Growth In Advanced Economies Research Articles

On the Substitution and Complementarity between Robots and Labor: Evidence from Advanced and Emerging Economies

This paper aims to empirically study the short-term relationship between robot adoption and the labor market across a diverse set of advanced and emerging economies. Additionally, it seeks to analyze the impact of macroeconomic and institutional factors on this relationship. This study reveals robot adoption promotes employment growth in advanced economies, while it has a negative effect on employment in emerging economies. This heterogeneity can be attributed to both direct and indirect linkages between robots and labor in production. Directly, robots can either substitute or complement human labor. Indirectly, robot adoption stimulates output growth, leading to increased labor demand. We also show that the robot–labor relationship is influenced by macroeconomic variables such as development stage, unemployment rate, and education level, as well as institutional variables such as business regulation and structural reforms. These findings suggest the need for a more inclusive and sustainable approach to the advancement of robot adoption and automation.

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.

The impact of ICT patents on economic growth: An international evidence

This study aims to examine the impact of inventions, measured by the number of new patents, on economic growth. Specifically, we focus on patents in the ICT sector for a global sample of 43 economies, comprising 26 advanced and 17 emerging market economies in the period 1998 to 2016. We use a two-step system GMM to control for potential endogeneity in the data. Our results are threefold. First, total patents have mutually causal effects with economic growth, but there is no evidence of an impact of total patents on manufacturing sector growth. At the same time, ICT patents have a unidirectional causal impact on both, overall economic growth, and the growth of services and manufacturing. Second, the impact of total patents on economic growth is stronger in advanced economies. At the same time, ICT patents have a positive significant impact on the growth of advanced economies and a negative significant effect on the growth of emerging economies. Third, in the long-run, ICT patents have a positive significant impact on economic growth, while total patents do not.

Household Debt, Corporate Debt, and the Real Economy: Some Empirical Evidence

ABSTRACT The rapid accumulation of private debt is widely viewed as a major risk to financial and economic stability. This article systematically and comprehensively assesses the effect of private debt buildup on economic growth. In the spirit of the existing study that separately examines the effects of two types of private debt – household debt and corporate debt – on growth in advanced economies, we specifically provide new evidence on the growth-private debt nexus in both advanced and emerging market economies (EMEs). Moreover, we construct financial peaks in terms of the speed of debt accumulation rather than crisis dates and find that in both advanced and EMEs, corporate debt buildups cause more financial peaks than household debt buildups. Furthermore, corporate debt-induced financial recessions inflict a bigger damage on output than household debt-induced financial recessions in EMEs. Overall, our evidence suggests that policymakers would do well to closely monitor not only household debt but also corporate debt.

HOW TO NOT MISS A PRODUCTIVITY REVIVAL ONCE AGAIN

Over the past 15 years, productivity growth in advanced economies has significantly slowed, giving rise to the productivity paradox of the New Digital Economy – that is, the notion of increased business spending on information and communication technology assets and digital services without a noticeable increase in productivity. We argue that time lags are the most important reason for the slow emergence of the productivity effects from digital transformation. This paper provides evidence that underneath the slowing productivity growth rates at the macro level, signs of structural improvements can be detected. In the United States most of the positive contribution to productivity growth is coming from the digital producing sector. The Euro Area and the United Kingdom show larger productivity contributions from the most intensive digital-using sectors, although the United Kingdom also had a fairly large number of less intensive digital-using industries which showed productivity declines. We also find that increases in innovation competencies of the workforce are concentrated in industries showing faster growth in labor productivity, even though more research is needed to identify causality. Finally, we speculate that as the recovery from the COVID-19 recession gets underway the potential for significant productivity gains from digital transformation in the medium term is larger than during the past 15 years.

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.

Economists and the Emergence of Development Discourse at OECD

This paper discusses how economists contributed to OEEC-OECD policies between the 1950s and the 1960s, when OECD emerged as a truly global organization. We aim at offering a contribution, based on extensive archival sources, to what Coats defined the “ambitious effort” to study “the systematic analysis of the activities and influence of professional economists in the modern (i.e., post-1945) world” (Coats 1986: vii). In particular, at the organizational level, we highlight the porous relationship between national and international governmental circles. As for the policy agenda, we discuss how a new focus on the nexus between backwardness, development policies, and the economics of education emerged in the European context, and how this focus was conceptually distinct from analyses centered on growth in advanced economies. This specifically European developmental focus produced a coordinated effort at addressing the educational question, which overlapped with new trends in economic research on the role of human capital for economic growth.

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.

Polycentric development and local fertility in metropolitan regions: An empirical analysis for Barcelona, Spain

AbstractThe present study verifies if spatial variability in local fertility reflects the shift from a monocentric dense settlement model towards a polycentric metropolis organised in central cores and subcentral locations. The spatial distribution of a crude birth rate in Barcelona's province was investigated for a long time span (1975–2018), identifying distinctive trends within five concentric rings around Barcelona at four subperiods (1975–1985, 1986–1996, 1997–2007 and 2008–2018). Using multivariate exploratory statistics, local fertility rates were correlated with background indicators delineating the socio‐economic profile of each municipality in the study area. Fertility rates decreased with the distance from downward Barcelona and with population density. In the first time interval (1975–1985), fertility levels—higher in subcentral municipalities and peri‐urban locations than in downtown Barcelona—were positively associated with urban growth. In the following two subperiods (1986–1996 and 1997–2007), the contribution of local fertility to urban growth decreased significantly, reaching the lowest‐low figures at the end of the 1980s. In the most recent time interval (2008–2018), a moderate (and spatially heterogeneous) recovery of fertility rates was observed in subcentral locations. Demographic processes underlying Barcelona's expansion provide evidence in favour of a positive relationship between polycentric development and local fertility. Our article finally debates on the use of fertility indicators in the assessment of monocentric versus polycentric (metropolitan) growth in advanced economies.

Does Disappointing European Productivity Growth Reflect a Slowing Trend? Weighing the Evidence and Assessing the Future

In the years since the Great Recession, many observers have highlighted the slow pace of labor and total factor productivity (TFP) growth in advanced economies. This paper focuses on the European experience, where we highlight that trend TFP growth was already low in the runup to the Global Financial Crisis (GFC). This suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. After the mid-1990s, European economies stopped converging, or even began diverging, from the U.S. level of TFP. That said, in contrast to the United States, there is some macroeconomic evidence for some northern European countries that the GFC had a further adverse impact on TFP growth. Still, the challenges for economic policy look surprisingly similar to the ones discussed prior to the Great Recession, even if the policy implications seem less clear.

World Productivity: 1996-2014

We account for the sources of world productivity growth, using data for more than 36 industries and 40 major economies from 1996 to 2014, explicitly taking into account changes in the misallocation of resources in labor, capital, and product markets. Productivity growth in advanced economies slowed but emerging markets grew more quickly which kept global productivity growth relatively constant until around 2010. After that, productivity growth in all major regions slowed. Much of the volatility in world productivity growth reflects shifts in the misallocation of labor across countries and industries. Using new data on PPP-based value-added measures by country and industry, we show that about a third of these shifts is due to employment growing in countries, most notably China and India, that benefit from an international cost advantage. Markups are large and rising and impact the imputed misalloction of capital. However, they have little effect on the country-industry technology contribution to global productivity.

Why Is Current Unemployment So Low?

We account for the sources of world productivity growth, using data for more than 36 industries and 40 major economies from 1996 to 2014, explicitly taking into account changes in the misallocation of resources in labor, capital, and product markets. Productivity growth in advanced economies slowed but emerging markets grew more quickly which kept global productivity growth relatively constant until around 2010. After that, productivity growth in all major regions slowed. Much of the volatility in world productivity growth reflects shifts in the misallocation of labor across countries and industries. Using new data on PPP-based value-added measures by country and industry, we show that about a third of these shifts is due to employment growing in countries, most notably China and India, that benefit from an international cost advantage. Markups are large and rising and impact the imputed misallocation of capital. However, they have little effect on the country-industry technology contribution to global productivity.

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.

Growth Strategies to Avoid the Middle-Income Trap

Since we coined the term in 2006, “the middle income trap” has been the subject of scores of investigations. The investigators have generally tried to answer one of two questions: Is there evidence to support the existence of the trap, and what can middle-income countries do to spring free of it? The evidence in support of its existence has been mixed, and the policy discussions have—to put it bluntly—been largely unhelpful. But our original proposition was that of the possibility of a trap, not its inevitability. We were more convinced of the absence of a functional theory of economic growth for middle-income economies. Solow-Swan models that stressed capital accumulation and exogenous technological change did well to explain growth in low-income countries, and Lucas-Romer models emphasizing learning and endogenous technical change identified the main drivers of growth in advanced economies and explained why capital and knowhow did not easily flow to poorer economies. Neither class of models has, to our knowledge, satisfactorily explained successful transitions from one type of growth to the other. In this paper, we propose that Schumpeterian models proposed by Aghion, Howitt and others that stress creative destruction and institutional change could provide the analytical foundations for understanding middle-income economies better. We present evidence that is consistent with the main predictions of this approach, and discuss its key policy implications, especially effective competition regimes, mechanisms to maintain social mobility, and adept management of economic crises.

The World Economy: Forecast Summary

Recent data indicates that the global output growth cycle has peaked. We expect global GDP growth to continue, but at a slightly slower pace than in the past two years.Tariff increases and trade disputes have contributed to slowing growth and have added uncertainty to the global economic outlook.While slightly faster wage growth in advanced economies and tighter labour markets raise the potential for higher inflation, the fall in oil prices in late 2018 should, with slowing output growth, prevent a widespread pick-up in inflation.Continued low inflation opens the possibility for central banks to increase monetary accommodation to support economic activity should it be required.Despite slower output growth this year, this decade will have seen sustained global GDP growth averaging 3.8 per cent a year.

IMF Managing Director's Statement to the Development Committee, April 2019

While growth in advanced economies is losing momentum amid trade tensions and policy uncertainty, activity in many emerging and low-income developing countries (EMDEs) has remained more robust, supported by still favorable financing conditions. Differences across EMDEs are large, however, and downside risks are building. Policy priorities include enhancing resilience in response to a more challenging global environment, creating fiscal space for essential development spending, containing debt vulnerabilities, and promoting strong and inclusive growth. Strengthening revenue generating capacity, enhancing public spending efficiency, and addressing infrastructure gaps are critical for reaching the 2030 Sustainable Development Goals.

HUMAN CAPITAL AND URBAN GROWTH IN ITALY, 1981–2001

Over the last decades of the XX century, human capital has emerged as a critical source of agglomeration economies fueling urban growth in advanced economies. Focusing on the Italian case, this paper assesses the contribution of human capital to urban growth, the latter gauged by employment growth between 1981 and 2001. A 10% higher share of college‐educated residents prompted a higher growth in employment in the 0.5–2.2% range. These results hold controlling for a wide set of urban characteristics and using an instrumental variable approach. By exploiting a spatial localization model, we disentangle the estimated effect into two components related to higher productivity and to higher life quality, respectively. We found that the former contributed to more than 60% of the effect at municipal level, and to over 90% at the wider local labor market level.

The World Economy

Recent data suggests that the global growth cycle has probably peaked. We forecast world GDP growth of around 3.5 per cent a year over the next two years.On that basis, the second decade of the 21st century will have seen sustained global GDP growth.Tariff increases and trade disputes seem likely to act as a drag on the global economic outlook, with a bias towards slower growth as a consequence.Despite faster wage growth in advanced economies, the recent fall in oil prices has reduced the risks of inflation overshooting targets. We expect central banks to reduce monetary accommodation very gradually.

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.

Skewed Credit and Growth Dynamics after the Global Financial Crisis

A large empirical literature finds that financial development is beneficial for economic growth, although some recent evidence suggests otherwise. The paper contributes to the finance–growth literature by examining the role of credit growth skewness and long-run growth. Earlier literature found that credit growth skewness is negatively associated with economic growth. It revisits this relationship using a large and recent panel dataset that encompasses Organisation for Economic Co-operation and Development economies and the impact of the global financial crisis. While the results reconfirm an association between credit skewness and growth, the relationship is more nuanced than previously thought. It finds that the beneficial effects from lower skewness—systemic financial risks—were evident only prior to 2000. The findings help explain why boom–bust dynamics were positively associated with economic growth in emerging markets in the past and why the growth of advanced economies has been sluggish since the global financial crisis.