What is the process of restructuring economic policies and strategies in low-income economies called?

What is the relationship, if any, between age dependency ratios (ADRs) and macroeconomic growth in low-income countries versus emerging economies? This paper probes the hypotheses that (1) ADRs and GDP growth are inversely correlated at both stages of development and (2) an equivalent rise in ADR is associated with a greater change in GDP growth in low-income countries than in emerging economies. The approach to testing the corresponding null hypotheses is to conduct linear fixed-effects regression analyses with AR(1) disturbances using annual World Bank and United Nations data on 38 low-income countries and 63 emerging economies over the 24-year period from 1994 to 2017. Model 1 is a simple bivariate regression of GDP growth against ADR by group; Model 2 adds population growth, unemployment, human capital (represented by Human Development Index scores), and technology (reflected in gross fixed capital formation) as control variables. The ADR coefficients have greater statistical significance in low-income countries than in emerging economies, but the differences themselves are more likely to be statistically significant in Model 2 than in Model 1, and tests of the null hypotheses produce mixed results. The paper closes with a comment on the implications for fiscal policy in low-income countries.

AbstractThe purpose of this paper is to investigate the impact of government consumption expenditure as a share of GDP on economic growth in developing countries. The paper uses threshold panel model to examine nonlinear relationship between the government consumption expenditure share and economic growth in 21 low-income countries and 11 low-middle income countries during 1981–2007. The results confirm nonlinear relationship, in which the threshold share of government consumption expenditure for the low and low-middle income countries is 16.2 and 16.9% with the confidence intervals of [13.7–17.3%] and [16.5–16.9%], respectively. The results indicate that, after passing the threshold, the effect of government consumption expenditure share on economic growth changes from insignificantly positive to significantly negative.

This research aims to utilize quarterly global VAR data from April 1, 2020, to September 30, 2021, to assess the influence of the economic recovery of China following the COVID-19 outbreak on global economies. China is one of the first big economies globally to show indications of recovery following the COVID-19 pandemic. The nation's economic growth has the biggest long-term influence on middle-income nations (0.17%) followed by low- and middle-income economies (0.16%) and high-income economies (0.16%) (0.15%). The chain reaction of China's economic growth is most visible in high-income nations (0.11–0.45%), followed by middle-income countries (0.08–0.33%) and low-income countries (0.02–0.05%). Our findings show that the post-COVID-19 economic rebound in China will mostly benefit middle-income nations, with low- and middle-income countries following closely after. After COVID-19, the influence of the economic recovery of China is most visible in the rise of energy consumption in high-income nations, followed by middle-income economies. It is also worth noting that the influence of China's economic expansion on low- and middle-income economies does not always imply a rise in energy consumption. Overall, China's economic recovery has a significantly stronger influence on other countries’ economic development than other countries’ energy consumption has on other economies’ growth.

Novelcoronavirus-19 has created a challenging situation for developed as well as developing countries to sustain economic stability. There are a lot of controversies for policymakers to formulate an effective policy for reviving economic stability and minimizing the economic effects of this pandemic. The present study focuses on the internal mechanism of the Sustainability Oriented Innovation System and its subsequent effects on economic stability in most innovative economies. For empirical analysis of the most innovative countries (12 countries) high-income, middle-income, low-income, and lower-middle-income countries are selected. The Sustainability Oriented Innovation System is represented through the innovation input index and innovation output index. Economic stability is measured through the GDP growth rate of respective countries. A set of panel data was developed for the period of 11 years and Fixed Effect Methods were used to ascertain the empirical findings. The outcomes indicate that innovation is the main force of economic stability. The study's results are important to policymakers to promote, stimulate and support economic stability through their strategies. Future studies may focus on the effects of the Sustainability Oriented Innovation System on economic stability in regional blocks like the EU, ASEAN, and G-20 countries.

This comprehensive study examines the impact of mineral resource trade on green economic growth in 17 high-income and 15 low-income economies during the period 2005 to 2021, employing the SYS-GMM approach. The findings reveal that mineral resource trade positively influences green economic growth in both income groups, with a 1% increase leading to a 0.27% boost in high-income economies and a more substantial 0.64% increase in low-income economies. Factors like urban population, electricity consumption, and poverty rates hinder green growth in both groups, while internet access drives it by promoting digital transformation. Foreign Direct Investment (FDI) affects high-income countries positively but has an adverse impact on low-income nations, primarily due to their resource-intensive industries. Practical strategies are recommended for each group, with high-income economies focusing on green logistics, FDI attraction, education, and digitalization, while low-income countries should prioritize sustainable mining practices, aligning FDI with sustainability goals, investing in education, and embracing digitalization to promote green economic growth.

Nowadays, improvement in income distribution and poverty eradication and hence low inequality are served as the main objectives of economic and social development strategy even prior than primary tasks of governments. to manifest importance of income distribution, some economists adopt income inequality and income distribution in society as criteria for economic system of the community, although these criteria and measures are theoretical for the economic system and this varies from the perspective of different people, however, it denotes on importance of income distribution among individuals. The main objective of this study was to evaluate the effect of economic growth on income inequality in the selection of low-income developing countries.To this end, using panel data and data for 28 developing countries over the period 1990-2010 the relationship between GDP and the Gini coefficient was examined. The results indicate that as per hypothesis Kuznets in the early stages of growth, income inequality increases and then it declines in later stage.

The relationship between economic growth and income inequality has been extensively investigated by previous studies. However, the studies have produced mixed evidences about the relationship. Previous studied have either exclusively focused on developed countries or on large panels with a larger share of developed than developing economies. In what we believe to be a first effort, in this study we have focused on low-income and high-income developing countries and the economies in transition to ascertain the relationship between economic growth and income inequality. The classification of the countries into the low-income and high-income developing countries and economies in transition are based on the classification of the World Bank as well as our own classification based on an income threshold that is endogenously estimated by our model. The classifications of countries according to their national incomes and stage of their development generate homogeneous samples leading to more robust inference about the relationship between economic growth and income inequality. We have used fixed-effects and dynamic panel technique such as system GMM estimation in our analysis to mitigate endogeneity problem. We have found strong evidence of a negative relationship between economic growth and income inequality in low-income developing countries and strong evidence of a positive relationship between economic growth and income inequality in high-income developing countries and in economies in transition.

Despite sustained economic growth and rapid poverty reductions, income inequality remains stubbornly high in many low-income developing countries. This pattern is a concern as high levels of inequality can impair the sustainability of growth and macroeconomic stability, thereby also limiting countries’ ability to reach the Sustainable Development Goals. This underscores the importance of understanding how policies aimed at boosting economic growth affect income inequality. Using empirical and modeling techniques, the note confirms that macro-structural policies aimed at raising growth payoffs in low-income developing countries can have important distributional consequences, with the impact dependent on both the design of reforms and on country-specific economic characteristics. While there is no one-size-fits-all recipe, the note explores how governments can address adverse distributional consequences of reforms by designing reform packages to make pro-growth policies also more inclusive.

The quest to achieve economic development worldwide has increased carbon dioxide (CO2) emissions, which could vary in high- and low-income economies due to differences in economic activities. Using empirical evidence from the panel data for the period 1960–2018 obtained from the World Bank, we investigate differences in the impact of population, gross domestic product (GDP), and renewable energy on CO2 emissions in high- and low-income economies. For that purpose, we applied the Pesaran cross-sectional dependence test (for cross-sectional dependence), Levin-Lin-Chu unit root test (for Unit roots), Granger causality Wald test (for the possibility of Granger causality among the variables), fixed-effects and random-effects regressions. We established that population, GDP and energy consumption considerably influence CO2 emissions. Results of the Granger causality Wald test, fixed-effects and random-effects regressions clearly demonstrated that growth in population and GDP directly correlates with CO2 emissions in high- and low-income economies, while renewable energy consumption has an indirect correlation. While there are no differences in terms of directions, we revealed differences in the magnitude in high- and low-income economies. The impact of population and renewable energy consumption on CO2 emissions in low-income economies is greater than that of high-income economies. The impact of GDP on CO2 emissions is greater in high-income economies than in low-income economies. Thus, to reduce CO2 emissions, policy makers should promote low carbon emission economic activities and implement population control measures.

PurposeThis paper aims to study the impact of foreign direct investment (FDI) and official development assistance (ODA) on the economic growth of developing countries. This paper classifies sample countries into two groups (low- and high-income developing countries) based on income level and investigates whether the two sources of foreign capital have different effects on the economic development of each subgroup of countries.Design/methodology/approachThe authors analyze panel data on 93 countries from 1981 to 2020 using a two-stage least squares (2SLS) estimation. The 2SLS method is used to overcome the endogeneity problem between economic growth and FDI. The sources of the data are World Bank and OECD.FindingsFirst, FDI inflows tend to accelerate per capita GDP growth in both total sample countries and within both groups of countries. Second, ODA has a significant impact on per capita GDP growth only for low-income developing countries. This result indicates that ODA seems to be particularly important for low-income developing countries.Practical implicationsThis paper suggests policy implications that low-income developing countries should create an environment for more ODA funds to flow into themselves with efforts such as improving the credibility and effectiveness of the government related to ODA programs. It also provides implications for donors of ODA to focus their ODA resources on low-income developing countries to more effectively achieve the goal of helping developing countries’ economic growth.Originality/valueThis paper investigates whether FDI and ODA have different effects on the economic development of low- and high-income developing countries. To the best of authors’ knowledge, this point is not addressed in existing studies.