Engine Of Sustained Growth Research Articles

Towards Smart Inclusive Cities

Cities are rethinking the urban future, following a smart city view towards urban development to drive inclusive urban growth and improve the quality of life, shaping the city as an inclusive community and engine of sustainable growth. A smart city helps shape the city of the future, using the potential of information technology to serve both economic and social life, and transform the urban community in a significant way. Inclusive cities protect the value of a city, thus enhancing community development. Smart inclusive cities help support sustainable urban development, strengthening collaborative and open frameworks within urban communities. Currently, several European cities are selecting a smart city vision to develop the city as an open, innovation-led, socially inclusive community. As smart communities, cities of tomorrow employ information and communication technology (ICT) to drive sustainable, open and inclusive urban growth and innovation, improving the quality of life, strengthening smartness as an ability to develop the city as smart inclusive community. Cities are shaping a smart pathway and building an open and inclusive environment for smart urban community development. The study aims to identify the pathway that cities are following to drive the city as smart, sustainable and inclusive urban community. In the study, exploratory case studies drawn from smart city urban planning are duly discussed concerning three cities that are designing a smart future and thus rethinking a smart inclusive urban development. The three European cities of Wien, Paris and Florence, which are planning a smart urban future, to shape inclusive and open innovative urban communities, are hereby discussed.

Open Innovation Projects in SMEs as an Engine for Sustainable Growth

Most innovation activities that are inevitable for sustainable growth are coordinated via research and development (R&D) projects, which can differ widely in terms of both project and open innovation characteristics, even when conducted within the same firm. Therefore, it is important to consider the peculiarities of R&D projects when evaluating the performance of open innovation strategies, as well as to explore how the benefits and costs of open innovation are shaped by cross-level interactions. This study identifies the differences between successful and unsuccessful open innovation projects, in both firm-level and project-level terms. We focus on small and medium enterprises (SMEs), which usually lack the full set of internal resources and competences required to effectively develop, produce, and commercialize their innovations, and thus must adopt open innovation approaches more actively for sustainability. Adopting an empirical approach, we conducted a survey of 517 Korean SMEs and analyzed 241 successful and unsuccessful open innovation projects in depth. By combining measurements at the firm and project levels, this study provides new insight into the intra-organizational challenges of implementing open innovation projects, which are not only helpful to strategic decision-makers in SMEs, but also to those who make policies for them.

Knowledge spillovers, human capital and productivity

Knowledge spillovers in the form of human capital are often regarded as the engine of sustained growth and development. We employ a rich employer–employee matched dataset on the manufacturing industry in Taiwan, a newly industrialized economy, to quantify the significance of human capital spillovers and their effects on productivity gains. Using the ratio of higher-educated (university or above) employees in each city as the external human capital index of a plant (excluding the reference plant itself) and addressing the potential endogeneity of various unobservable factors attributable to the location of the plant, we find that within a given city, a 1 percent increase in the proportion of higher-educated employees will increase the productivity of plants in that city by approximately 0.93–1.15 percent. Furthermore, the productivity increases are found to be greater for high-tech plants and for those located in cities with science parks. This indicates that human capital spillovers are not only present, but stronger under greater technology intensities. Our measure of the monetary value of such spillover effects indicates that a 1 percent increase in the percentage of higher-educated employees in a city will raise the value-added per plant by US$15,937, or, equivalently, an increase of US$1.27 billion for the entire manufacturing industry.

Manufacturing, Industry and Growth in Mexico

The Mexican economy has undergone an important transformation that started at the end of the 1980s. There is a greater weight of private investment and some companies are making major investments in certain manufacturing activities. The composition of foreign trade now rests mostly on manufacturing. Multinational companies, which have acquired assets in the country or have made new investments, are mainly interested in exports. However, the growth of manufactured exports has occurred without a sustained real gross domestic product (GDP) growth, let alone GDP per capita. There are no signs of an increase in technical development and there is evidence of slower growth in equipment, machines, and tools used to manufacture the goods being exported. Based on Celso Furtado’s analysis, it is possible to argue that what happened in Mexico is a breakthrough in the growth of manufacturing exports, a growth that creates neither conditions for industrial development nor positive changes in the composition of employment. It has created an export platform concentrated in small group activities, mostly due to the arrival of subsidiaries of foreign firms in the country. Industry is not the engine of sustained growth and even less an expansion of productive activity that encourages the emergence of new branches and the multiplication of exchanges among the various sectors of the economy. One witnesses weak growth and a tendency toward stagnation.

Relative Wealth, Consumption Taxation, and Economic Growth

This paper examines the role of the relative wealth-induced status motive in affecting the neutrality of consumption taxation in an optimizing growth model. It is found that a key factor determining the validity of the neutrality of consumption taxation in both the level sense and the growth rate sense is the desire for relative wealth-induced social status. When individuals care about their relative wealth, a rise in consumption tax enhances the steady-state level of capital stock and consumption. Furthermore, if the production function takes a linear technology form as the engine of sustained growth, then increases in consumption taxation raise the economy's long-run growth rate. In addition, an optimal consumption tax policy provides full subsidies to consumption so as to induce the economy to achieve the social optimum and the optimal growth rate.

Why Do Some Countries Manage to Extract Growth from Foreign Aid?

Aid is primarily given to governments whereas the engine of sustained growth is the private sector. It is therefore illusory to investigate the impact of aid on growth without considering the impact of government interventions on the private sector. The model shows how these interventions improve capacity utilization and growth. However, distortionary interventions can also cause capacity underutilization and an increase in the informal economy, that is, the very market failures the interventions initially sought to address. Countries that fall into this trap are characterized by insufficient credibility in promoting the private sector, which translates into aid dependence and slower growth over time. The empirical evidence is supportive. This paper finds that aggregate aid has a positive impact on growth (even without diminishing returns) but the impact is substantially smaller for low-income countries.

Why Do Some Countries Manage to Extract Growth From Foreign Aid?

Aid is primarily given to governments whereas the engine of sustained growth is the private sector. It is therefore illusory to investigate the impact of aid on growth without considering the impact of government interventions on the private sector. The model shows how these interventions improve capacity utilization and growth. However, distortionary interventions can also cause capacity underutilization and an increase in the informal economy, that is, the very market failures the interventions initially sought to address. Countries that fall into this trap are characterized by insufficient credibility in promoting the private sector, which translates into aid dependence and slower growth over time. The empirical evidence is supportive. This paper finds that aggregate aid has a positive impact on growth (even without diminishing returns) but the impact is substantially smaller for low-income countries.

Tariff Revenue, Government Expenditure and Growth in a Small Open Economy

I develop a small open endogenous growth model with domestic and foreign intermediate goods. The Marshallian external economies in the domestic intermediate goods sector work as the engine of sustained growth. The model offers two arguments. First, imposing a trade distortion is growth- and welfare-improving if the government uses the tariff revenue for correcting the domestic distortion. Second, comparing the tariff with a lump-sum tax as a financing device, the former is certainly worse than the latter with respect to both growth and welfare if the two intermediate goods are substitutes. JEL Classification Numbers: F43, H20.

Social status, inflation, and endogenous growth in a cash-in-advance economy

This paper examines the effects of wealth-enhanced social status on capital accumulation in an optimizing monetary growth model with liquidity constrained consumption. We find that inflation positively affects the steady-state level of the capital stock. Further, when the production function takes the ‘AK’ technology form as the engine of sustained growth, an increase in the rate of money growth raises the long-run growth rate of the economy.