Capital Formation Research Articles

The impact of economic freedom on economic growth in countries with high and low regulatory quality—lessons for Viet Nam

This article aims to analyze the impact of economic freedom on economic growth, considering the influence of varying regulatory qualities (RQ) among nations. Analyzing data from 54 countries from 2008 to 2022, Bayesian linear regression results on two sample groups, categorized based on RQ, reveal that economic freedom positively affects economic growth regardless of high or low RQs. Additionally, separate regression analyses for Vietnam indicate no significant difference from other countries. However, control variables uncover differences between the two groups, particularly in corruption control and financial development, with their effects varying across nations. Notably, in Vietnam, government expenditure on education, inflation, fixed capital formation, and population growth rate exhibit regression outcomes contrary to those of other countries in the two groups. The suggested policy implications align with the regression results, aiming to strengthen economic freedom. They support policymakers in achieving this.

Driving low-carbon mechanisms through smart investments in renewable resources and green finance initiatives among G20 nations

In light of the escalating concerns regarding climate change and environmental decline, major nations are actively exploring strategies to mitigate environmental harm and achieve future sustainability. The surge in economic expansion in developed economies is linked to an increase in CO2 emissions. Consequently, in their pursuit of carbon-neutral policies, these countries are increasingly turning towards renewable energy as a means to enhance resource conservation and efficiency. This research investigates the varied impacts of renewable energy investment, green finance, geopolitical risk, GDP growth, foreign direct investment, and gross fixed capital formation on the carbon emissions of G20 countries. The study uses the CUP-FM (Continuously Updated Fully Modified) and CUP-BC (Continuously Updated Bias-Corrected) estimators, which are sophisticated econometric approaches designed to handle non-stationary panel data and cross-sectional dependency, to produce robust long-term parameter estimates. The CUP-FM estimator adjusts for potential endogeneity and serial correlation, improving the accuracy of long-run relationships in panel data. The CUP-BC estimator provides bias-corrected estimates to further enhance the precision of these long-run connections.The long-term parameter estimates reveal a negative correlation between renewable energy investment, green finance, and carbon emissions. In contrast, foreign direct investment, gross fixed capital formation, GDP growth, and geopolitical risk are positively associated with CO2 emissions. This suggests that financial stability often leads to investments in carbon-heavy economic ventures, thereby implicating economic growth as a contributing factor to environmental degradation in G20 countries.

A Panel Data Analysis on the Relationship between Financial Development and Economic Growth: The Case of Asian Countries

The causal relationship between economic growth and financial development is crucial for the dynamics of economic growth and the financial background it generates. However, doubts about the shape of the relationship may lead to indecision in the economic policies to be implemented. The aim of this study is to analyze and provide evidence on the relationship between the two variables in order to overcome this ambivalence. In this panel data analysis of 24 Asian countries covering the 2000-2020 period, firstly Cross-sectionally Augmented Dickey-Fuller (CADF) Unit Root Test, one of the second-generation unit root tests, and then Dumitrescu & Hurlin (2012) Panel Z_NT causality tests were applied. According to the causality test results, there is a bidirectional relationship between GDP and financial development. In addition, gross fixed capital formation (GFCF), which is included in the model as a control variable, is also found to have a bidirectional relationship with both variables. Thus, the evidence supporting the interaction view that combines supply and demand side theories reveals the importance of taking both variables into account in economic policy decisions.

Analysis of factors determining the development of human capital in the context of digitalization of regional economic systems

Subject. This article discusses the issues of formation of the information society and digital literacy improving. Objectives. The article aims to assess the impact of digital tools on the formation of human capital. Methods. For the study, we used the mathematical research methods. Results. The article presents the author-developed methodology for assessing the Consumer Behavior subsystem, that is a subsystem of the regional economic system. The proposed methodology involves the assessment of digitalization processes in conjunction with socio-economic indicators. The article identifies factors that determine the development of human capital in the new economic conditions. Relevance. The results of the study can be used to develop plans for a regional digital economic system creation.

Diseño de un Sistema Integral para la Formación de Capital Humano en la pequeña y mediana empresa de Yucatán

The purpose of this study is to design an Integral System for the Formation of Human Capital (SIFCH), which allows the strengthening and specialization of this resource and, in this way, helps in the economic growth and consolidation of the market to which the products and services of small and medium-sized companies are directed. The method integrates the qualitative research approach with phenomenological processes, descriptive and analytical scope; for this purpose, interviews were conducted with 35 people, 17 businessmen of the State of Yucatan and 18 experts in the training area (consultants, private training companies, government agencies, business chambers, and business incubators). As a result, the Integral System of Human Capital Formation (SIFCH) was established, which consists of two parts. The internal part (the system's core) contemplates the organization's specific needs in terms of its size, business line, and resources; the entrepreneurial culture and innovation as an added value. The external part was designed according to a compendium of the elements that training experts consider at the time of training; these are: Diagnosis of the learning needs and the Evaluation of the Human Capital Training Process, that is, the results obtained in the productivity and personal growth of the worker in a period of time determined by the organization to measure the impact and effectiveness of this. The conclusions establish the processes to be followed in the implementation of SIFCH.

The Real Equilibrium Exchange Rate of the Czech Koruna – the BEER Approach

The aim of this paper is to develop a model of the real equilibrium CZK/EUR exchange rate with all relevant explanatory variables. Emphasis will be placed on examining the longest possible time horizon, with a period of real convergence, but also economic stagnation. The model is based on the theoretical BEER approach using a cointegration or error correction model that distinguishes between short-term and long-term relationships. The results show that the Czech koruna strengthens when the productivity differential, terms of trade differential or gross fixed capital formation increase, while the koruna weakens when the VIX index representing global risk aversion increases. For the real interest rate differential, the hypothesis that the koruna strengthens in the short run during the improvement but weakens in the long run probably due to the country's risk premium, was confirmed. Moreover, it turned out that the start of the European Central Bank's quantitative easing led to strengthening of the Czech koruna, while the start of the CNB's foreign exchange interventions in 2013 led to weakening of the Czech koruna.

Women entrepreneurs in rural Nigeria: formal versus informal credit schemes

PurposeThis study examines why low-wealth women entrepreneurs forgo mobile enabled money services and government supported micro finance for informal, community-based revolving loans in rural Nigeria.Design/methodology/approachThematic analysis of 25 interviews with women in rural, south-west Nigeria. Entrepreneurial ecosystem theory, in the gendered context of micro finance and community-based lending, is employed.FindingsThis study explains the paradox of forgoing seemingly accessible mobile enabled credit, and formal credit schemes (e.g. micro-finance programs) for informal, one-on-one borrowing. Convenience and trust-based relationships with respected community members ease the burden of time scarcity and vulnerability associated with formal capital. Flexible terms, autonomy, self-reliance and knowing who one is dealing with make Esusu a preferred source of finance. Findings are discussed in the context of gendered entrepreneurial ecosystems in which participants conduct business.Research limitations/implicationsThe sample is not representative of women entrepreneurs in rural Nigeria. Survivorship bias is acknowledged. Further research is needed on the psychological risks of informal capital and the benefits of community-based lending.Practical implicationsMeasures to scale mobile enabled credit, without commensurate interventions to address time management and other structural issues that confront women traders, limit their utility and impacts. Power differentials between women traders and lenders must also be considered in the design of lending products. Training of women traders and formal lenders should incorporate curricula about gender gaps in capital markets and systematic gender challenges to support entrepreneurs who seek to grow beyond subsistence enterprises.Originality/valueThis study documents decision criteria that motivate informal rural women traders to employ community-based revolving credit or Esusu. Findings inform measures to increase women entrepreneurs' access to capital in a rural sub-Saharan Africa contexts.

Interplay of Foreign Direct Investment, Remittances, and Economic Growth: Insights from SAARC Countries

The current study focuses on finding and analyzing the nexus between remittances, foreign direct investment, and economic growth in SAARC countries. This study uses secondary balanced data of selected SAARC countries for the years 2000 to 2019. This study uses gross domestic product i.e., GDP, which serves as the proxy of economic growth, as the dependent variable. The core independent variables of this study include (FDI) foreign direct investment and remittances (RMTN). Additionally, gross capital formation (GCF) and carbon dioxide emissions (CO2) are the other two independent variables in this study. For the proxy for environmental degradation the study uses data of CO2 emissions. The data is collected from the world development indicators, WDI. The study focuses on how all the independent variables affect the growth of economy in selected SAARC countries which include Pakistan, India, Bangladesh, Sri Lanka, and Nepal. The study applies cross sectional dependence test, panel cointegration test, unit root tests, and PARDL (panel auto regressive distributed lag model), also called pooled mean group methodology, to obtain empirical estimates. The results of PARDL show that FDI, RMTN, and GCF are all positively and significantly related to GDP. This means that GDP or alternatively economic growth, is improving with rise in FDI, RMTN, and GCF in selected SAARC countries. The results show that CO2 emissions have a negative significant impact on GDP i.e., increase in pollution levels is harmful for the growth of the selected economies.

Impulse Response of External Debt Stock and Gross Capital Formation on Economic Growth in Bangladesh: Var Model, Granger Causality and Variance Decomposition Analysis

Purpose: This study employs an annual time series data set from 1987 to 2018 gathered from the World Development Indicators (WDI), 2021 to analyze the properties of external debt stock on financial progress(proxied by economic growth) in Bangladesh. Methodology: The objectives are determined using a variety of econometric techniques, including the Phillips-Perron (PP) unit root test, Var model, Johansen co integration test, Impulse Response Function (IRF), Variance decomposition function, and Granger causality test. The get the result of the Phillips-Perron (PP) unit root test which indicates the stationarity of all the variables at the initial difference. Findings: There is an expectant impact on financial progress (proxied by Gross Domestic Product Per capita) in Bangladesh, according to the short run Var model with the two independent variables External Debt Stock (proxied by public debt) and second lag of Gross Fixed Capital. Block Exogeneity/ Wald Tests and Johansen Co-integration test show that both lnEDS and lnGCF have a strong constructive impact on Bangladesh's financial progress in the short as well as long run. Pairwise, Granger Causality also indulgence the Bi-directional causality between lnGDPPC and lnEDS and Uni-directional causality from lnGCF to lnGDPPC. The influences of lnEDS and lnGCF on lnGDPPC are rising in the long term, showing that both variables are significantly exogenous on the dependent variable. Practical Implication: Bangladesh is now a fast-growing economy with several mega projects for infrastructural, human, and technological advancements such as roads, train, power, education, health, information technology, gas, and energy. External debt service and gross capital formation are crucial for Bangladeshi economic growth. The government should establish a priority aim for long-term economic growth by implementing suitable measures to control, maintain, regulate, and stabilize inflation at a reasonable level. Originality/Value: In a developing country, Savings within the country are insufficient to support investment for financial progress, according to the dual-gap theory and the Keynesian theory of public debt. As a result, bridging this gap for the required level of investment and achieving targeted economic growth will necessitate a bigger inflow of foreign aid or external borrowings. That’s why this study is very important. Limitations: Some limitations of this study include the absence of recent data with the factors. Also numerous factors can influence Bangladesh economic growth for instances, remittances, exchange rates and foreign direct investment all have a crucial impact on GDP growth.

Exploring the impact of oil revenue on Nigeria's economic growth: A non‐linear autoregressive distributed lag model

AbstractThe influence of oil proceeds on an economy remains a subject of debate among scholars. Most scholars agree that income from oil has direct effect on economic expansion. We explore the impact of revenue from oil on economic growth in Nigeria from 1986 to 2016. Data were collected from the Nigerian Central Bank and the World Data Indicators. We employed a non‐linear autoregressive distributive lag approach to analyse the data. The outcome exposes a direct and significant association between revenue from oil and GDP both in the short and long term. Trade openness exhibits a significant negative effect on GDP from both short‐ and long‐term perspectives. Gross capital formation directly influences GDP in the short and long run, with significant impacts primarily in the long term. The study suggests that revenue from oil has a direct and significant impact on the Nigerian economy during the period from 1981 to 2016. We recommend that the Nigerian government create a conducive environment for private investment to thrive, thereby sustaining the nation's growth potential. Additionally, the government should wisely utilise revenue from oil to revitalise non‐booming productive sectors in the economy, thus diversifying revenue sources.

Cocoa Transfer Agreements, moneylenders, public letter writers and the rise of business elites in South West Nigeria, 1986–2000

Abstract This paper focuses on the subject of the cocoa transfer agreements and the transformation of rural agrarian livelihoods in the cocoa belt of South West Nigeria under the Structural Adjustment Programme (SAP). The paper maps the trajectory and career of three dominant agricultural entrepreneurs in the cocoa produce trade in South West Nigeria during the 20th century. The paper demonstrates that while the cocoa business in Nigeria has received considerable scholarly attention, the impact of moneylenders, public letter writers (PLWs) and cocoa transfer agreements on cocoa business, rural livelihoods and entrepreneurship in the aftermath of SAP is yet to be fully investigated. Analysing the accumulative strategies and contributions of Emmanuel Akintan, Isaac Adegbuyi Akingboye and Rufus Orosundafosi to rural capital formation, the paper highlights the impacts of liberalisation policies on African rural businesses in the aftermath of SAP. The paper combines primary sources, such as oral interviews, personal observation and ethnography, with information collected from the archives, newspapers, diaries, and extant literature to analyse the dynamics of rural accumulation in the cocoa producing South West Nigeria during the 20th century. The paper argues that the acquisition of wealth and the thin line between standard procedures and clandestine deals stimulated accusations of dispossession of peasant farmers by the capitalist moneylenders and merchants in the post-SAP era.

Impact of Natural, Physical and Human Capital Formation on Economic Growth in Pakistan: An ARDL Analysis

Attaining sustained economic growth is one of the key objectives of any country to improve the well-being of its people and strengthen its economic position in the world. Capital formation is one of the crucial factors of economic growth as it promotes productivity, efficiency, and higher output growth. Therefore, this paper intends to analyze the impact of natural, physical, and human capital formation on economic growth in Pakistan by employing annual time series data from 1971 to 2020. Different econometric approaches such as unit root test, bound test, and ARDL model are utilized to estimate the results. The study found that labor force participation rate, physical capital, human capital, natural capital, FDI, and financial development are positively associated with economic growth in Pakistan. Instead of FDI, all the variables are found to be significantly related to economic growth in Pakistan. Considering the study’s findings, it is concluded that capital formation is essential to progress the economy of Pakistan, so policymakers must concentrate on investing in physical infrastructure, improvement in health and educational facilities, and efficient utilization of natural resources to promote economic growth.

Macroeconomic determinants of labour costs in the EU: a comprehensive panel and cluster analysis

Abstract Labour costs are a fundamental component of production expenses, significantly impacting both the quantity and quality of output. This study explores the determinants of labour costs within EU member states that have implemented minimum wage policies over the past two decades. The research technique includes a comprehensive panel analysis of EU member states to identify significant variables influencing labour costs, as well as cluster analysis to discover underlying patterns across the nations under examination. Our findings reveal that higher minimum wage levels, higher employment rates, increased labour productivity, and greater trade openness are positively correlated with higher labour costs. Specifically, increases in these variables lead to higher wages and a broader tax base, while greater trade openness results in elevated labour costs due to expanded market opportunities. Conversely, gross fixed capital formation negatively affects labour costs, as investments in production assets tend to reduce labour requirements or hours worked. The cluster analysis led to the identification of three distinct groups. The first cluster consists of well-developed economies with modest labour cost increases and average minimum wages. The second cluster includes countries with substantial labour cost increases, low minimum wages, and significant productivity gains. The third cluster features nations with high minimum wages and high employment rates. This paper contributes to the field by highlighting the complex interplay between labour costs and economic factors, offering insights for decision-makers to tailor macroeconomic and company-level strategies to specific local conditions. The findings emphasise the importance of balancing wage policies with sustainable economic development to enhance competitiveness while ensuring fair labour conditions.

How Do Net Exports and Remittances Impact on Economic Growth in Bangladesh? Insight from ARDL Time Series Model

This study delves into the intricate contribution of net exports and remittances on economic growth of Bangladesh with a focus of their impact on Gross Domestic Product (GDP). Net exports along with remittances are considered as key independent variables influencing the economic landscape of the country. The long-run and short-run effects of net exports and remittances on GDP are analyzed by conducting the Autoregressive Distributed Lag (ARDL) model over time period 1980-1922. The results of this study show that there is a positive effect of net export, remittance and gross capital formation on economic growth. On the other hand, all these independent variables have negative impact in short run and will adjust in long run significantly. As Bangladesh is a large remittance receiving country, export also increases in large volume by gross capital formation which increases domestic investment and output. The effects of remittances on GDP growth and exports on economic growth have each been the subject of much research, but independently. Buckling the payoff of exports and remittances on economic growth has not been studied. To fill this inane, we have tried to show how remittances and exports together boost economic growth. The findings contribute to a deeper understanding of the mechanisms through which net exports and remittance inflows shape economic outcomes in Bangladesh, offering insightful information to stakeholders and policymakers who are active in promoting sustainable economic development.

Matchmakers or chaperones? How venture capital investors facilitate startups’ corporate venture capital partnership formation through aligning and disciplining

Building upon the recent extension of resource dependence theory, this study examines how venture capital (VC) investors provide social defenses for startups by playing the role of matchmakers through the trust-based aligning effect and the role of chaperones through the power-based disciplining effect, encouraging them to form ties with established corporate venture capital (CVC) investors. We argue that the aligning effect stems from VC investors’ prior ties with CVC investors and is mitigated by the disciplining effect from their network centrality and coalition formation likelihood. In our empirical analysis of the IT industry in the United States between 2001 and 2015, we find support for our theory and hypotheses. The results also show that network centrality and coalition formation are not complementary but substitutable as coalition formation is less effective for more central VC investors.

Effects of Transmission Mechanism of Monetary Policy Channels on Economic Growth in Ethiopia: Cointegration and Causality Analysis Approach

The study aimed at investigating and analyzing factors those effects of transmission mechanism of monetary policy channels on economic growth in Ethiopia using a 36 years’ time series data. To this end, variables such as economic growth (dependent variable), and other regress variables such as real lending rate, real effective exchange rate, credit for private sector, consumer price index, trade of opens, gross capital formation, and money supply are considered. An empirical model linking the real GDP to its theoretical effects is then specified. This study had employed the co-integration and vector error correction model (VECM) analysis with impulse response and variance decomposition analysis to provide robust long run effects and short run dynamic effects on the real GDP. All variables under consideration are integrated of order one I (1) and also co-integrated. Vector Error Correction Model/VECM/ results show that real GDP was positively and significantly affected by the real effective exchange rate, money supply, gross capital formation (investment), credit for private sector, trade of openness over a period of long-run; while real leading interest rate and consumer price index (inflation) have significant negative effect. The estimate of the speed of adjustment coefficient found in this study indicates that about a 31 percent of the variation in the real GDP from its equilibrium level is corrected within a year. The study suggests that lowering the lending interest rate can encourage more private investment because it will encourage private investors to borrow more, which will increase investment in Ethiopia. Since investment is one of the factors that determine the gross domestic product, this will result in an increase in the GDP.

Structural Effects of Economic Shocks on the Macroeconomic Economy–Electricity–Emissions Nexus in India via Long-Term Cointegration Approach

For developing nations to achieve net-zero targets, macroeconomic linkages impacting the decoupling of emissions from economic growth must account for non-linear business cycles and economic shocks. This study aims to delineate decarbonization policy pathways for the Indian electricity sector in the aftermath of COVID-19 by analysing the long-term evolution of the economy–electricity–emissions (3E) nexus during the 2008 financial crisis and during COVID-19, covering the period of 1996Q2 to 2020Q3. Upon testing multiple theoretical 3E systems, it was found that a model internalizing trade, inflation, and stochasticity was able to minimize the reproduction errors from growth to recession phases, as well as predict the rebound effect from an economic crisis. This was revealed to be due to more information within the coefficients in a trade stochastic model. Our results confirm the existence of electricity-associated emission decoupling with capital formation in the long-run, post-crisis, while economic growth and inflation increase CO2 emissions. The main finding highlights the negative feedback loop of inflation->trade->emissions, which shows that GDP and emissions are not directly causal. This long-run macroeconomic dynamic death spiral causes decoupling to be inhibited, where fossil fuel imports should not be subsidized for economic shock rebound, and the risk hedging of energy transition investments should occur in the post-COVID-19 era.

Оцінка забезпеченості людським капіталом на тов тк «добра хата»

An analysis of the change in the number of Ukrainians from 1990 to the beginning of the Russian-Ukrainian war and during the war, which negatively affected the formation of human capital of domestic enterprises, is carried out. The work examines and defines the essence of the «human capital of an enterprise» concept and defines this economic category. It has been established that human capital is an employee’s abilities that allow him to bring the most effective results in the economic activity of the enterprise (organization) in which he works. The effectiveness of using human capital at «DOBRA КHATA» TC LLC was investigated, and an assessment of human capital provision at this enterprise was provided. The structure, dynamics, and movement of the human capital of the enterprise LLC TC “DOBRA KHATA” are analyzed, and the relationship with the change in the population of Ukraine during the Russian-Ukrainian war is determined. It was established that despite the situation in the country and the lost potential, the enterprise continues to function and encourages its workers to cooperate. Yes, the enterprise uses very active methods of corporate culture, which only improve yearly. Ways to improve human capital efficiency used at«DOBRA КHATA» TC LLC have been identified. These included the guaranteed professional growth of employees who underwent training and retraining, the system of training and retraining of personnel at the expense of the state and enterprises, the creation of such an atmosphere at the enterprise that would help to interest employees in increasing labor productivity indicators, and constant assessment and analysis of the outflow of human capital and what exactly contributed to this, as well as efforts to eliminate these causes and prevent them from appearing in the future. The expediency of developing and implementing measures to increase human capital to increase labor productivity and achieve high results in enterprise development is substantiated. Keywords: human capital, enterprise, development, assessment, indicators.

The camp, the zone, and sovereign sediments: Querying paradigms through the politics of Made-in-Italy agribusiness operations

The article questions the paradigmatic nature ascribed to “the zone”—and the concomitant dismissal of the camp's—by some analyses of the politics of capital's operations, and problematizes the very notion of the paradigm. Elaborating on previous reflections concerning contemporary agro-industrial zones in Italy, the article rethinks camps against state-centric and exceptionalist readings that consider them purely as sites of exclusion. At the same time, it retains a stress on the symbolic dimension of forms of containment and extraction, going beyond a narrow political-economic approach. The zone and the camp, it is argued, are mutually imbricated “infrastructure spaces” of present-day agro-capital's operations, which, however, result from the sedimentation of spatialized techniques for labor disciplining, reproduction, and containment that have developed alongside capitalist forms of agriculture throughout the contemporary period. The camp is thus defined as a function of the political, sovereign dimensions of extraction, that may operate within but also beyond the state. Furthermore, it is underlain by differential attributions of humanness, and therefore by a specific biopolitical anthropology. Engaging in a genealogy of the (humanitarian and/as labor) camps that today proliferate in agro-industrial zones, I argue that to understand the spatial formations emerging from and sustaining the politics of contemporary capital operations a recursive analytics is necessary, that thus questions the purchase of paradigms on the grounds of their atemporality and complicates the positing of mere historical continuities.

ORGANIZATIONAL PRINCIPLES OF EXTENSION OF GRANT AID FOR THE DEVELOPMENT OF RURAL AREAS

The article is devoted to developing and substantiating the critical elements of the mechanism for developing and submitting an application for grant funding for developing a rural community or an agrarian business entity. It is substantiated that there is a need to significantly expand the involvement of external funding sources for the formation and development of human capital in rural areas. It was determined that the reserve of such funding is to increase rural communities' access to grant programs of international organizations and partner countries. It was determined that in expanding grant aid for developing rural areas in Ukraine, especially in wartime conditions, it is essential to consider the main reasons for the grantors' refusal to provide financial support. The most relevant reasons include violation of requirements for the form and content of documents, lack of convincing justification of the social utility of the project and reasoned calculation, inconsistency between the purpose of the grant program and the goals of the project, incompatibility of the nature of the program and the application, violation of requirements regarding the target audience, bad reputation of the applicant, lack of of the detailed project budget, as well as the inconsistency of the formulation of project tasks with the basic methodological principles of construction (SMART analysis). An organizational mechanism for developing and applying for grant funding for developing a rural community or an agrarian business entity is proposed. This mechanism has methodological value because it focuses on the most critical stages of the process of development and submission of an application for grant financing of the project, determines the approximate circle of stakeholders of the grant process, emphasizes the conditions and factors that help to count on success in the grant competition. In contrast to the existing approaches, it highlights the phasing, as well as the list and content of measures during the development and submission of an application for the project's grant funding.