Higher Public Investment Research Articles

Income mobility and crime: a hierarchical cluster analysis on principal components for 27 OECD countries

PurposeThe aim of this paper is to investigate the linkages between intergenerational income mobility and crime for 27 OECD countries, considering different types of crime, family ties, enforcement, in terms of punishment rate and perceived quality of the legal system, redistributive outcomes and government expenditure.Design/methodology/approachUsing the Global Database of Intergenerational Mobility (GDIM), the empirical analysis is conducted by coupling the principal components analysis with the hierarchical clustering. The variance tests verify the robustness of the clusters.FindingsIncome mobility is higher in those countries where there is high public investment devoted to education and high perception of rule of law to buffer the adverse effects of crime on income mobility. The redistributive policies must be oriented to better the wealth distribution and not only income equality opportunity to decrease crime and to increase income mobility. A plausible existence of “hidden” income mobility emerges from the linkages between income mobility and frauds.Social implicationsMore redistributive policies for education, income and wealth equality should be applied in those countries with low income mobility and high violent crime rates; higher punishment rates should be applied to reduce the rates of thefts and frauds in high income mobility countries.Originality/valueThe main contribution is the identification of what type of crime leads to downward income mobility, as well as the role of perceived quality of the legal system, government and family ties in the association between income mobility and crime, suggesting also the potential existence of “hidden” income mobility.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-07-2023-0520

Fiscal Responses to Foreign Aid: Does the Permanence of Aid Matter?

Abstract This paper shows that failing to distinguish between permanent (low frequency) and temporary (high frequency) aid results in misleading estimates of the fiscal responses to aid. I focus on foreign grants received by sub-Saharan Africa over the period 1990–2016, and I separately identify the fiscal responses to permanent and temporary foreign aid. Permanent and temporary aid generates fiscal responses that are meaningfully different on the components of expenditure and domestic borrowing. Temporary aid is associated with fiscal adjustments, such as lower domestic borrowing and increasing recurrent expenditure, while permanent aid is associated with higher public investments. Results provide important policy implications regarding the macroeconomic effects of foreign aid and the design of aid programs to developing countries.

Mexico needs a fiscal twist: Response to Covid-19 and beyond

Mexico's fiscal response to the pandemic has been modest compared to its peers, reflecting the authorities' desire to not issue new debt for spending. This approach, however, resulted in a more severe recession in 2020 and a weaker economic recovery, notwithstanding spillovers from the United States. Balancing the need for stronger near-term fiscal support for the people and the recovery against medium-term discipline, this paper lays out an alternative strategy. We show that credibly announcing a pro-growth and inclusive medium-term fiscal reform upfront—including increased tax capacity, higher public investment and strengthened social safety nets—would open space for larger short-term support and close medium-term fiscal gaps. Model simulations suggest that this package would boost output, limit lasting economic damage from the pandemic, and put debt trajectory on a declining path in the medium term as tax reforms pay off and risk premia decline.

Moving toward a green revolution in Japan: Symmetric and asymmetric relationships among clean energy technology development investments, economic growth, and CO2 emissions

A revolution in the energy sector is crucial for achieving environmental sustainability since almost three-fourth of global carbon dioxide emissions is generated from the energy sector. It is believed that combustion of unclean energy resources is the major contributor to the multifaceted environmental adversities experienced across the globe. Thus, the development of clean energy technologies, to elevate their shares in the global energy mix, is deemed necessary to reinstate environmental well-being worldwide. Against this background, this study aims to explore the symmetric and asymmetric impacts of public research and development investments for nuclear and renewable energy development and economic growth on carbon dioxide emissions in the context of Japan over the 1974–2017 period. As opposed to the conventional approaches, this study contributes to the literature by specifically scrutinizing the environmental effects associated with public investments in clean energy development projects; whereas the majority of the preceding studies have either considered the environmental impacts associated with the overall research and development investments in the energy sector or that made by firms in general. However, evaluating the effects of such investments for clean energy development is more appropriate for policy-making purposes. The results from both the symmetric and asymmetric analyses reveal that higher public investments in clean energy research and development-oriented projects help to curb carbon dioxide emissions in Japan. Besides, such investments for nuclear energy development are evidenced to be relatively more effective in facilitating the nation's carbon emission-abating agenda. In contrast, economic growth in Japan is evidenced to trigger higher carbon dioxide emissions. In line with these key findings, this study offers several policy-level suggestions in respect of undergoing clean energy transition and achieving environmental sustainability in Japan.

Perceptions of park visitors on access to urban parks and benefits of green spaces

There has been limited research on understanding access to public green spaces in cities of the global South. In a study in Hyderabad, India, we interview visitors in four parks to understand their perceptions of and access to ecosystem services. Of these, two parks charge entry fees and two provide free entry or entry at minimal cost. Most users value the park as a recreational space, but are largely unable to access provisioning services such as food and fodder. This poses a particular challenge for low income residents. In the large parks with high vegetation cover, visitors could identify a variety of trees, plants, and birds, while in the smallest neighbourhood park which has the least amount of greenery, they could only identify a small number of species. Parks were visited more by men than by women, who cited challenges of lack of time, and lack of safety. Park entry fees also acted as barriers, for low income groups. The two parks located in wealthy and gentrifying neighbourhoods were almost exclusively accessed by middle class and wealthy visitors, because of the entry fee.Surveys of willingness to pay found that wealthy visitors were keen to pay an entry fee and did not seem to understand the implications of such a fee on exclusion, low income visitors expressed negative views. A central role of the urban park as a ‘public space’ within a city is to nourish the sense of community. Yet some parks have been converted into landscaped and designed areas with high public investment, and entry charges, with limited provision for harvesting ecosystem services. Thus even in public spaces like parks, we observe stark gender and income inequalities, leading to the uneven access to green space.

Public investment efficiency and sectoral economic growth in Pakistan

AbstractMotivationThe issue of the effect of public investment on private investment and consequently on growth is much debated in economic literature. On the one hand the classical school believes that increment in public spending reduces economic growth by crowding out private investment, whereas Keynesians, on the other hand, consider government spending a key variable for economic growth.PurposeLike other developing economies Pakistan is also facing a high budget deficit which curtails public spending. This study estimates the relative effects of public investment in physical (infrastructure and energy) and social (health and education) sectors on output by estimating long term marginal productivity.Approach and MethodsThis study used the vector autoregressive/vector error correction model (VAR/VECM) technique to measure the effect of public investment on output, private investment and employment; separate VAR models are estimated for each sector and each type of public spending. Further, in order to attain these uncorrelated residuals, Cholesky decomposition is used and the resulting accumulated impulse response measures the cumulative response of all variables due to change in policy variable i.e. public investment.FindingsThis study indicates that public investments have a crowding in effect in 49 cases, while in 21 cases there is crowding out, 34 cases indicate labour absorption effect, while 36 cases show labour substitutions and 52 cases show a positive output effect, while in 18 cases output effects are negative. Overall, these results indicate that all types of public investments are growth stimulating through both crowding‐in and labour absorption effects.Policy ImplicationsThe overwhelming results illuminate that public investment had attracted private investment in Pakistan in the past and therefore to attract private investment in future, the government of Pakistan should increase public investment. This lesson can also be substantiated from the experience of several developing countries, particularly India. In India, the last 20 years have seen very high public investment despite high fiscal deficit, which has led to very high economic growth.

Mexico Needs a Fiscal Twist

Mexico’s fiscal response to the pandemic has been modest compared to its peers, reflecting the authorities’ desire to not issue new debt for spending. This approach, however, risks a more severe recession and a weaker economic recovery, with further costs in the future. Balancing the need for stronger near-term fiscal support for the people and the recovery against medium-term discipline, this paper lays out an alternative strategy. We show that credibly announcing a pro-growth and inclusive medium-term fiscal reform upfront—including increased tax capacity, higher public investment and strengthened social safety nets—would open space for larger short-term support and close medium-term fiscal gaps. Model simulations suggest that this package would boost output, limit lasting economic damage from the pandemic, and put debt trajectory on a declining path in the medium term as tax reforms pay off and risk premia decline.

Mexico Needs a Fiscal Twist: Response to COVID-19 and Beyond

Mexico's fiscal response to the pandemic has been modest compared to its peers, reflecting the authorities' desire to not issue new debt for spending. This approach, however, risks a more severe recession and a weaker economic recovery, with further costs in the future. Balancing the need for stronger near-term fiscal support for the people and the recovery against medium-term discipline, this paper lays out an alternative strategy. We show that credibly announcing a pro-growth and inclusive medium-term fiscal reform upfront-including increased tax capacity, higher public investment and strengthened social safety nets-would open space for larger short-term support and close medium-term fiscal gaps. Model simulations suggest that this package would boost output, limit lasting economic damage from the pandemic, and put debt trajectory on a declining path in the medium term as tax reforms pay off and risk premia decline.

Luxembourg: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Luxembourg

This 2018 Article IV Consultation highlights that the economic growth in Luxembourg reached 2.3 percent in 2017, above the European Union average, and was driven by net exports of financial services and private consumption. Growth is projected at 3.5 percent for 2018, with continued strong job creation, and a temporary slowdown in inflation. In 2017, buoyant corporate tax revenues contributed to a fiscal surplus of 1.4 percent of GDP. The full impact of 2016 tax reform, and a continued need for high public investment are expected to result in a small fiscal surplus over the medium-term.

Corruption, Public Investment and Revenue: Evidence from Nigeria

In this study, we present evidence of the effects of corruption on public investment and revenue in Nigeria. We find that corruption distort the entire decision process associated with public investment. The evidence we presented shows that higher corruption increase higher public investment. We could not conclude on the effect corruption has on public revenue in Nigeria due to the insignificant of the coefficient of corruption in our model. In addition, we present evidence of efforts by Nigeria government to tackle corruption over the years. While we accept that achievement in this area had been made, we emphasize the need for more collaborative efforts by all stakeholders to effectively tackle corruption in Nigeria.

Mali

This paper discusses Mali’s Sixth Review Under the Extended Credit Facility Arrangement and Request for Modification of a Performance Criterion. Economic activity in Mali remains robust, aided both by higher public investment and accommodative monetary conditions. Inflation remains subdued, helped by favorable weather conditions and low global inflation. The external position has weakened, reflecting strong domestic demand growth, but is expected to strengthen in the near term as terms of trade improve and demand growth slows down. The near-term outlook remains positive but is subject to downside risks, stemming mainly from the fragile security conditions.

PHP14 - Assessment of Biosimilar Landscape in Korea, Malaysia, Singapore and Taiwan

Biosimilar has attracted tremendous interest and controversy in the past decade. Several mature healthcare markets in Asia Pacific has not only developed regulatory frameworks to approve biosimilar, but also taken initiatives to promote utilisation. This study aims to assess the current biosimilar landscape in Korea, Taiwan, Singapore and Malaysia and explore tactics to drive biosimilar adoption. Secondary research was conducted from January to March 2016 on all available information in the public domain. Biosimilar registration frameworks from Singapore, Korea, Taiwan and Malaysia were first retrieved from respective government sources. In a systematic analysis, each framework’s definition of biosimilar, references and pre/ post submission requirements were assessed. Other associated factors for biosimilars development and utilisation (e.g. government funding, joint-venture, etc.) were identified and evaluated through a second wave of desk research. In a final analysis, all regulatory variants as well as external influencing factors were compared qualitatively against the current the number of biosimilar approved to assess the most critical factor that drive biosimilar development and/or adoption. All in-scope countries have adopted their frameworks from the European Medicines Agency guidelines and were similar in nature. Although clinical trial requirements waiver (Taiwan) and abbreviated license pathway (Singapore) seem to make Taiwan and Singapore an attractive option, very few biosimilars are approved. Korea, on the other hand, is the forerunner in biosimilar development, with 12 biosimilars approved to date (including 5 monoclonal antibodies) given high public attention and government investment on biosimilar research & development cost, regulatory consulting service, marketing strategies and construction of good manufacturing practice facilities. Biosimilar environments are complex and dynamic and creation of biosimilar approval guidelines is insufficient to drive development of biosimilar industry. Strong public awareness and government support will be essential for other Asia markets, including Singapore, Taiwan and Malaysia to further strengthen their biosimilar industry.

Investment scaling up and the role of government

ABSTRACTThis article studies the fiscal and welfare implications of a scaling up of public investment when the government is subject to inefficiencies on the spending and on the tax collection side. In our simulations, the scaling up of public investments results in higher long-run output and consumption levels but requires a fiscal stabilization package in order to preserve fiscal sustainability. The effects on consumers’ welfare after the fiscal adjustment are nontrivial. Our welfare analysis shows that consumers’ welfare is increased when the government smooths the fiscal adjustment via higher borrowing and not through an increase in taxation. Moreover, the comparison between several stabilization packages via tax adjustment shows that higher welfare is achieved when the government relies mostly on taxation of capital as this allows higher levels of consumption. Lower fiscal costs that do not undermine fiscal sustainability can however be achieved if the government manages to reduce inefficiency in tax collection. Finally, we consider a change in the trade regime that causes a decline in revenues. We find that the higher fiscal burden required to preserve fiscal sustainability would completely wipe out the welfare gain of higher public investments.

Republic of Croatia: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Croatia

This paper discusses the economic developments, outlook, risk, and policies of Croatia. This East European country has begun since the last quarter of 2014 to gradually recover from a six-year recession. In 2015 real GDP grew by 1.6 percent, driven by strong exports and tourism, a revival of private consumption, and higher public investment. Consumer prices have largely been declining over the past two years, mainly due to lower energy and food prices. Unemployment declined only slightly since 2014 and remains very high. However, absent concrete measures to underpin some of the planned reforms, slightly higher deficit in 2016 and a slower pace of consolidation over the medium term are projected.

Harnessing Resource Wealth for Inclusive Growth in Fragile States

Like other fragile sub-Saharan African countries, Cote d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a general equilibrium setting. First, it assesses the macro-fiscal implications of alternative fiscal rules for public investment, and, second, it explicitly accounts for redistribution through direct cash transfers. Results show that a sustainable non-resource deficit target is robust to the high uncertainty of resources output and prices, while delivering growth benefits through higher public investment. The scaling-up magnitudes, however, depend on the size of projected resource revenue and absorptive capacity. Adding a social transfer raises private consumption, suggesting that a fraction of the resource revenue could be used to expand safety nets.

Harnessing Resource Wealth for Inclusive Growth in Fragile States

Like other fragile sub-Saharan African countries, Cote d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a general equilibrium setting. First, it assesses the macro-fiscal implications of alternative fiscal rules for public investment, and, second, it explicitly accounts for redistribution through direct cash transfers. Results show that a sustainable non-resource deficit target is robust to the high uncertainty of resources output and prices, while delivering growth benefits through higher public investment. The scaling-up magnitudes, however, depend on the size of projected resource revenue and absorptive capacity. Adding a social transfer raises private consumption, suggesting that a fraction of the resource revenue could be used to expand safety nets.

Income, saving, investment, and consumption pattern of farm households in Karnaldistrict of Haryana

The findings of the study revealed that on an average, the operational holding was 3.34 ha which varies between 1.40 ha to 7.24 ha on small and large category of farms and land rent was found to be `75916 per hectare. The leased in land was higher on large farms (1.23 ha), followed by medium (0.37 ha) and small category of farms (0.06 ha). More than seventy per cent farmers highlighted that lower income and savings, lower access to institutional credit and inadequate loan, higher cost of new machinery, lower output prices of agricultural crops, higher prices of inputs, higher rate of interest, higher family consumption expenditures, higher cost of education and small size of holding hindered the capital formation on farms. Hence, there is a need to encourage the investment on farms through liberal financing at lower rate of interest and making higher public investment on agricultural infrastructure development. The investment on productive farm assets was having positively significant relationship with income earnings and size of operational holding, while, non-significant with literacy and age of the respondent.

Public Investment as an Engine of Growth

This paper looks at the empirical record whether big infrastructure and public capital drives have succeeded in accelerating economic growth in low-income countries. It looks at big long-lasting drives in public capital spending, as these were arguably clear and exogenous policy decisions. On average the evidence shows only a weak positive association between investment spending and growth and only in the same year, as lagged impacts are not significant. Furthermore, there is little evidence of long term positive impacts. Some individual countries may be exceptions to this general result, as for example Ethiopia in recent years, as high public investment has coincided with high GDP growth, but it is probably too early to draw definitive conclusions. The fact that the positive association is largely instantaneous argues for the importance of either reverse causality, as capital spending tends to be cut in slumps and increased in booms, or Keynesian demand effects, as spending boosts output in the short run. It argues against the importance of long term productivity effects, as these are triggered by the completed investments (which take several years) and not by the mere spending on the investments. In fact a slump in growth rather than a boom has followed many public capital drives of the past. Case studies indicate that public investment drives tend eventually to be financed by borrowing and have been plagued by poor analytics at the time investment projects were chosen, incentive problems and interest-group-infested investment choices. These observations suggest that the current public investment drives will be more likely to succeed if governments do not behave as in the past, and instead take analytical issues seriously and safeguard their decision process against interests that distort public investment decisions.

Surging Investment and Declining Aid: Evaluating Debt Sustainability in Rwanda

Rwanda is a unique case among its Sub-Saharan African peers in that it has already undergone a large scaling-up of public investment. The Rwandan government has made clear its desire to lower its reliance on foreign aid while still maintaining high public investment levels. We use the model of public investment, growth, and debt sustainability in Buffie et al. (2012) to evaluate the macroeconomic consequences of a possible scaling-down of investment in Rwanda. Using the model, we can gauge the consequences of different financing mechanisms and investment efficiency levels on the economy. We find that with some commercial borrowing and a modest tax adjustment, the authorities may be able to retain their high investment spending while still reducing their reliance on foreign aid.

Surging Investment and Declining Aid: Evaluating Debt Sustainability in Rwanda

Rwanda is a unique case among its Sub-Saharan African peers in that it has already undergone a large scaling-up of public investment. The Rwandan government has made clear its desire to lower its reliance on foreign aid while still maintaining high public investment levels. We use the model of public investment, growth, and debt sustainability in Buffie et al. (2012) to evaluate the macroeconomic consequences of a possible scaling-down of investment in Rwanda. Using the model, we can gauge the consequences of different financing mechanisms and investment efficiency levels on the economy. We find that with some commercial borrowing and a modest tax adjustment, the authorities may be able to retain their high investment spending while still reducing their reliance on foreign aid.