of informality on inclusive growth depends on the measure of informality and inclusiveness. Our results show that financial inclusion exhibits an inverted-U-shaped relationship with inclusive growth. Also, we find that the moderating role of financial inclusion in the informality–inclusive growth nexus is mixed. Our results are robust to alternative model specifications and highlight the importance of financial inclusion and informality in influencing inclusive growth in Sub-Saharan Africa.