Long-run Economic Growth Research Articles

The Long-term Economic Growth Impact of Chinese Investment in Africa

Africa and China have always been a community of destiny, with close ties and similar historical backgrounds. However, investigating whether the Chinese investment benefits the sustainable economic growth for Africa is valid. The gist of this essay is to look at the impacts of the Chinese investment on Africas economic growth. Through analysing the structure of Chinese investment, the constraints to Africas growth, the impacts caused by Chinese investment, and their effectiveness of them. The Solow Model is an exogenous doctorial model that is recognized by the public and also focuses on long-term economic growth. The essay will apply the Solow Model to realistic situations and use it to prove the effects that Chinese investment brought by using derivatives such as capital, investment, labor force, technology, and output. The properties of the Solow Model will also be involved. The research result is that Chinese investment has indeed helped Africas sustainable economic growth and it also fits the properties of the Solow Model. Meanwhile, there are some constraints and lack of effectiveness along with the benefits. So the essay concludes that even though the Chinese investment benefited the long-run economic growth of Africa, the African governments still need to increase their interventions in the market such as introducing policies that can control the dependency on Chinese leadership. And it is also important for Africa to maintain the ability to think independently and have its agendas.

Oil Price and Long-run Economic Growth in Oil-importing Developing Countries

The recent spikes in oil prices are a significant setback for the world economy, which has already faced multiple challenges due to the COVID-19 pandemic. This is particularly concerning for developing countries as maintaining a sustained growth in real GDP is crucial for lifting their population out of poverty. While the short-run negative macroeconomic effects of a spike in oil prices are well established in the context of the developed world, the long-run growth effect has received little attention, especially in developing countries. Using the World Bank's development indicators database covering the period 1990 to 2020, this study aims to investigate the oil price-growth nexus in low and middle-income net oil-importing countries to shed light on how oil price increases could be a challenge for sustainable development. Specifically, we first set up a theoretical model to establish the relationship between growth in output per capita and oil price. Following the traditional growth regression approaches, we empirically estimate the causal effect of growth in oil prices on the economic growth of 65 net oil-importing developing countries using fixed effect panel IV regression methods. The empirical results confirm statistically significant negative effects of oil prices, indicating that a higher oil price reduces long-run economic growth in oil-importing developing countries. Our results on the other determinants of growth are consistent with the existing empirical growth literature. Oil-importing developing countries, therefore, must allocate resources towards alternative domestic energy sources, in addition to pursuing fuel efficiency and conservation strategies, to mitigate the negative effects of oil price fluctuations on their long-run economic output and uphold sustainable development.

The Macroeconomic Impact of Crude Oil Price Fluctuations in Nigeria

The main objective of the study was to determine the way fluctuations in the price of crude oil affected macroeconomic variables in Nigeria from 2000 Q1 to 2022 Q4. The data was analysed in the paper using Structural Vector Autoregressive (SVAR) models. According to the findings, Nigeria's current economic growth has been significantly impacted by lag GDP values. This indicates that economic growth in Nigeria was significantly impacted by one-period lag GDP by 3,791.7 units in the short-run and 7,430.4 units in the long-run. Also in the short-run, the current broad money supply was significantly impacted by both the one-period lag general price level (0.445 units) and the one-quarter lag broad money supply (757.7 units). According to the crude oil price fluctuation model, current crude oil price variations in Nigeria are significantly influenced by one-period lags in general price level (-64.9 units), crude oil price fluctuation (1,114.6 units), and fiscal budget deficits (0.65 units). All of the one-period lagged coefficients of macroeconomic variables, including real GDP, broad money supply, interest rates, general price level, inflation rates, and fiscal budget deficits, had a significant impact on current economic growth and broad money supply, respectively, as demonstrated by the long-run economic growth and broad money supply models. The real GDP's impulse response to fluctuations in crude oil prices fell during the first period, peaked during the second, and then increased to show a positive trend during the third. This study came to the conclusion that shocks or fluctuations in the price of crude oil are the main cause of macroeconomic policy instability in Nigeria. The study recommended that the government should control foreign exchange rate regimes, pursue expansionary monetary policy, general price level control and stabilisation measures.

Long-run economic growth despite population decline

When economic growth is driven by the discovery of new ideas and physical labor is the input in ideas production, population decline inevitably leads to the stagnation of living standards. Here, I reconsider the problem of declining population when ideas are produced by an educated workforce and show that steady positive growth of ideas and income is a plausible outcome. The reason is that the accumulation of human capital offsets the negative effects of population growth. In a general equilibrium model with diminishing returns to education, I show that households generate the constant education effort needed to sustain high economic growth.

Government Expenditure on Education, Educational Index, and Economic Growth in Nepal: An ARDL-ECM Approach

Education is a key priority in economic development, significantly impacting growth and society through its role in enhancing human capital and advancing technological knowledge. Government spending on education is crucial for providing equitable access to quality education and is widely believed to stimulate economic growth. This study examines the relationship between education, government expenditure on education, and economic growth in Nepal from 1990 to 2022, using the Autoregressive Distributed Lag (ARDL) model and the Error Correction Model (ECM) to assess long-run and short-run impacts. The findings reveal that the educational index, gross capital formation, and population have a positive and significant impact on economic growth. In contrast, government expenditure on education, domestic credit to the private sector, and trade openness have negative and insignificant effects on long-run economic growth. Additionally, the educational index shows a negative and significant impact on economic growth in the short run. The study’s policy recommendations emphasize the need to increase government spending on education, implement effective mechanisms for spending, and enhance credit availability and trade openness to boost economic growth.

The Impact of Financial Inclusion and Stability on Economic Growth in African Countries

This study investigates the effect of financial inclusion and financial stability on economic growth in a panel study of 30 African countries over the period between 2004 and 2020. Data were analyzed using the panel ARDL model. The panel ARDL estimation results demonstrate that financial inclusion has a statistically significant positive long-term effect on economic growth, though its short-term impact is insignificant. The study also found that the effects of financial inclusion on economic growth vary across different income levels. Specifically, there is a positive association in low-income countries, a negative association in lower-middle-income countries, and a positive but insignificant effect in upper-middle-income countries. On the other hand, the financial stability measured by the bank Z-score has a significant negative impact on long-run economic growth and a positive one in the short run. The effect is negative for low-income countries, positive for lower-middle-income countries, and negative but insignificant for upper-middle-income countries. Thus, the study findings suggest financial inclusion and financial stability policies should be tailored to the country's income level in African countries.

Human capital composition and long-run economic growth

This study examines the impact of human capital composition on technological progress and its role in influencing the transition from stagnation to growth and the persistent income disparities across the globe. It posits that the trade-off between higher and lower education within an economy results in a trade-off between innovation and technology adoption. While highly educated individuals drive technological innovation, a workforce without adequate education can hinder technology adoption, thereby delaying the transition from stagnation to growth. Moreover, technology adoption complements technological progress especially in the modern era, when innovations are more challenging to adopt, thereby enhancing economic growth. This study provides empirical evidence to support the theoretical predictions. Overall, the findings form the basis for future studies on the critical role of human capital composition in economic development and offer novel insights for shaping education reforms at different stages of development.

Evaluating the Kuznets curve relationship between economic growth and child labor in an emerging economy

PurposeThis study aims to test the Kuznets curve between economic growth and child labor, along with the influence of exports, household size and rural population in the context of Pakistan.Design/methodology/approachTo achieve the research objective, this study applied the unit root test, bound co-integration test, and autoregressive distributive lags (ARDL) method for the period of 1972–2021.FindingsThe findings show an inverted U-shaped relationship between economic growth and child labor indicating that at the beginning stage of economic development, child labor increases due to lower per capita household and subsequently, in the long-run of economic development, child labor decreases due to the higher per capita households. Moreover, the results also show that exports, household size and rural population have a positive influence on increasing child labor.Research limitations/implicationsThe policymakers and government of Pakistan need to focus on long-term economic growth policies, ensure free quality education and cheap equipment which practices minimum manpower to reduce the threat of child labor.Social implicationsHaving long-run economic growth, the government of Pakistan need to equally benefit the households and the poor population to reduce child labor and enhance the social welfare of society.Originality/valueTo the best of the authors’ knowledge, this is the first study that investigates the Kuznets curve relationship between economic growth and child labor in the context of Pakistan. Moreover, this study contributes to the reduction in child labor through long-term economic growth in the context of Pakistan.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2023-0387

Revisiting openness-growth nexus: Panel data estimates for selected developing Asian countries

Trade openness is viewed as a way for Asian countries to progress economically and socially. Therefore, determining how trade affects economic growth is crucial for society, particularly for emerging economies. This paper provides empirical evidence on the issue of how openness to trade affects economic growth. A sample of 22 selected Asian countries has been taken as a balanced panel. To carry out the analysis, Auto Regressive Distributive Lag Model (ARDL) on annual data from 1990 to 2020 is used. To select between Pooled Mean Group (PMG) Mean Group (MG) and Dynamic Fixed Effect (DFE) estimators of ARDL, the Hausman test is used. PMG turns out as a better estimator. PMG estimation confirms that trade openness and economic growth exhibit a positive and statistically significant relation in the long run, however, short-run results lack significance. The study concluded with the recommendation that policymakers should adopt and implement an optimal trade policy. The optimal trade policy suggests the sample countries be more open to trade because it may result in higher long-run economic growth.

Sources of long-run economic growth: Algeria versus south Korea 1990-2018

Sources of long-run economic growth: Algeria versus south Korea 1990-2018

Population ageing and household risk aversion

ABSTRACT This note provides an empirical analysis on how the worldwide trend of population ageing affects household’s risk preferences and financial behaviours such as investing decisions. Using Chinese household survey data, we study how household’s risk attitudes are affected by the relative number of elderly people (age ≥ 65 ) in the family. The main empirical finding is that the rise of the relative number of aged people in the household significantly increases the conditional probability of the household’s being risk averse. When there are more aged people in the household, the household is more likely to be against any form of risks when making investments and prefer risk-free asset. We also find that the increase of the relative number of aged people in the family has a larger marginal effect on the household risk preference when the society is in transit from a younger age structure to an older one. Since household risk preferences have impacts over many economic variables, such as consumption, asset returns and long-run economic growth, our findings provide a new perspective on the potential mechanism through which population ageing affects the economy.

Relationship between Energy and Economic Growth: Evidence from a Panel Nonlinear ARDL Model

In this article, we study the heterogeneous relationship among energy consumption and economic growth by incorporation gross fixed capital formation, foreign direct investment, international trade and finance development as control variables in a selected sample of 11 countries of the Middle East and North Africa over the period 1980-2020 using a panel nonlinear autoregressive distributed lag model. Empirical results show the presence of an asymmetric long run relationship between energy consumption and economic growth in the group of countries. The Pooled Mean Group estimates indicate that positive and negative changes in energy consumption have positive and significant effects on output growth in the long term, whereas both Mean Group and Difference Fixed Effect estimates report that only negative changes in energy consumption have positive and significant effect on long-term economic growth in the selected sample of countries. In addition, the short run individual effects of energy use on economic growth are positive and significant for only three countries (Jordan, Saudi Arabia, and Tunisia). These results are very important for the design of energy policies and sustainable economic growth. Energy-saving policies are suitable for long-run economic growth for the entire sample, while they are only suitable for eight countries out of eleven in the short-run.

Hate Crime and Human Capital

This paper examines the impact of hate crimes committed by White offenders on the educational attainment of Black individuals across United States commuting zones between 1990 and 2017. Using data on reported hate crimes from the Federal Bureau of Investigation Uniform Crime Reporting Program and data on educational attainment from the decennial Census and American Community Survey, we show an increase in per-capita hate crime in a commuting zone has a statistically significant and economically meaningful negative impact on college completion for young Black individuals residing in that commuting zone. A 10% increase in per-capita hate crime committed by White offenders reduces the proportion of Black individuals aged 21 to 30 with four or more years of college between 0.12 and 0.23 percentage points, a 1% to 2% reduction relative to the sample mean. In contrast, hate crime committed by White offenders has no negative impact on educational attainment for White individuals. Our results are robust to adjusting for geographic heterogeneity in hate crime reporting, including systematic under-reporting of hate crimes in the Southern United States. The findings in this paper add to the growing body of evidence establishing a negative effect of racial violence on long-run economic growth.

Convergence and Middle-Income Trap between Asian Country Members: New Findings

This paper investigates the possibility of middle-income convergence among seven members of Southeast Asian nations (Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, and Vietnam), with Malaysia being in upper-middle-income rank and other six countries in lower-middle-income rank. We apply unit root testing framework that allows for smooth nonlinearity, abrupt break, and cross-dependence in the income differences. Results show that these lower-middle-income countries are likely to converge among themselves and converge to the income level of Malaysia in the long run. Based on Add Asian cross-country policy recommendations, Economic policies capable of stimulating long-run economic growth of these lower-middle-income countries is therefore recommended, and the countries should be ready to take up the challenge of upper-income country, like Malaysia.

Demographic Aging and Long-Run Economic Growth in Germany

Demographic Aging and Long-Run Economic Growth in Germany

Is the Influence of International Oil Price Changes on Economic Growth Significant in India?

The changes in the price of oil by creating supply-side shocks, inflation risks, and exchange rate risks, generate havoc in the development process of oil-importing countries like India. In this perspective, this study examined the degree and direction of connection among the price of oil and economic growth in India while controlling for the influences of exchange rate, real interest rate, rate of inflation, net inflows of foreign direct investment, and trade openness. The work uses the auto-regressive distributed lag bounds test approach and provides evidence in support of the negative effect of oil price changes on the long-run growth of the Indian economy when net inflows of foreign direct investment and foreign exchange rate exert statistically significant negative effects on this relationship. However, trade openness has a statistically significant positive effect. It is further observed that this long-run relationship has a convergence tendency towards the equilibrium value through short-run adjustments, thereby making the estimated relationship stable. The implication is that international oil price fluctuations can be used to predict the country's long-run economic growth. Besides, a policy effort is required to promote alternative energy consumption at home to keep oil demand under control. Furthermore, trade policies are required to be revisited to boost exports by the country to accommodate the negative effects of increases in the price of oil at the international level on economic growth.

Credit, Land Speculation, and Long-Run Economic Growth

Credit, Land Speculation, and Long-Run Economic Growth

Does technology have a lead or lag role in economic growth? The case of selected resource-rich and resource-scarce countries

This paper's main aim is to analyse the linkage between technology and Long-Run (LR) Economic Growth (EG) in the context of selected countries with and without abundant natural resources, considering a balanced panel dataset from 1994 to 2019. We find the existence of cross-sectional dependence across the total and split samples of resource-rich and resource-scarce countries. Given the high persistence of cross-sectional dependence, we apply the second-generation Durbin-Hausman cointegration test and find that the variables from the proposed models across samples indicate cointegrated relationships in the LR. We use the second-generation dynamically improvised Cross-Sectional Distributed Lag (CS-DL) method for the LR estimations. We reveal that there is a significant growth dynamics heterogeneity between and within resource-rich and resource-scarce cohorts. Countries within each cohort have been progressing regarding the technological impact in the LR EG due to their respective development stages, behavioural patterns, and group-specific economic structural aspects. However, we find evidence of the resource curse symptom between sub-cohorts since the impact of technology on LR EG is greater in sub-cohorts that have limited resources. We also provide a few useful recommendations, such as improving human capital for better adaption of technology and institutional reforms in resource-rich countries.

An Empirical Study on Developing the Tourism Potentials of Fairs and Festivals in Odisha in India

Numerous studies on the appeal of tourist sites have been done. However, little study has been conducted on festival attractiveness and its effect on place attachment. This study adopted a mixed-methods strategy to examine the festivals in Odisha. Travel and tourism have become essential economic activities throughout the world in this globalization market. Festivals have recently grown in number, variety, and popularity, making them one of the strongest parts of the tourism industry. During tourism activities, tourists pay close attention to how attractive something is. The festival’s appeal is one of the most important things that determines whether or not a tourist will go and take part in activities. Also, the appeal of a festival can makes tourists more likely to come back, which is the key to the success of festival activities. This paper sought to determine the role of tourism as a long-run economic growth mechanism in Odisha. The Government of Odisha promotes tourism, but the focus remains on the golden triangle, which includes Puri, Konark, and Bhubaneswar. Without a doubt, these locations are well-equipped to meet the needs of both domestic and foreign tourists. Other beautiful places in Odisha still are largely unknown to tourists. In this paper, we try to demonstrate the overall importance of various fairs and festivals for the development of tourism and relate the significance of fairs and festivals.

Türkiye'de Yapısal Değişim, Ticari Açıklık, Yenilenebilir Enerji ve Ekonomik Büyüme Bağlantısı, 1970-2020

Purpose: This paper aims to investigate the effects of structural change, trade openness, and renewable energy on economic growth in Türkiye. 
 Design/Methodology: Structural change is defined as the shift of resources from the agricultural sector to the industrial sector and then to the services sector. In the structural change process, it is accepted that the manufacturing industry is the engine of growth. However, since the mid-1970s, especially in the post-1980 period, the manufacturing industry has lost its importance. In addition, trade liberalisation and energy policies came to the fore in this process. In this context, this paper analyses the determinants of economic growth within the framework of the structuralist approach. For this, we apply the ARDL bounds test approach and apply FMOLS, DOLS, and CCR for robustness check.
 Findings: According to the ARDL bounds test results, the manufacturing industry, renewable energy, and trade openness affect economic growth positively; however, the coefficient of renewable energy is statistically insignificant. The results of the robustness check (FMOLS, DOLS, and CCR) also confirm these findings. The effect of the manufacturing industry on economic growth is greater than that of other variables.
 Limitations: To analyse the impact of structural change on economic growth in the Türkiye, the study is limited to the period 1970-2020.
 Originality/Value: The originality of our paper is that it analyses the impact of structural transformation (such as the manufacturing industry, trade openness, and renewable energy) on long-run economic growth in Türkiye.