Growth Performance Of Countries Research Articles

Imported Inputs, Balance of Payments and Economic Growth: a model and a test on the case of Turkey

Several countries rely heavily on imported intermediate inputs for the manufacturing of their exported goods. Understanding the implications of this reliance on a country's growth performance is vital. To address this issue, we conducted an in-depth analysis using the multi-sectoral balance-of-payments constrained growth model with data from Turkey spanning 1970 to 2019. We used the autoregressive distributed lag method to estimate sectoral export, final import, intermediate goods import, and total import demand functions for five technology-based sectors. Subsequently, we calculated growth rates using the multi-sectoral balance of payments constrained growth models, factoring in the estimated income and price elasticities, as well as the respective sectoral shares in total exports, total imports, total final imports, and total intermediate goods imports. Our results demonstrate that the multi-sectoral balance of payments constrained growth model, which incorporates the impact of imported intermediate goods, successfully predicts Turkey's growth path. The findings indicate that structural changes in the production process and the use of imported intermediate inputs have a positive impact on exports. However, Turkey's significant dependence on imported intermediate goods during the production process leads to a decrease in the multi-sectoral balance of payments constrained growth rate.

Governance Quality and Growth Performance in Sub-Sahara Africa: Dynamic Panel Systems Generalized Methods of Moments

The objective of this paper is to examine the effect of governance quality on growth performance of Sub-Sahara African Countries. The data were obtained from World Bank database over the period 2002-2018 for a sample 22 countries. The method of dynamic panel systems generalized methods of moments (SYS-GMM) was applied to estimate the model. The overall finding reveals that governance quality plays significant role in economic growth performance of the countries. The aggregate (composite governance index) has positive significant effect, where a unit improvement in composite governance index increases economic growth (GDP) by about 3.4 percent. The disaggregated result also reveals that corruption and political stability do have negative and statistically significant effect on growth performance, whereas rule of law, voice and accountability and government effectiveness have positive significant effect on growth. The effect of regulatory quality index even if positive, it is not significant. The paper recommends consistent and strong policy interventions by respective governments in order to improve governance quality emphasizing on areas where the problems are especially serious such as problems of political stability, lack proper implementation of the rule of law and corruption control. Keywords: Governance quality, Growth, Panel GM, Sub-Sahara-Africa, DOI: 10.7176/IAGS/86-01 Publication date: September 30 th 2020

Growth transitions and the balance-of-payments constraint

This paper re-evaluates the recent criticisms of ‘Thirlwall's law’ against the literature on growth transitions. The unpredictable nature of growth transitions in developing economies suggests that the evidence derived from single-regime regression models, on which critics have based most of their arguments, is only suggestive about the long-run causes of growth. A rigorous test of Thirlwall's law requires a more in-depth analysis of turning points in a developing country's growth performance, and whether the growth law accurately predicts the sustainability of growth transitions. These arguments are illustrated with an application to South Africa over the period 1960–2017. The results show that it is misleading to evaluate Thirlwall's law across a single regime. Once regime shifts are controlled for, the growth law accurately predicts South Africa's growth performance during 1977–2003, and sheds light on the sustainable and unsustainable nature of growth transitions across the sub-periods 1960–1976 and 2004–2017, respectively. Since the literature on growth transitions identifies a competitive exchange rate as an initiating source of growth, rather than an individual long-run determinant, the omission of the level of the real exchange rate from the original growth law should not be regarded as a major weakness.

The Effect of IMF Programmes on Economic Growth in Low Income Countries: An Empirical Analysis

Using an LIC-specific participation model, we adopt a propensity score matching (PSM) methodology to compare economic growth performance in countries with and without IMF programmes over the period 1989–2008. Concessional programmes are found to have had a generally positive effect on economic growth for up to two years after agreements were signed. The effects are contingent on other factors including overall initial economic conditions, recent prior growth performance, aid dependency, debt, IMF resources, recent history of IMF engagement and time period. We examine the implications of the results as the IMF considers how best to support the Sustainable Development Goals.

Do Governance Indicators Explain Development Performance? A Cross-Country Analysis

The central question addressed by this study is whether countries with above-average governance grew faster than countries with below-average governance. Using the World Bank’s worldwide governance indicators to measure governance performance, it examines whether a country with governance “surplus” in a given base year (1998) grew faster on average in a subsequent period (1998-2011) than a country with governance “deficit.” Governance is defined in several dimensions, including government effectiveness, political stability, control of corruption and regulatory quality, voice and accountability, and rule of law. The study finds that government effectiveness, political stability, control of corruption and regulatory quality all have a more significant positive impact on country growth performance than voice and accountability and rule of law. Developing Asian countries with a surplus in government effectiveness, regulatory quality and corruption control are observed to grow faster than those with a deficit in these indicators up to 2 percentage points annually, while Middle East and North African countries with a surplus in political stability, government effectiveness, and corruption control are observed to grow faster than those with a deficit in these indicators by as much as 2.5 percentage points annually. Good governance is associated with both a higher level of per capita GDP as well as higher rates of GDP growth over time. This suggests that good governance, while important in and of itself, can also help in improving a country’s economic prospects.

Employment and Export Specialization Patterns Versus GDP Per Capita Performance - Unifying Approach

The underneath motivation of this study is based on the findings confirming that specialisation is non neutral on a country's growth performance. Consequently, it seems important to analyse the evolution of specialization patterns along the process of economic development. The scope of the paper is twofold: first of all, it aims at understanding if the evolution of employment specialisation is reflected in the same manner in trade specialisation patterns. Secondly, it explores the link between the degree of specialization on one side and cross country GDP per capita performance on the other. The paper challenges other empirical studies present in the specialization literature and contributes by presenting simultaneously the evolution of sectoral dispersion patterns emerging from employment and trade data. The sample of countries (32 world economies on different stages of economic development), the time span (1980 onwards) and the sectoral composition of the two datasets are retained constant. By comparing the results obtained with various inequality indicators, including a wide range of absolute and relative measures, we demonstrate the relevance of the methodological setting used for the assessment of economic activity dispersion. Next, we perform nonparametric and semiparametric estimations in order to reveal the 'specialization curve' which describes the evolution of specialization along the development path. We find a support for nonlinear relationship between the two dimensions of specialization and GDP per capita levels, with a tendency towards despecialization in the initial phase of economic growth.

Democracy and Economic Growth: A Historical Perspective

Recent studies appear to show that democracy has no robust association with economic growth. Yet all such work assumes that the causal effect of democracy can be measured by a country's regime status in a particular year (T), which is correlated with its growth performance in a subsequent period (T+l). The authors argue that democracy must be understood as astock,rather than alevel,measure. That is, a country's growth performance is affected by the number of years it has been democratic, in addition to the degree of democracy experienced during that period. In this fashion, democracy is reconceptualized as a historical, rather than a contemporary, variable—with the assumption that long-run historical patterns may help scholars to understand present trends. The authors speculate that these secular-historical influences operate through four causal pathways, each of which may be understood as a type of capital: physical capital, human capital, social capital, and political capital. This argument is tested in a crosscountry analysis and is shown to be robust in a wide variety of specifications and formats.

Global inequality and international trade

The paper analyses the effect of widespread trade liberalisation on global income inequality. The analysis of the trend in global inequality during 1981--97, presented in the first part of the paper, shows that the apparent growth of income inequality among countries conceals a process of convergence. Some developing countries achieved significantly faster economic growth than the advanced industrialised countries and, though small in number, they actually account for a majority of the population of the developing world. Thus international inequality (i.e., the inequality of distribution of per capita incomes among the world's population) in fact declined even though the inter-country income inequality increased. The analysis in the second part of the paper shows (i) that while improved trade performance did have a stimulating effect on growth performance of countries, trade liberalisation had extremely varied effects on trade performance across countries, and (ii) that the distribution of benefits and costs of trade liberalisation across countries has been such as to reduce international inequality without affecting inter-country inequality. Copyright 2004, Oxford University Press.

Regional Trade Agreements or Broad Liberalization: Which Path Leads to Faster Growth?

Should a closed economy open its trade to all countries or limit itself to participation in regional trade agreements (RTAs)? Based on time-series evidence for a data set for 1950-92, this paper estimates and compares the growth performance of countries that liberalized broadly and that of those that joined an RTA. The comparisons show that economies grew faster after broad liberalization, in both the short and the long run, but slower after participation in an RTA. Economies also had higher investment shares after broad liberalization, but lower ones after joining an RTA. The policy implications support broad liberalization. Copyright 1999, International Monetary Fund

Capital-Labor Substitution and Technical Progress in Planned and Market Oriented Economies: A Comparative Study

Many economists have attempted to measure aggregate growth performance of various economic systems. Empirical studies on this topic dealt primarily with measurement of gross national product and its main components for different countries. In one of his pioneering works Kuznets [11] presented the aggregate and per capita GNP levels and the rates of growth of these indices for various countries. While such estimates of rates of growth of GNP are interesting in themselves, the contributions of Solow [14] and Denison [5] stimulated interest among economists concerning the question of why these growth rates differ. The literature on economic growth and development cites differences in the initial conditions as a major cause for the differences in the rates of growth of the developed and underdeveloped nations. Another argument attributes differences in growth rates to differences in the quality of physical capital and technologies used in production. The human capital literature claims that different growth rates arise due to differences in the quality of labor which depends on such factors as education, health, age, sex composition, etc. In recent years, some monetary economists, e.g. Nadiri [13], have suggested that money ought to be treated as an additional factor of production. Hence one may argue that differences in growth rates are due to different degrees of monetization. Comparative systems literature would argue that growth differentials are due to differences in patterns of organization of the economic activity. In our study we are interested in comparing the growth performance of countries characterized predominantly by centralized socialist economic planning vs. countries with decentralized decision making and with a predominant private sector. The comparison of growth performances of the present study is based on the estimated structural parameters of production for the manufacturing sectors of various countries. The production structure for the manufacturing sector in each of the countries under investigation is assumed to be of CES form of Arrow et al. [1] with Hicks neutral technical progress. Handicapped by the quality of the available data, we have limited our investigation to cover only six countries: USSR, Hungary, and Yugoslavia -in the first category; and USA, Canada, and Israel-in the second one. In a similar attempt, Balassa and Bertrand [2] tried to compare the growth performance of a wider variety of countries. They have used primarily, however, unpublished data that we could not obtain and whose quality we could not have judged. This was, furthermore, coupled with highly deficient assumptions that we will comment upon in the next section. In the following section a unified treatment of the various explanatory factors of growth differentials is provided. Section III outlines our approach and presents the cross differences in rates of technical progress with other parameters of the production * We are greatly indebted to our colleague James Gapinski for his comments and suggestions. The authors alone are responsible for any errors. This research was supported in part by a Summer Research Grant to the first author by the Florida State University. P. Hanumantha Rayappa assisted us in carrying out the computational work reported in Section III. 103