Economic Growth Literature Research Articles

Economic growth, foreign direct investment and corruption nexus in sub-Saharan African countries: moderation model

This study aligns with Sustainable Development Goal 8 which borders on “economic growth by ensuring FDI inflows continue to increase so as to spur sustained economic growth”. It contributes to the economic growth literature by evaluating the role of FDI inflows and corruption on economic growth. The Sub-Saharan African region has witnessed an increase in FDI inflows for the last three decades. However, economic growth has been reducing. For example, the region witnessed a contraction in economic growth to 2.7 percent in 2022 down from 4.4 percent of 2021. The literature indicates that corruption can impede FDI inflows from translating to high economic growth. Many studies have examined the role of FDI inflows in economic growth but have not studied the moderating effect of corruption thus creating a gap for this study. To achieve the objective, the study uses the Fixed Effects Panel data approach on unbalanced panel data for 46 sub-Saharan African countries from 1998 to 2021 to interrogate the nexus. The results revealed a positive relationship between FDI inflows and economic growth. The findings align to the endogenous growth model that explains the link between foreign direct investment and economic growth. However, corruption was found to reduce the effectiveness of FDI inflows in realizing economic growth. The study therefore recommendsthat the governments of the Sub-Saharan Africa countries need to address corruption so as to achieve the desired economic growth. They should implement measures focusing on improving institutional quality to control corruption. In addition, the policy makers should relook at anti-corruption initiatives aimed at reducing poor governance. For instance, financing anti-corruption agencies and legislating their independence to ensure corruption is reduced.

The impacts of exporting to China: assessing the productivity gains of developing countries using an instrumental variable approach

ABSTRACT Developing countries have taken substantial measures to liberalize protected domestic markets to facilitate international trade. However, market liberalization often depends on policies of export expansion and innovations, raising the question: Is export expansion sufficient for productivity gains of developing countries? How does export expansion mediate the relationship between innovations and productivity gains? Are further policy interventions necessary? Hence, this study examines the impacts of developing countries’ exports to China on productivity gains from 1992-2022. Further, it investigates how innovations mediate the relationship between export expansion and productivity gains. The 2SLS method is applied for estimation, which addresses the endogeneity by using export expansion to China from other developing countries. The findings reveal that exports positively impact productivity driven by China’s rise. Innovations and learning by exporting significantly mediate the association between key variables. It highlights how developing countries benefit from China’s growth, contributing insights to trade and economic growth literature.

产业集聚、知识溢出与区域经济增长文献综述

产业集聚、知识溢出与区域经济增长文献综述

Guns versus Climate: How Militarization Amplifies the Effect of Economic Growth on Carbon Emissions

Building on cornerstone traditions in historical sociology, as well as work in environmental sociology and political-economic sociology, we theorize and investigate with moderation analysis how and why national militaries shape the effect of economic growth on carbon pollution. Militaries exert a substantial influence on the production and consumption patterns of economies, and the environmental demands required to support their evolving infrastructure. As far-reaching and distinct characteristics of contemporary militarization, we suggest that both the size and capital intensiveness of the world’s militaries enlarge the effect of economic growth on nations’ carbon emissions. In particular, we posit that each increases the extent to which the other amplifies the effect of economic growth on carbon pollution. To test our arguments, we estimate longitudinal models of emissions for 106 nations from 1990 to 2016. Across various model specifications, robustness checks, a range of sensitivity analyses, and counterfactual analysis, the findings consistently support our propositions. Beyond advancing the environment and economic growth literature in sociology, this study makes significant contributions to sociological research on climate change and the climate crisis, and it underscores the importance of considering the military in scholarship across the discipline.

Natural resource endowments and growth dynamics in Africa: evidence from panel cointegrating regression

PurposeWith heterogeneous findings dominating the growth and natural resources relations, there is a need to explain the variances in Africa's growth process as induced by robust measures of factor endowments. This study used a comprehensive set of data from the updated database of the World Bank to capture the heterogeneous dimensions of natural resource endowments on growth with a particular focus on establishing complementary evidence on the resource curse hypothesis in energy and environmental economics literature in Africa. These comprehensive data on oil rent, coal rent and forest rent could provide new and insightful evidence on obscure relations on the subject matter.Design/methodology/approachThis paper considers the panel vector error correction model (PVECM) procedure to explain changes in economic growth outcomes as induced by oil rent, coal rent and forest rent. The consideration of the PVECM was premised on the panel unit root process that returns series that were cointegrated at the first-order differentials.FindingsThe paper found positive relations between oil rent, coal rent and economic development in Africa. Forest rent, on the other hand, is inversely related to economic growth in Africa. Trade and human capital are positively related to economic growth in Africa, while population growth is negatively associated with economic growth in Africa.Research limitations/implicationsShort-run policies should be tailored towards the stability of fiscal expenditure such that the objective of fiscal policy, which is to maintain the condition of full employment and economic stability and stabilise the rate of growth, can be optimised and sustained. By this, the resource curse will be averted and productive capacity will increase, leading to sustainable growth and development in Africa, where conditions for growth and development remain inadequately met.Originality/valueThe originality of this paper can be viewed from the strength of its arguments and methods adopted to address the questions raised in this paper. This study further illuminated age-long obscure relations in the literature of natural resource endowment and economic growth by taking a disaggregated approach to the component-by-component analysis of natural resources factors (the oil rent, coal rent and forest rent) and their corresponding influence on economic growth in Africa. This pattern remains underexplored mainly in previous literature on the subject. Many African countries are blessed with an abundance of these different natural resources in varying proportions. The misuse and mismanagement of these resources along various dimensions have been the core of the inclination towards the resource curse hypothesis in Africa. Knowing how growth conditions respond to changes in the depth of forest resources, oil resources and coal resources could be useful pointers in Africa's overall energy use and management. This study contributed to the literature on natural resource-induced growth dynamics by offering a generalisable conclusion as to why natural resource-abundance economies are prone to poor economic performance. This study further asks if mineral deposits are a source or reflection of ill growth and underdevelopment in African countries.

Factors of production, productivity, institutions, and development: Evidence from Brazil

AbstractThe economic growth and development literature emphasizes that investment in technology and physical and human capital is essential for achieving higher levels of development. Political and economic institutions are also relevant in this process. With a sample of 5,503 Brazilian municipalities, this study carries out a development accounting exercise and measures the effects of institutional quality on per capita gross domestic product (GDP), physical capital intensity, human capital stock, and productivity. The empirical results indicate that institutional quality affects GDP per capita mainly through human capital accumulation and total factor productivity.

Consumption with earnings, liquidity, and market based models

The market, earnings, and liquidity growth combine to form a proxy for wealth growth, allowing a recursive consumption model with a low risk aversion coefficient, a risk-free rate close to historical, a high equity premium, and a reasonable elasticity of intertemporal substitution. The empirical consumption model does well against major asset pricing puzzles. Tested over 118 years it is not rejected while a forward-looking consumption model using the market alone as a wealth proxy fails. Changing liquidity and earnings forecast consumption and their ‘crashes’ precede consumption declines. We also demonstrate related stock level factors have similar economic magnitude and are significant. These models are consistent to the financial intermediary economic growth literature. Such consistency across approaches adds credence to common earnings and liquidity factors as important risks to investors.

Post-COP26: can energy consumption, resource dependence, and trade openness promote carbon neutrality? Homogeneous and heterogeneous analyses for G20 countries.

The need to halt the pervasive issue of global warming has triggered commitments from policymakers, international organizations, and research pundits with an ambitious goal of neutralizing carbon emissions, forming the core of COP26 in November 2021. Consequently, the carbon neutrality agenda is globally debated in the environment and economic growth literature. Given the preceding narratives, this study examines the tripartite effects of energy consumption, resource dependence, and trade openness on carbon neutrality in G20 economies from 2001 to 2019. The empirical evidence relies on homogenous and heterogeneous dynamic models based on a system generalized method of moments (GMM), fully modified ordinary least squares (FM-OLS), and quantile regression estimators. The following results are evident from the empirical analyses. Among the heterogeneous indicators, nonrenewable energy, oil rents, coal rents, and imports contribute to the surge in carbon emissions, while renewable energy, gas rents, and exports moderate carbon emissions. The homogenous impacts show that total energy consumption, total natural resource rents, and trade openness promote significant carbon emissions. Further, the long-run results from FM-OLS and the disintegrated mean effects from quantile regression are robust for the main short-run results based on the two-step system GMM. Based on the empirical fallout, investing in renewable energy and diversifying from natural resource exploration are among the emanating policy that can enhance the sustainability of the G20 environment.

Asymmetric Effect of Military Expenditures on Economic Growth in Pakistan: A Nonlinear-ARDL Approach

The nexus between military expenditure and economic growth has been analyzed using different methods and techniques in the economic growth literature, but most previous findings are indecisive, i.e., non-significant, positive, or negative. The primary purpose of this article was to explain the military expenditure-economic growth nexus in Pakistan by capturing the asymmetrical effects of military expenditures on economic growth using the non-linear autoregressive distribution lag-NARDL technique. Data were analyzed from 1972-2018. The results indicated that a decrease in military spending (adverse shocks) enhanced economic growth in the long term. An increase in military spending (positive shocks) had an insignificant effect on economic growth in Pakistan, suggesting that a focus on cost reduction in military expenditure may benefit economic growth. More so, the Wald test validated the asymmetries both in the long- and short term. Capital formation and labor force, as a control variable, positively affected economic growth in the long run. Based on these findings, the paper offers some critical suggestions for policymakers.

Institutional quality and economic growth: Evidence from South‐Asian countries

The current study investigates the relationship between institutional quality and economic growth, focusing on South‐Asian countries entailing Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka, from 2002 to 2018. The data are analysed using the dynamic heterogeneous panel (panel autoregressive distributed lag [ARDL] model) approach, specifically the dynamic fixed effect (DFE), mean group (MG), and pooled mean group (PMG). Based on the findings, the three governance indicators, namely corruption control, accountability, and the rule of law, positively and significantly affect economic growth. All the nations have consistent long‐run estimates but varied short‐run estimates and adjustment speed for the long‐term equilibrium. This is due to governance volatility that is evident in all the nations. This article offers both practical and theoretical contributions. This article contributes to the institutional quality and economic growth literature from a theoretical perspective from the South‐Asian perspective. From a practical perspective, the study findings are significant for policymakers, particularly those from the countries that demonstrate major fiscal and external imbalance due to war and terrorism, low oil prices and weak trade. Hence, there is a pressing need to address economic growth issues instigated by the policymakers' negligence to ensure appropriate governance and macroeconomic management. Regulators can improve economic growth through national and regional image building by developing a stable economic and political landscape and maintaining macroeconomic stability by improving the institutional quality indicators. There is evidence that institutional quality improvement leads to better economic growth.

The intellectual evolution of the technological catch-up literature: Bibliometric analysis

• The literature on technological catch up shows convergence in topics but not convergence in intellectual attributions. • We identified three stages in the literature: a convergence between the economic growth and technology capabilities literature (1980/the 1990s). • A shift from the macro issues of growth and convergence to (latecomer) firm and sectoral level issues (2000s). • Concern over the relationship between globalization and technology upgrading at the or mezzo level (2010s). • Richard Nelson is central in the authors' co-citation network, whose work bridges four different approaches in technological catch-up studies. Abstract 1 We analyse the growing literature on technological catch-up since the 1980s to identify its intellectual bases and evolution. The analysis uses co-occurrence and co-citation techniques to explore trends in keywords, journals, documents, and authors. In the 1980s, the area was characterised by two unrelated streams of work on macroeconomic growth and the building of technological capabilities at the micro-level in developing economies. During the 1990s, when the technological catch-up literature began to take off, these two streams of literature evolved further and came closer to each other. During the 2000s, firm-level studies rooted in resource-based and knowledge-based views proliferated. From 2010 they were followed by an increased number of studies of latecomer firm internationalisation. The field's qualitative evolution has been characterised by the convergence between the economic growth and technology capabilities literature, a change of focus from the macro issues of growth and convergence to firm (latecomer firm) and sectoral level issues, and a dominant concern about the relationship between globalisation and technology upgrading at the sectoral or mezzo level. There are four streams that currently underpin research on technology catch up: economic growth, systems of innovation, knowledge management, and industrial dynamics cum global value chains and latecomer firm.

Integration and convergence in efficiency and technology gap of European life insurance markets

This paper applies the meta-frontier Data Envelopment Analysis and the main concepts of convergence from the economic growth literature (β-convergence and σ-convergence) to analyze integration and convergence both in efficiency and in technology gap of European Union (EU) insurance markets. We evaluate 10 EU life insurance markets over the 17-year-period 1998–2014. Results show convergence in cost/revenue efficiency among major EU life insurance markets during the sample period. These findings indicate that the least efficient countries in 1998 have shown a higher improvement in cost/revenue efficiency than the most efficient countries in the same year as well as that the dispersion of the mean efficiency scores among EU life insurance markets decreased over the sample period. We also find convergence in cost/revenue technology gap among these markets, suggesting that they become more technologically homogeneous during the sample period. However, results show that the global financial crisis has led to a slowdown in the progress of integration and convergence in efficiency and technology gap of EU life insurance markets in terms of cost efficiency but not in terms of revenue efficiency.

Fresh insights into tourism-led economic growth nexus: a systematic literature network analysis approach

ABSTRACT Using over 200 empirical studies curated from web of science (WoS) and Scopus databases, the current study employed systematic literature network (i.e. systematic review and bibliometric) analysis to document the evolution of tourism-led economic growth literature. Specifically, the study answered four key research questions validating the most influential contributors, key themes in tourism-growth nexus, intellectual networks and critical signposts for future research engagements. Beyond its contribution in answering the aforementioned questions, this study also offered crucial recommendations to policymakers for generating alternative path(s) to economic growth.

Exports and Imports-Led Growth: Evidence from a Small Developing Economy

This paper examines equilibrium relationships and dynamic causality between economic growth, exports, and imports in Nepal using time-series data between 1965 and 2020. This research examines the impact of exports and imports on the economic growth of Nepal and documents empirical evidence in exports-led growth, imports-led growth, growth-led exports, and growth-led imports hypotheses in both the short and long run. The test results show no evidence favoring the exports-led growth and growth-led exports hypotheses in both the short and long run. However, the study finds evidence supporting the imports-led growth hypothesis in the short term and the growth-led imports hypothesis in the long term. Overall, this paper finds no evidence in favor of the notion that foreign trade supports the economic growth of Nepal in the long run. The research findings may have important implications for policymakers in Nepal. The paper contributes to trade and economic growth literature by investigating the relationship between exports, imports, capital, and gross domestic products in a small economy such as Nepal, where exports make a minimal and imports make an extensive contribution to gross domestic products by using cointegration and the vector error correction model.

The impact of China's foreign direct investment on Africa's inclusive development

It has become a consensus among African countries that China's foreign direct investment is one of the most important ways to promote Africa's economic growth and inclusive development. As a result, Chinese enterprises are investing more and more in Africa, which has boosted Africa's economic growth and China-Africa trade cooperation. However, there are many criticisms that China's investment presence is a curse to the inclusive development of Africa. Therefore, our paper aims to determine the impact of CFDI on inclusive development in Africa. By collecting China's FDI data, the panel data of 48 African countries were analyzed from 2003 to 2020, respectively. The finding of CFDI in the continent was suspicious and needed to measure the impact in the host country. According to the empirical analysis results, it can be found that CFDI promotes the African economy through direct investment. Therefore, our results expand the economic growth literature and inform policymakers of the need to pay attention to bilateral, multilateral trade and investment with China, which both parties must control with a solid policy.

The Causal Link Between Savings and Economic Growth in Bosnia and Herzegovina

AbstractThe causal link between savings and economic growth has been extensively discussed in the economic growth and development literature, but the question of the direction of this link has not yet been clearly defined. The aim of this paper is to determine the direction and intensity of savings causality (components of private savings) and economic growth in Bosnia and Herzegovina. Granger’s causality test, the Toda-Yamamoto procedure, was applied to test for causality between savings and economic growth. The results of Granger’s causality test indicated that there is no causal link between components of private savings with economic growth in Bosnia and Herzegovina. It was found that among the variables there is cointegration, but not causality, which means that the variables have a common stochastic trend. This fully corresponds to the characteristics of the Bosnia and Herzegovina’s economy.

Do house price-earnings ratios in England and Wales follow a power law? An application of Lavalette’s law to district data

This paper considers Lavalette’s function and its applicability to district house price-earnings ratios. Drawing on work in the urban scaling literature and Zipf’s law, in conjunction with finance theories of pricing and affordability, the paper considers how stable the distribution of ratios is over time, how robust the ranking order of ratios is in the face of variations in affordability over 2004–2019, and proffers an explanation for the shape and movement of the distribution. It draws on issues found in the economic growth literature where sigma-convergence is applied to spatial variables, and a narrowing of the distribution is said to indicate convergence. It proposes that, when plotted over time, the Lavalette exponent and Spearman’s correlation coefficient point to divergence and rank-order stability.

Boosting economic growth through energy in Africa: the role of Chinese investment and institutional quality

ABSTRACT In 2019, Chinese investment rose to $110 billion across all sectors in Africa. However, there are many criticisms that the Chinese presence is a curse to the development of Africa. Hence, we direct our attention to unravel the truth about these allegations by examining the underlying effect of institutional quality and Chinese investment in Africa on energy consumption (EC) and its impact on economic growth. We applied a panel corrected standard error (PCSE) econometric procedure for a selected 21 sub-Saharan African countries. Our results show that energy consumption promotes economic growth. Similarly, the study revealed that the institutional quality and Chinese investment in Africa were the underlying factors for the positive effect of energy consumption and economic growth. Therefore, our results expand the economic growth literature and inform policymakers of the need to pay attention to bilateral trade and investment with China.

Patterns of specialization and economic complexity through the lens of universal exhibitions, 1855-1900

The complexity of a country's product mix is related to its economic growth. This paper extends this key insight from the economic growth literature to the second half of the 19th century, by reconstructing Revealed Comparative Advantages (RCA) and Economic Complexity Indices (ECI) for tens of polities, including both independent countries and colonies. It does so by exploiting product-polity information from the catalogues of five universal exhibitions, held in Paris in the second half of the 19th century (1855, 1867, 1878, 1889, 1900). For this period, exhibition data are available at a more disaggregated level than export data, on which RCA and ECI are typically based. This is the first application of ECI to the pre-Second World War era. A significant relation is observed between ECI, the level of GDP per capita, and the latter's long-run growth. Furthermore, the evolution of RCA and ECI reveals processes of structural change and economic development, notably the emergence of Germany and Switzerland, which developed along the technological paradigms of the second industrial revolution and thus attained positions of technological and economic primacy.

An Integration of Neoclassical Growth Theory and Economic Structural Change with Monopolistic Competition Theory

Wealth accumulation is a deterministic factor mechanism of national economic growth. Neoclassical growth theory is basically concerned with capital and wealth accumulation in perfectly competitive market. Global markets are characterized by a great variety of markets. Nevertheless, there only a few rigorous models of wealth accumulation with other types of markets within neoclassical growth framework. This study attempts to contribute literature of economic growth by introducing monopolistic competition and monopoly into neoclassical growth theory. The model is based on a few well-established economic theories. The model is constructed within framework of the Solow-Uzawa two-sector neoclassical growth model. The description of to monopolistic competition is influenced by the Dixit-Stiglitz model of monopolistic competition. The modelling of monopoly is based on monopoly theory. We model behavior of the household with Zhang’s utility function and concepts of current income and disposable income. The unique contribution of this research is to integrate these theories in a comprehensive framework. We construct the basic model and then analyze properties of the model. The existence of a unique equilibrium point is identified by simulation. The effects of changes in some parameters comparative static analyses in some parameters.