Determinants Of Economic Performance Research Articles

Households’ Liquidity Preference, Banks’ Capitalization and the Macroeconomy: A Theoretical Investigation

ABSTRACT In this paper, we build a simple model on the role of households’ liquidity preference in the determination of economic performance. We postulate, for the sake of the argument, a purely ‘horizontalist’ environment, i.e., a world of endogenous money where the central bank is able to fix the interest rate(s) at a level of its own willing. We show that even in such a framework liquidity preference, while obviously not constituting anymore a theory for the determination of the interest rate, continues to be a key element for the determination of both the level and evolution over time of aggregate income and capital accumulation. In our model, this happens because of the working of a mechanism so far unexplored in the literature, i.e., the endogenous variations of banks’ policy of profits’ distribution in response to changes in the liquidity preference of the public.

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.

How Culture Evolves: Measuring Cultural Distance and Variation

Culture and cultural evolution have become more frequent and more prominent in Economics, possibly due to the greater availability of data and new ways to measure culture. In order to use culture as a determinant of human behavior and economic outcomes, it is necessary to understand how culture changes over time and how it varies across and within societies. This paper contributes towards this understanding in two ways. First, I present a fitness landscape representation of cultural evolution using Boolean hyper-cubes. This approach yields several characteristics of cultural evolution observed in the data, including sensitivity to initial conditions, path dependence, unpredictability, multiplicity of local optima, and interdependent/coherent cultural dimensions. It also illustrates why some cultures seem to remain stuck in less fit regions of the space of possibilities. I use data for five widely used measures of cultural dimensions to show that a sample of 96 countries is distributed across the culture-space in a way that is consistent with the grouping of developed versus developing countries. The results suggest the primary importance individualism over other dimensions (conformity, impartiality, trust and gender bias) as a determinant of economic performance. Second, I use the latest wave of the World Values Survey (WVS-7, 2017-2020) and a new measure of cultural distance (Muthukrishna, Bell, et al., 2020) and show that even though this measure varies across individuals in a same country, as well as across groups within each country (as measured by regions, gender, age, rural/urban, income and education), countries as a whole nevertheless exhibit distinct cultures from each other. I also create a measure of culture that is consistent across five waves of the World Value Survey (1990-2020) to show how culture varies over time.

Financial benchmarking on dairy farms: Exploring the relationship between frequency of use and farm performance

The importance of financial benchmarking has increased in recent years as European Union milk quota abolition has facilitated rapid change in the dairy sector. This study evaluates the association between usage frequency of a financial benchmarking tool [Profit Monitor (PM)] and farm changes on spring-calving pasture-based dairy farms. To this end, physical and financial data for 5,945 dairy farms, representing 20,132 farm years, for the years 2010 to 2018 were used. Farms were categorized by frequency of annual financial benchmarking over the 9-yr period into frequent PM users (7-9 yr), infrequent PM users (4-6 yr), low PM users (1-3 yr), and nonusers. We use a mixed model framework and econometric models to characterize farms and to explore characteristics and determinants of economic performance and user groups. The most frequent users of the financial benchmarking tool had the greatest increase in intensification (measured by change in farm stocking rate), productivity (measured by change in milk production per hectare), and financial performance (measured by change in farm gross output and net profit per hectare) across the study period. Infrequent and low PM users of the benchmarking tool were intermediate for all variables measured, whereas nonusers had the least change. Empirical results indicated that economic performance was positively associated with dairy specialization and pasture utilization for all groups. Despite considerable fluctuations over the observation period, the overall change in total farm net profit between 2010 and 2018 was greatest for the frequent PM users (an increase of 70%, or €37,639), followed by farms in the infrequent PM user category (a 71% increase corresponding to an increase of €28,008 in net profit); meanwhile, low PM user and nonuser categories showed increases of 69% (€26,270) and 42% (€10,977), respectively. The results of this study also clearly indicated the existence of a strong positive association between frequency of financial benchmarking and greater technical and financial efficiency. The econometric analysis revealed that financial benchmarking users are more likely than nonusers to have larger herds, and that regional differences exist in usage rates. Finally, the study concludes by suggesting that the development of simplified financial benchmarking technologies and their support are required to increase benchmarking frequency, which may also help to facilitate a more sustainable and resource efficient dairy industry.

İktisadi ve Politik Kurumların Ekonomik Büyüme Üzerindeki Etkisi: Gelişmiş Ülkeler ve Yükselen Piyasa Ekonomileri Karşılaştırması

Neden çok az ülke ekonomik büyümeyi sağlayan kurumları oluşturabilmektedir? Bu soruyu yanıtlamak için birbirleriyle etkileşime giren ekonomik oyuncular arasında davranış kalıpları oluşturan kurumsal unsurların incelenmesine ihtiyaç duyulmaktadır. Kurumlar ülkelerin ekonomik büyümesini etkileyerek mevcut etkileşimlerin hacmini ve ekonomik değişimin faydalarını ortaya çıkarmaktadır. İktisadi ve politik kurumlar ekonomik aktörlerin toplumdaki teşviklerini şekillendirdiği ve teknoloji ile fiziksel ve beşeri sermayeye yapılan yatırımları etkilediği için ekonomik büyümeye destek olmaktadır. Çalışma kapsamında Yeni Kurumsal İktisat yaklaşımının metodolojik temellerinin uygulanması suretiyle ekonomik performansın belirleyicileri olarak kabul edilen iktisadi ve politik kurumların ekonomik büyüme üzerindeki etkilerine dair analizler toplam 26 ülke için 2002-2016 yıllarını kapsayan verilerle gerçekleştirilmiştir. Çalışmanın temel ölçüm hedefi olan iktisadi ve politik kurumların ekonomik büyüme üzerindeki etkisi Gelişmiş Ülkeler ile Yükselen Piyasa Ekonomileri ayrımına gidilerek iki ayrı model kapsamında Panel veri analiziyle Uygulanabilir Genelleştirilmiş EKK (FGLS) tahmincisi kullanılarak incelenmiştir. Çalışma kapsamında iktisadi kurumların ölçümü amacıyla kullanılan Heritage Vakfı Ekonomik Özgürlük Endeksini oluşturan göstergelerin ve politik kurumların ölçümü amacıyla kullanılan Dünya Yönetişim Endeksini oluşturan göstergelerin Gelişmiş Ülkeler ve Yükselen Piyasa Ekonomileri için ekonomik büyüme ile pozitif ilişki içerisinde ve istatistiksel olarak anlamlı olduğu saptanmıştır.

Regional dynamics of economic performance in the EU: To what extent do spatial spillovers matter?

This paper investigates the main determinants of economic perfor-mance in the EU from a regional perspective, covering 253 regions overthe period 2001-2008. In addition to the traditional determinants of eco-nomic performance, measured by GDP per capita, the analysis accountsfor spatial e¤ects related to externalities from neighbouring regions. Thespatial Durbin random-e¤ect panel speci cation captures spatial feedbacke¤ects from the neighbours through spatially lagged dependent and inde-pendent variables. Social-economic environment and traditional determi-nants of GDP per capita (distance from innovation frontier, physical andhuman capital and innovation) are found to be signi cant. Overall, our ndings con rm the signi cance of spatial spillovers, as business invest-ment and human capital of neighbouring regions have a positive impact–both direct and indirect –on economic performance of a given region.

The market for the “old” and the “new” institutional economics

ABSTRACT This paper conceives of the market as an institution, and contrasts two theoretical approaches: Institutionalism, with an evolutionary and analytical bias, whose theoretical basis comes from “Old/Original” Institutionalism, and New Institutional Economics, with an analytical, contractual approach, linked to mainstream economics. Both approaches have given relevant contributions, as they consider the importance of institutions for economic performance. The limits of New Institutional Economics are particularly relevant, whose analysis of the operation of markets is centered on the logic of transaction cost economics as a determinant of economic performance. Evolutionary Institutionalism, in turn, sees the market within a broader scope, in which cost economies only partially explains economic performance, but it is not necessarily seen as a determining factor.

Heavily indebted poor countries initiative (HIPC), debt relief, economic stability and economic growth in Africa

Stabilization seeks to achieve internal and external equilibrium that is, to control the demand side of the economy, with the purpose of reducing size of government, inflation and quickly achieving a sustainable balance of payment position. In this paper, I investigated the impacts of HIPC initiative and debt relief on economic growth and economic stability in Africa. I also identify the determinants of economic performance using the World Bank data for the period 1990–2015 with 5-year panels. The results show that this initiative causes economic instability in Africa. The results also indicate that the long run effect of debt relief on economic growth is positive but in the short run debt relief has no significant effect on GDP per capita growth. However, in both the short run and the long run, debt relief reduces external balance on goods and services deficit and has no effect on inflation. The main determinants of economic performance in Africa are control of corruption, political stability, regulatory quality and education. In this perspective, governments of African countries should promote good governance, educate their population and revise trade agreements to provide insurance for economic growth and economic stability.

Analyzing Factors Affecting Economic Growth within CEMAC Countries

In simple terms, economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time, which is most cases a year. It is measured as the percent rate of increase in real gross domestic product (GDP), usually in per capita terms. Economists have used both theory and empirical research to explain the cause of economic growth. People like Solow, Swann, and Romer have provided theoretical frameworks on which the majority of works are based. This paper aims to identify the factors affecting economic growth within CEMAC countries. A high volume of exports, plentiful natural resources, longer life expectancy, and higher investment rates have positive impacts on the growth of per capita gross domestic product developing countries. Much research needs to be done to distinguish the causes of growth in developing countries, as the scope of existing research is limited due to a lack of reliable data. To achieve the above, the paper highlights recent trends of economic growth of CEMAC countries in its first part, and then the main theories and determinants of economic growth, and finally the determinants of economic performance of a country.

Innovation, creativity and governance: Social dynamics of economic performance in city-regions

The pressure towards a globalizing, knowledge-based economy raises questions about the underlying determinants of economic performance in city regions. The creation and diffusion of new knowledge drives innovation in knowledge-intensive production and service activities, which in turn, drives economic performance and growth. Although these processes are strongly shaped by national institutions and global knowledge flows, recent analyses of innovation and creativity emphasize the continuing relevance of regions in general and urban regions in particular as critical sites for determining economic performance. This work also suggests that the underlying social dynamics of urban regions are particularly significant in shaping economic outcomes. This paper explores some recent evidence on the social nature of innovation dynamics in urban regions, the increasing significance of talent and creativity in urban economies and their implications for the economic performance of city regions. It concludes with a discussion of the need for the strategic management of urban economies to cope with the challenges they face.

Technological capacity and other determinants of economic performance in African countries: Panel data evidence

The determinants of aggregate economic performance in African countries are economic, institutional and political. To date, rarely has research included a specific conceptual measure of technological index among the core determinants. Consequently, for the first time in the economic development literature this paper employs a unique measure of the national technological capacity index (constructed for RAND and surprisingly covering most African countries) as a determinant. Panel data regression model estimates of the determinants of economic output (Gross National Income, or GNI) are obtained using data on 49 of the 53 African countries. Our novel findings confirm that the lagging technological capacities, measured relative to the most advanced economy, significantly retard national outputs; trade openness and democratic government form improve economic performance; and increasing returns to education (investments in schooling) are highly potent catalysts for the production of GNI. Policy implications are discussed.

The political economy of U.S. economic performance: is the president responsible?

A recurring theme in electoral politics is that American voters hold the president responsible for the state of the economy. Ironically, many Presidency scholars argue that presidents are ill equipped to manage the economy because other variables compete with and complicate the effects of fiscal policy. These include international variables, private market forces, and monetary policy, among others. Using simultaneous equation methods, we examine the direct and indirect effects of fiscal policy on economic performance while controlling for a variety of other determinants of economic performance. We find that fiscal policy plays a significant role in influencing unemployment and economic growth in the United States, even after controlling for a variety of other determinants of economic performance. We close by discussing the importance of linking the econometric modeling literature with the literature on presidential management of the economy.

Infrastructure and Growth in a Spatial Framework: Evidence from the EU regions

This paper examines the return to infrastructure in the European Union regions in a spatial framework. It innovates on the earlier literature on infrastructure and growth by a combination of regional focus, disaggregation of infrastructure types and consideration of spatial dependence. Different types of infrastructure capital are considered as determinants of economic performance at the Nomenclature des Unités Territoriales Statistiques level. To account for growth spillovers among regions, a spatial Durbin model is estimated. The results confirm the important role of infrastructure and identify the highest rates of return as associated with telecommunication, quality and accessibility of transportation networks, with a positive impact of roads and railways.

Productivité du travail et économie en élevages d’herbivores : définition des concepts, analyse et enjeux

De tous les secteurs de l’économie, c’est l’agriculture qui a connu l’accroissement le plus rapide de la productivité du travail au cours des cinquante dernières années. La production en volume de la branche a été multipliée par 2,2 entre 1955 et 2010, grâce à l’utilisation croissante des intrants et à la mobilisation d’un capital toujours plus important (matériel et bâtiments). Sur cette même période, la population active agricole est passée de 31 à 3,4 de l’emploi total. Les subventions jouent aujourd’hui un rôle déterminant dans le maintien du revenu agricole par actif. L’analyse de la productivité du travail pour les filières bovine, ovine et caprine montre que l’accroissement de la productivité physique et des principaux indicateurs économiques ne vont pas forcément de pair. Il existe des écarts de productivité physique du travail importants entre systèmes et entre filières. Si, en bonne conjoncture de prix, les systèmes à haute productivité physique du travail dégagent les meilleurs revenus, une évolution défavorable des prix induit pour ces systèmes une fragilisation économique révélant ainsi leur faible capacité de résilience. La recherche de cohérence du système de production et de l’optimisation des moyens de production apparaît toujours comme un élément déterminant des performances économiques. L’orientation des exploitations sera largement induite par la répartition des gains de productivité entre les différents acteurs de la branche (producteurs, industries agricoles et alimentaires, commerce et consommateurs) ainsi que par les choix des pouvoirs publics.

DETERMINANTES DO DESEMPENHO ECONÔMICO DAS MESORREGIÕES OESTE PARANAENSE E OESTE CATARINENSE ENTRE 1970 E 2000

Esse artigo analisa os determinantes do desempenho econômico das mesorregiões Oeste Catarinense e Oeste Paranaense no período de 1970 e 2000, analisando a distribuição das atividades econômicas e as especializações mesorregionais. Essas duas mesorregiões possuíam algumas similaridades em suas estruturas fundiárias, estruturas competitivas e padrões de organização do trabalho em 1970. Além disso, elas apresentaram desempenhos econômicos muito superiores aos apresentados pelo conjunto do Sul do Brasil no período analisado. Utilizou-se como metodologia a aplicação do método estrutural-diferencial. Os resultados apontaram que a explicação desse desempenho superior esteve atrelada às opções produtivas (especializações), no período, de cada mesorregião. Assim, de forma geral, no período de 1970 a 2000, ambas mesorregiões se diversificaram, integraram os três macro-setores, e apresentaram uma indução de economias externas que se refletiu em melhores condições socioeconômicas, em comparação com outras mesorregiões e o próprio Sul do Brasil como um todo.

Entrepreneurial re-starters in Japan

We examine the determinants of economic performance for re-starters in Japan. Empirical results show that re-starters who recognise the 'stigma of failure' in business society and who 'utilise their business failure experiences for the personnel training and the employment of a talented person' have good performance. The timing and method of closing prior business is an important factor for the success of re-starters. Re-starters should have a long-term business management perspective at the time of re-startup. However, aged people who have not accumulated any related business experience should not be re-starters.

The economic impact of disease on human resources: a cross-country study

Health status has played an important role in recent developments of the economic literature. The two-way relationship between health and economic performance has a mechanism of transmission that is explained by their impact on labour productivity (human resources) and potential output. This paper reviews the literature on growth theory, analyses the importance of human capital and portrays the role of health as a determinant of economic performance. This survey also introduces the impact of a particular disease, HIV/AIDS, on human resources. It includes empirical work explaining the interrelationship of health and income per capita, which is measured using a multivariate framework controlling for other background variables. Good health improves economic performance whereas ill health (using HIV prevalence as a proxy) deteriorates human capital, negatively affecting income per capita across countries.

ECONOMIC PERFORMANCE THROUGH TIME: A GENERAL EQUILIBRIUM MODEL

This paper presents a simple general equilibrium model of economic performance through time. The model incorporates four main determinants of economic performance: technology, capital investment, the division of labor and quality of institutions. It demonstrates that growth is not automatic even with technological progress. In order to maintain economic growth, it is important to continuously implement new technologies through capital investment. It also shows that institutional improvement promotes the social division of labor, which is an independent source of economic growth.

Political Institutions and the Wealth of Regions

This investigation evaluates the effects of political institutions on the wealth of regions. It provides an empirical test of how consensus democracy, institutional decentralization, and plebiscitary instruments influence economic performance of the Swiss cantons. Our pooled cross-sectional time-series analyses show that direct democracy and institutional centralization are particularly forceful political determinants of economic performance, while the type of democracy is not systematically associated with economic wealth. Moreover, part of the variation in economic power between the Swiss cantons in the 1990s is explained by differences in educational expenditure and in the degree of overall taxation.

Crucial relationship between the privatized sector and the generic private sector in post-communist privatization: Determinants of economic performance

This article looks at the issue — largely neglected in the transition literature — of the relative weights of the privatized sector and the generic private sector (of de novo private firms) in the emerging private sector of post-communist economies in transition. The present writer posits that the relative weight of each in the aggregate share of a private sector (generally expanding over time as transition progresses) strongly influences economic performance, both during correctional recession and during recovery and expansion period. Another, interrelated issue considered here is the interaction between the evolving institutional framework and the expansion of the generic private sector, that is the most dynamic one in the transition economy. It is true that the interaction between institutions and performance has been a staple of a very large number of books, articles, and papers. However, this article concentrates on one component of a private sector only, that is the generic private sector. But at the same time it looks beyond the ‘Holy Trinity’ of transition (stabilization, liberalization, and privatization) towards a wider institutional framework of political liberty, law and order. The foregoing wider framework, and the emerging general trust, matters as much — if not more — for the present writer as the standard transition program. It is the relative dynamics of both components of the private sector, affected by both standard transition programs and the above-mentioned wider institutional framework, that is of primary importance for the economic performance in post-communist transition. In the last part of the article I will try also to answer, tentatively, the question under which circumstances the wider institutional framework may emerge in the transition process.