Economic Growth In Advanced Economies Research Articles

AN EVALUATION OF GOVERNMENT SUPPORT SERVICES FOR SMMEs IN THOHOYANDOU, SOUTH AFRICA

Small, Medium, and Micro Enterprises (SMMEs) possess attributes akin to entrepreneurship that make them indispensable tools for economic growth and development. While SMMEs have a direct impact on economic growth in advanced economies, these enterprises have a high failure rate due to a variety of reasons, especially during the start-up and growth phases. Government support schemes have been availed to SMMEs to assist them to survive the vulnerable phases of their existence. This study investigates the role of government support services towards the development and growth of SMMEs in South Africa. The quantitative research design used the survey method to collect data from a sample of one hundred (100) SMMEs in Thohoyandou, South Africa. The Statistical Package for Social Sciences (SPSS) was used to analyse the data, and presentation used descriptive analysis. The main study revealed that despite the government support schemes and initiatives, the failure rate of SMMEs remains high. The major factors affecting the uptake of government support schemes and initiatives included the lack of information and access to the financial assistance offered to most SMMEs through the government schemes. Despite the support schemes and initiatives, further challenges include the proliferating myriad of rules and regulations in the regulatory environment curtailing the operations and survival of SMMEs. Study findings indicated that despite the existence of the growth and development-oriented government support schemes, most SMMEs are unaware of their existence while other enterprises find them ineffective. The main conclusions point to the information deficit and needs analysis that would tailor-make and accommodate the specific requirements of different enterprises.

Revisiting Energy Consumption-economic Growth Hypothesis: Do Slope Heterogeneity and Cross-sectional Dependence Matter?

In this paper, the long-term nexus between energy consumption and economic growth is investigated using a panel data of 80 countries from World Bank data base for the period 1970 to 2017. In order to check for the issues of endogeneity, slope heterogeneity, and cross-sectional dependence present in errors of panel data, the study applied cross-sectional augmented autoregressive distributed lag (CS-ARDL) and cross-sectional augmented distributed lag (CS-DL) models to examine the long-term impact of energy consumption on economic growth. The empirical results revealed that energy consumption has a positive and significant long-run effect on economic growth and that cross-sectional dependence, slope endogeneity and heterogeneity are issues that should be on the watch when dealing with panel data of developing and developed countries’ analysis. Furthermore, the outcomes indicated that the impact of energy consumption on economic growth is stronger in less developed countries than in advanced economies. Technological progressions that give rise to the advancement of clean and efficient energy and substitution of low-quality fuels with high quality fuels are some of the possible channels that weaken the link between energy consumption and economic growth in advanced economies. Importantly, from a policy perspective, based on the study findings, energy conservation policies aimed at promoting environmental quality may worsen economic growth in developing countries, thereby adversely affecting their long-run economic growths.

The Effect of Financial Deepening on Economic Growth, Inequality, and Poverty: Evidence from 73 Countries

Abstract This study aims to analyze the effect of financial deepening on economic growth, income inequality, and poverty rates in 73 countries during the period 1991–2015. Panel data regression and the interaction of dummy variables are used to measure the effect. The results indicate that financial deepening has positive effects on economic growth, but negative effects on income inequality and poverty rates; has significant effect on economic growth in advanced economies (AEs) and significant effect on income equality and poverty rates in emerging markets and developing economies (EMDEs). These findings show that countries have to be selective in developing their financial sectors as it either can have positive or negative effect.

PERAN RISET DAN PENGEMBANGAN (R&D) AKADEMIS TERHADAP PERTUMBUHAN EKONOMI

This study empirically examines the role of research and development (R&D) in the universities on economic growth. Using yearly data over the period 1996-2013 for 32 advanced economies and 46 developing countries in the world, the empirical results are estimated by static- and dynamic-panel data to provide evidence in favor of the impact of academic research and development on economic growth. The empirical evidence suggests that the static- and dynamic-panel data analysis estimates well characterize how academic research and development (R&D) influences economic growth in advanced economies and developing countries. Static panel data analysis in the light of fixed effect method (FEM) suggest positive effect of academic research and development on economic growth both in advance economies and developing countries. Moreover, dynamic panel data (Arrelano-Bond and Blundell-Bond) analysis finds academic research and development has consistently positive effect on economic growth in advanced economies, unfortunately academic R&D has negative effect on economic growth in developing countries. Based on the results, this study recommends for developing countries especially Indonesia to pay specific attention to academic R&D at universities by commercialization of new inventions and knowledge to attract industry.

An alternate approach in exploring the causal link between financial development and economic growth—Evidence from advanced economies

AbstractThis study explores the causal link between financial development and economic growth in advanced economies as these countries experience significantly higher levels of financial development. Using a fully balanced panel of 24 economies from 1983 to 2013, the study shows that when imposing a linear relationship, the financial development and economic growth are negatively associated in the long run. The panel granger causality tests establish the bidirectional causality between the financial development variables with growth. Employing an alternate approach of moderated mediation effect framework, we notice that the association of financial development with economic growth is moderated by the negative impacts of inflation, interest rate, and population dependency; and the positive mediation effect of trade openness. The policy implication is that there is a need to rein in inflation and real interest rates and enhance trade openness to optimize the benefits of growing financial development on economic growth.

What drives economic policy uncertainty in the long and short runs: European and U.S. evidence over several decades

Economic policy uncertainty (EPU) has increased markedly in recent years in the U.S. and Europe, and some have posited a link between this phenomenon and subpar economic growth in advanced economies (see Baker et al., 2016). But methodological and data concerns have thus far raised doubts about whether EPU contains marginal and exogenous information about other economic phenomena. Our work analyzes the impact on EPU of several possibly endogenous variables, such as inflation and unemployment rates in western countries where EPU is measured. We also consider longer-term technological factors, such as media fragmentation, which, by undermining political consensus, may indirectly elevate EPU. We find that about 40 percent of EPU movements can be explained by long- and short-run movements in these determinants, which is consistent with limited evidence that de-trended movements in EPU may contain marginal information about GDP growth and other macro variables.

Bond markets, stock markets, banks and growth: a system GMM analysis

Empirical studies on the finance-growth nexus largely focus on banks and stock markets to the exclusion of bond markets. Furthermore, such important events as bank crisis are neglected in most finance-growth models. The major aim of this paper is therefore to throw light at the finance growth link by accounting for bond markets and controlling for banking sector crisis using data on economic growth and financial development indicators of 36 economies comprising 21 advanced and 15 emerging economies. Applying a system generalised-method-of-moments (GMM) technique, the study revealed that bond markets rather than banks and stock markets are related to economic growth in advanced economies, and the same relationship is not found for emerging economies. It is further observed that the finance-growth link depends on the specific measures used to gauge financial development. This study also confirms previous findings that crisis dampens the finance-growth link. Two important inferences could be made from the results of this study. First, the often reported positive link between finance and growth might be caused by aggregation of countries of different economic growth and financial development. Second, the finance growth link depends on the measures of financial development used.

What Drives Economic Policy Uncertainty in the Long and Short Runs? European and U.S. Evidence over Several Decades

Economic policy uncertainty (EPU) has increased markedly in recent years in the U.S. and Europe, and some have posited a link between this phenomenon and subpar economic growth in advanced economies (see Baker, Bloom, and Davis, 2015). But methodological and data concerns have thus far raised doubts about whether EPU contains marginal and exogenous information about other economic phenomena. Our work analyzes the impact on EPU of several possibly endogenous variables, such as inflation and unemployment rates in countries where EPU is measured. We also consider longer-term technological factors, such as media fragmentation, which by undermining political consensus may indirectly elevate EPU. We find that about 40 percent of EPU movements can be explained by long- and short-run movements in these determinants, which is consistent with limited evidence that de-trended movements in EPU may contain marginal information about GDP growth and other macro variables.

A Stocks, Bonds, Consumers Leading Indicator

Real, total consumption growth deviations from normal stock market wealth effects lead economic growth in advanced economies in the Americas, in Europe and in AustralAsia, as shown by Breeden (2013). Consumers’ expenditures reflect their information about employment opportunities and future real wage growth, as well as information about the volatility of future investment returns. Previous research has shown that stock prices and the slope of the term structure of interest rates reflect forecasted economic growth and profits. In this applied article, we put together the readings of stock market investors, bond market investors and issuers, and consumers (each rated by their Z-scores measuring standardized movements) in a simple, economically intuitive and powerful leading index of economic growth. It is shown that consumption deviations improve upon the signals given by the term structure and stock returns, and the combined readings of the “Stocks, Bonds and Consumers Leading Index” (SBCLI) developed here are quite competitive with more complex widely used indexes of leading economic indicators published by the Conference Board and the OECD.

Public debt and economic growth in advanced economies: A survey

SummaryThis paper surveys the recent literature on the links between public debt and economic growth in advanced economies. We find that theoretical models yield ambiguous results. Whether high levels of public debt have a negative effect on long-run growth is thus an empirical question. While many papers have found a negative correlation between debt and growth, our reading of the empirical literature is that there is no paper that can make a strong case for a causal relationship going from debt to economic growth. We also find that the presence of thresholds and, more in general, of a non-monotone relationship between debt and growth is not robust to small changes in data coverage and empirical techniques. We conclude with a discussion of the challenges involved in measuring and defining public debt and some suggestions for future research which, in our view, should emphasize cross-country heterogeneity.

Impact of macroeconomic indicators on stock market performance

PurposeThe study aims at examining how macroeconomic indicators affect the performance of stock markets by using the Ghana Stock Exchange as a case study.Design/methodology/approachQuarterly time series data covering the period 1991‐2005 were used. Cointegration and the error correction model techniques are employed to ascertain both short‐ and long‐run relationships.FindingsFindings of the study reveal that lending rates from deposit money banks have an adverse effect on stock market performance and particularly serve as major hindrance to business growth in Ghana. Again, while inflation rate is found to have a negative effect on stock market performance, the results indicate that it takes time for this to take effect due to the presence of a lag period; and that investors benefit from exchange‐rate losses as a result of domestic currency depreciation.Originality/valueThe single most important contribution of this study is its emphasis on macroeconomic variables and stock market performance in a small country, since most studies have concentrated on stock markets and economic growth in advanced economies.

De-industrialisation and the balance of payments in advanced economies

This paper defines de-industrialisation as a secular decline in the share of manufacturing in national employment. De-industrialisation, in this sense, has been a widespread feature of economic growth in advanced economies in recent decades. The paper considers briefly what explains this development and quantifies some of the factors responsible. It then examines the experience of Britain and America, which are two countries that have combined rapid de-industrialisation with a strong overall economic performance. The paper considers both the domestic situation of manufacturing industry in these countries and its foreign trade performance. It concludes by examining in detail the British balance of payments, and documenting how improvements in the non-manufacturing sphere have helped offset a worsening performance in manufacturing trade. Copyright 2004, Oxford University Press.