Capita Income Growth Research Articles

Drivers of Health in sub-Saharan Africa: A Dynamic Panel Analysis

Globally, life expectancy increased while infant mortality reduced substantially between the 19th and late 20th century. Although there is relatively mature literature on the drivers behind these gains in life expectancy and reductions in infant mortality, there is a dearth of studies that focus on the drivers of health in sub-Saharan African (SSA) countries. The few studies that do exist do not account for a broader array of determinants such as the quality of access to health services and institutional quality which may have important implications for health policy. We contribute in filling this gap by estimating the effect of a rich set of socio-economic, environmental, health system and lifestyle factors on life expectancy and infant mortality using a panel of 30 sub-Saharan African countries. We employ a dynamic Generalized Method of Moments (GMM) estimator and focus on the period between 1995—2014.Our findings show that increases in health expenditure, educational attainment, and health care access quality are associated with increases in life expectancy and reductions in infant mortality. Higher HIV prevalence rates are associated with reductions in life expectancy whereas urbanization, per capita income growth and access to clean water are positively associated with life expectancy.We conclude that increases in life expectancy and reductions in infant mortality can be accelerated by paying particular attention to interventions linked to these drivers, including, health care access quality.

Interplays among R&D spending, patent and income growth: new empirical evidence from the panel of countries and groups

Industrial houses and governments of different countries and groups spend a sizeable amount of their earnings upon research and development activities to create new products and obtain patents for them. The short-run motive is to get patents, and the long-run motive is to influence income growth of the countries. The empirical findings so far are skeptical on the effects of research and development (R&D) spending. The present study further investigates the long-run associations and short-run dynamics among R&D spending, number of patents and per capita income growth in the panel of countries and groups for the period 1996–2017. Using VAR model for the panel data, the study observes that R&D spending, number of patents and per capita income growth have no long-run equilibrium relations but in the short-run, income growth and number of patents make a cause to R&D spending. However, there are weak causation from patents and R&D spending to income growth rates. The study thus recommends for controlling unfair competition on spending on R&D head and getting patents since it increases the magnitudes of social cost.

Impact of financial development on economic growth: Evidence fromSub‐SaharanAfrica

AbstractMany African countries have experienced episodes of weak growth since 1970 through the 2000s. A fundamental intermediation gap in Sub‐Saharan Africa (SSA) is the extremely limited financing for medium to long term lending facilities to promote growth. Thus, given the importance of financial development on economic growth, this study investigates the impact of financial development on economic growth in SSA, which is sub‐divided into low‐, middle‐ and upper‐income groupings to ascertain whether differences in income levels across countries affect the relative impact of finance on growth. The study adopts the dynamic and static panel data model to analyse 30 SSA countries using annual data over the 1985–2015 period. The findings indicate that financial depth and financial intermediation reduce per capita income growth in low‐ and middle‐income countries. However, it increases growth in upper‐income and the overall sample of SSA countries. Credit supply positively impacts growth in low‐income countries but exerts a significantly negative impact on growth in middle‐income and the overall sample of SSA countries. Financial liberalisation promotes growth in upper‐income and the overall SSA. However, it reduces growth in low‐ and middle‐income countries. Financial development and financial liberalisation are important factors that affect economic growth given different income levels.

ENERGY PRICES, INCOME AND ELECTRICITY CONSUMPTION IN AFRICA: THE ROLE OF TECHNOLOGICAL INNOVATION

In this paper, we examine an extended model of the determinants of electricity consumption to include the effect of technological innovation represented by the number of patent and trademark registered. The study focused on 35 African countries from 2009 to 2018 based on availability of records on patent and trademark registration. Both the one and two-step system generalized method of moments were explored to estimate the empirical model. The models were estimated in five different categories to properly account for the behaviour of technological innovation and other determinants of electricity consumption. It was revealed that technological innovation has an insignificant effect on electricity consumption in Africa. However, other variables of interest affected electricity consumption in diverse ways; while per capita income and population growth have positive and significant effect on electricity consumption, energy price and FDI inflows exhibit a negative and significant effect on electricity consumption. The results suggest that technological innovation has not promoted energy efficiency in Africa possibly due to weak innovative capabilities of African countries. Hence government effort should be geared towards improving innovative technology in the region.Keywords: Technological Innovation, Energy price, Electricity consumption, GDP per capita, System Generalized Method of MomentsJEL Classifications: O30, O34, P18, Q20DOI: https://doi.org/10.32479/ijeep.9494

Role of Education and Financial Capacity on E-Government Adoption

E-government is an emerging concept that refers to the use of new technology for the provision of services to the citizens resulting in increase in transparency and efficiency. Financial capacity of a country refers to the ability of a country or government to manage the expenses and finances of the country and to make rational decisions related to finance. Level of education means the literacy rate or the number of knowledgeable people in the country. The basic plan of this study is to check the impact of level of education and financial capacity on the e-government adoption by people in the presence of two control variables, per capita income and GDP growth. In order to conduct research, data has been collected from ASEAN countries for 28 years from most reliable resources. In the research process, several techniques and tests are used such as IPS unit root test, Pedroni cointegration test, FMOLS coefficient estimation test, Granger casualty test etc. As the consequence of these tests, the impact of level of education and financial capacity well as the control variable, GDP growth on happiness level of people are accepted. However, the impact of a control variable, per capita income has been rejected. This study has several benefits and implications related to theoretical, practical and policy making benefits in context of increase in e-government adoption.

Determinants of Inclusive Growth in ASEAN

Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.

Determinants of Inclusive Growth in ASEAN

Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.

Balanced versus unbalanced growth: Revisiting the forgotten debate with new empirics

AbstractThe debate between balanced and unbalanced growth doctrines generated much heat after the publication of Rosenstein‐Rodan’s seminal work in 1943, but it vanished in the early 1980s. This paper empirically revisits this forgotten debate by first compiling a harmonized international data set that contains sectoral value‐added data for up to 177 countries over 45 years. This data set enables us to construct indices of sectoral growth imbalances for each country, which further allows us to update the key empirical tests for the balanced and unbalanced growth hypotheses that featured in the original debate. Moreover, we also conduct a panel regression analysis to systematically examine the association between sectoral balance (or imbalance) and per capita income growth. Overall, we find empirical support for the balanced growth hypothesis.

Immigration and economic resilience in the Great Recession

The 2007–2009 financial crisis has caused economic disruption in many US cities and has drawn considerable academic attention. Despite abundant evidence of immigrants’ economic and social value to urban areas, little research has examined the relationship between immigration and resilience. This article investigates whether immigration enhanced economic resilience to the Great Recession for metropolitan areas in the US. It uses ordinary least squares and instrumental variable regressions to test the immigration effects between 2007 and 2014. The findings indicate that immigration leads to employment and income resilience. On average, metropolitan areas with a larger immigrant population tended to better preserve their growth paths during the Great Recession and to experience greater levels of employment and per capita income growth following the recession.

Does the African Growth and Opportunity Act (AGOA) impact EU-15 imports from Africa?

PurposeAt the heart of the African Growth and Opportunity Act (AGOA) are substantial trade preferences, which coupled with the Generalised System of Preferences (GSP) grant a wide range of goods produced in qualified African countries duty-free access to the USA. To be AGOA-eligible, countries are assessed annually on their progress in undertaking appropriate economic, institutional and human rights reforms. This paper seeks to cover new grounds by exploring whether exports of apparel to US crowds out EU-15's imports from Africa.Design/methodology/approachThis paper employs the gravity model to gauge trade displacement effects from the EU to the US due to AGOA, and whether the more relaxed special waiver embodied in AGOA's apparel provision causes non-knitted exports to EU-15 to be crowded out. The basic gravity model, which posits that trade between two countries is positively influenced by the economic size and negatively affected by the distance between them, is augmented with other trade inhibiting and trade facilitating variables.FindingsThe gravity model provides no evidence of trade displacement but, instead, provides support for the hypothesis of complementarity of African exports to the two key markets. A strong positive impact of the bilateral trade between the US and Africa on the EU–African trade is evident mainly before the phasing out of the Agreement on Textiles and Clothing (ATC). This paper finds that Special Rule beneficiaries' exports to the two markets still complement each other, but for every percentage increase in exports to the USA, there is a less than proportionate increase in exports to EU-15 indicating a higher utilisation of the special waiver. This paper also provides evidence for complementary apparel exports to both LDCs (least developing countries) and non-LDCs, with stronger effects on non-LDCs and the non-knitted sector.Research limitations/implicationsFuture work could consider the longer lifespan of AGOA following its latest renewal in 2015. This would allow one to also capture the ongoing changes in EU trade arrangements in particular implementation of Economic Partnership Agreements (EPAs). This new agreement comes with more flexible rules of origin requiring single transformation step instead of the double step. As most African nations are still in the process of adopting EPAs, new research can shed more light on complementary or displacement effects once these agreements are adopted.Originality/valueSince the main intent of AGOA is to enhance Africa's integration into the global economy by encouraging trade and investment, generate employment and increase productivity and per capita income growth, its impact on Special Rule beneficiaries' exports to the US has been extensively examined. However, the indirect effects of this trade agreement on African exports to other key markets providing similar preferences such as the EU has not been fully explored. This study also covers new grounds by examining whether there has been any apparel trade displacement from the EU to the US, as a result of the Act, over 2001–2016 period right from AGOA's inception.

"Understanding growth convergence in India (1981-2010): Looking beyond the usual suspects".

The literature on growth convergence has focused to a great extent on the role of initial incomes as a primary determinant of long-term growth outcomes. Expanded versions of growth models have used other explanators to unpack the growth process. In this paper we add to the literature in two significant ways: (a) we use socioeconomic variables that are sometimes overlooked in explaining growth (such as, political stability and political alliance, social heterogeneity, and demographic distribution), and (b) we demonstrate that earlier analyses may be overlooking the problem of normality and endogeneity in regression models (and we provide alternate methods like instrumental variable and distribution dynamics to control for these). In this paper we analyze the per capita income growth at the subnational level in India for the period 1981–82 to 2010–11 using an expanded growth framework. We find that initial incomes, the ratio of working age group to total population, political stability and alliance, and the extent of development expenditure play a positive and significant role in predicting growth. We also find that, contrary to popular belief, the presence of marginalized groups—namely Scheduled Castes and Scheduled Tribes—have not been a hindrance to growth of per capita incomes in states. Our findings on the influence of social institutions may have significant implications for a public policy of affirmative action in India. The results on the impact of development expenditure on growth is also important for states seeking to increase their growth rates through policy intervention.

Employment and economic growth dynamics in Odisha, India

As the current phenomenon of “jobless growth” has gripped the Indian labor market, the subnational literature on how states have fared on employment generation in the post‐liberalization period has been sparse. We examine the changing trends in employment and income among different sectors and subsectors of the economy of Odisha, an eastern Indian state, over the period 2011–2012 to 2017–2018 which is coincident to the Naveen Patnaik government which has been in power since March 2000 to date. Adopting the World Bank's Job Generation and Growth Decompositions tool (JoGGs) inspired by Shapley (1953. Contributions to the theory of games. Princeton University Press) decomposition method, we decompose growth across different sectors of its economy and examine how the per capita income growth is linked to changes in employment, output per worker, and population structure at the aggregate level and by sectors. We find there is a sharp decline in employment growth rate in the agriculture sector, a moderate growth in the mining sector, and a high growth only in the construction and a few service subsectors in Odisha. There has been significant output growth across industrial and service sectors and low growth in the agriculture‐sector. Low employment creation in the agriculture sector and negative employment growth in manufacturing sector have had implications for seasonal migration and rural agrarian distress in the state. The dismal overall trend in the employment growth makes it imperative on the part of the government to undertake serious policy interventions in Odisha.

A Comparison of Living Standards Across the States of America

We use an expected utility framework to examine how living standards vary across the United States and how each state's living standards have evolved over time. Our welfare measure accounts for cross-state variations in mortality, consumption, education, inequality, and cost of living. We find that per capita income is a good indicator of living standards, with a correlation of 0.80 across states. Living standards in most states, however, appear closer to those in the richest states than their difference in per capita income would suggest. Whereas high-income states benefit from higher life expectancy, consumption, and college attainment, low-income states benefit from lower cost of living. All states experienced positive welfare growth, and hence rising living standards, between 1999 and 2015. The annual welfare growth rate, however, varied from 1.38 to 3.76 percent across states due to varying gains in life expectancy, consumption, and college attainment, with life ex pectancy accounting for 50.3 percent of the variation. Finally, the growth rate of per capita income is a poor proxy for how fast living standards are rising in a particular state since the correlation between welfare growth and per capita income growth is only 0.38, and deviations are often large.

Manufactoring, economic growth, and real exchange rate: Empirical evidence in panel data and input-output multipliers

This paper investigates the effects of manufacturing and of the real exchange rate (RER) on real per capita income growth. We use dynamic panel models and the calculation of output and employment multipliers for a diversified sample of countries from 1990 to 2011. Three important results can be highlighted. First, we provide new evidence that manufacturing is the most important tradable sector for achieving greater real per capita income growth for developing countries. Second, the greater a country’s gap in relation to the technological frontier, the greater the positive effect of an undervalued RER on the real per capita income growth rate. Finally, the manufacturing industry’s output multipliers and employment multipliers in the developing countries are higher than those in in developed ones, in all years analyzed. JEL codes : F43, L16, R15

Economic Growth, Energy and Environmental Degradation Nexus: A Case Study in Pakistan

This study estimated the growth, energy and environmental degradation nexus in Pakistan by using time series data. The data have been taken from the World Bank for the year 1971 to 2011. The data analysis was done by using the approach of co-integration (ARDL bound test) to confirm the effective long-term positive relationship among carbon dioxide emissions, per capita income growth and the per capita income gap to monitor the trend of the Environmental Kuznets Curve in Pakistan. The results of the study showed that there is no evidence of a serial correlation between the variables in the discussion, but they have a long-term association. Energy usage and per capita real income, has a positive relationship with CO2 emissions. The study has concluded that there is an evidence of inverted U shaped EKC in Pakistan and this relationship varies with different types of pollutants and geographical regions. Initially, income has a positive relationship with CO2 emission but after the turning point, both have a negative relationship.

Determinants of Microfinance Outreach in India: Empirical Evidence

Using a panel data on the Microfinance-Bank Linkage Program (2008–2015), this paper examines the determinants of the program’s outreach. The results indicate that microfinance outreach has not been a key indicator for addressing economic and social issues. The study underscores that the program favors income-rich rather than poor states: the average loan is correlated with higher per capita income and high economic growth at the state level. Literacy, NPA, and bank ownership also matter in determining microfinance outreach.

Determinants of the result of new rural development program in Vietnam

PurposeThe purpose of this paper is to identify the determinants of the proportion of communes that met all national new rural criteria (hereafter NRD communes).Design/methodology/approachFirst, the method of propensity score (PS) stratification is used to classify 63 provinces into the subgroups. Second, the ordinary least squares (OLS) model is used with the subgroups classified from the PS stratification method as one of explicative variables. The dependent variable in the OLS model is the proportion of NRD communes.FindingsWith the sample of 63 provinces of Vietnam, the author found that per capita income growth rate, high growth of gross regional domestic product (GRDP) and effort of the provincial authority have positive impact on the proportion of NRD communes.Practical implicationsThis research suggests that the provincial authority should actively participate in the NRD program, and the economic development is key factor for success implementation of the NRD program.Originality/valueThis research contributes to understand the factors impacting the result of the NRD program and then help to identify the measures to support this program.

China's Growth Outlook: Is High-Income Status in Reach?

Can China build on its development success to achieve high-income status in the decades ahead? To shed light on this question, we examine the past and prospective future sources of growth in China through the lens of the neoclassical growth model. Our key finding is that China would need to sustain total factor productivity growth at the top end of the range achieved by its high-income Pacific Rim neighbors in order to match their success in raising living standards. While fast-growing working-age populations boosted per capita income growth elsewhere in the Pacific Rim, a rapidly aging population will act as a powerful drag on income growth in China’s case. Moreover, China's already capital-intensive production structure will make it difficult to match those countries' gains from capital deepening. These restraints mean that a sustained and exceptionally high pace of productivity growth will be needed for Chinese per capita incomes to reach even 50 percent of the U.S. level by 2040. We argue that lagging institutional development represents the chief obstacle to the needed productivity gains.

The Impact of Financial Inclusion on Poverty in Jordan

This study aimed to estimate the long-run impact of financial inclusion along with a set of control variables on the poverty in Jordan during the period spans from 1980 through 2018. The per capita income growth rate was used as an indicator of poverty due to the lack of annual data on poverty indices. The study used the Autoregressive Distributed Lag (ARDL) Model to test for cointegration. Also, both Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) are used to estimate the long-run model parameters. The ADF (Augmented Dickey-Fuller) results indicate that the variables integrated of order one I(1) or integrated of order zero I(0) but none is I(2). The diagnostic statistical tests necessary to ensure the model’s adequacy and validity indicate that the model is free from statistical problems, and the estimation results are reliable. The bounds test to cointegration provide evidence on the existence of long-run equilibrium relationship among variables, and hence, the variables are cointegrated. The empirical results revealed a positive effect of loans and demand deposits on per capita income, which reflects a reduction in poverty. While the number of bank branches has a negative impact on the per capita income, and hence, increasing poverty. Accordingly, the study recommended improving financial and banking systems to facilitate obtaining loans, increase the number of branches to improve individuals' access to financial services, and raising the interest rate on deposits to encourage investors and capital owners and companies to save in banks.

Growing through Spinoffs. Corporate Governance, Entry, and Innovation

New firms are often based on ideas that the founders developed while working for incumbent firms. We study the macroeconomic effects of spinoffs through a growth model of product variety expansion, driven by firm entry, and product innovation. Spinoffs stem from conflicts of interest between incumbent firms' shareholders and employees. The analysis suggests that incumbents invest more in product innovation when knowledge protection is stronger. An inverted-U shape relationship emerges, however, between the intensity of spinoff activities and the strength of the rule of law. A calibration experiment indicates that, with a good rule of law, loosening knowledge protection by 5% reduces product innovation by one fifth in the short run and one seventh in the long run, but boosts the spinoff rate by one tenth and one sixth in the short and long run, respectively. Nevertheless, per capita income growth drops and welfare deteriorates. The trade-offs are broadly consistent with evidence from Italian firms.