Long-term Growth Rate Research Articles

Growth through export: evidence from Iran’s manufacturing plants

PurposeDoes the long-term growth rate of a firm increase by exporting? If yes, how large is that increase in a developing economy? The paper aims to discuss this issue.Design/methodology/approachThe authors incorporate data from the manufacturing plants in Iran as a developing economy for 2003–2011 to address this question. Using fixed effect panel and propensity score matching method, the authors examine whether exportation can affect a firm’s growth rate to test for the learning to grow hypothesis.FindingsThe findings document that: not only the exporters are larger and more productive than non-exporters, but they also grow faster in size and productivity measures as well. Additionally, the authors find that the rise in the growth rate is a short-term phenomenon and it disappears in the second year; meaning that exportation does not have a permanent growth effect. The findings are consistent with a spot effect of learning, compared to a permanent growth engine. Results are robust to different analysis tests.Originality/valueThe authors investigate the learning effect of exporting within recently released firm-level data of a developing country.

How market intervention can prevent bubbles and crashes

Using an agent-based model (ABM) with fundamentalists and chartists, prone to develop bubbles and crashes, we demonstrate the usefulness of direct market intervention by a policy maker, documenting strong performance in preventing bubbles and drawdowns and augmenting significantly the welfare of all investors. In our ABM, the policy maker diagnoses burgeoning bubbles by forming an expectation of the future return of the risky asset in the form of an exponential moving average of the excess return over the long-term return. The policy maker invests in the risky asset when he detects a small deviation of the return from the long-term growth rate in order to construct an inventory that he draws upon later to fight future market exuberance. Then, when this deviation between the current growth rate and the long-term growth rate exceeds the policy maker's tolerance level, he starts to sell the risky asset that he has accumulated earlier, in a countercyclical fight against future price increase. We find that the policy maker succeeds in preventing bubbles and crashes in our ABM. In simulations without bubbles, the policy maker behaves similarly to the fundamentalists and his impact is negligible, following the principle of Primum non nocere. In simulations where bubbles form spontaneously as a result of the noise traders's strategies, the policy maker's intervention reduces the average drawdown by a factor of two when his market impact becomes significant. We find that the policy maker intervention improves all analysed metrics of market returns, including volatility, skewness, kurtosis and VaR, making the market less turbulent and more stable. The combination of fewer bubbles and crashes, lower market risks and the stability of the long-term growth rate make the policy maker intervention to improve the welfare of all investors as measured by their risk-adjusted return, increasing the Sharpe ratios from approximately 0.3 to 0.5 for noise traders, from 0.6 to 0.8 for fundamentalists as the market impact of the policy maker increases to the level of the fundamentalists. We also test the sensitivity of these results to variations of the key parameters of the strategy of the policy maker and find very robust outcomes. In particular, the conclusions are unchanged even under very large miscalibrated long-term expected returns of the risky asset.

Sustainable development in the face of new strategic challenges

The study attempts to assess the economic potential of a large industrial region, the Sverdlovsk Region, as the basis for sustainable development in the new economic realities generated by the global pandemic of 2020 associated with the COVID-19 threats. As a hypothesis of the study, the assumption is considered that the sustainable development of the regional economy in the new conditions is ensured by the accumulated economic potential in the context of the coronary crisis trigger of contradictions. The aim of the study is to study and assess the economic potential of the Sverdlovsk region, the dynamics of its development in the face of new strategic challenges. To assess and predict the economic potential that ensures the sustainable development of the region in the context of the coronavirus-related trigger of contradictions, a study was carried out of relevant scientific publications by leading scientists in this field for 2019-20. The economic potential of the Sverdlovsk region was determined, calculated on the basis of a mathematical model, using statistical data on the following indicators: gross regional product per capita in thousand rubles; average life expectancy of the population in the region; the number of hospital beds and schools per 10 thousand population; the percentage of innovative products in the total volume of the region. Based on the data obtained, an econometric model according to Altman was developed to analyze and forecast the economic potential of the Sverdlovsk region. The calculated, accumulated economic potential undoubtedly provides opportunities for sustainable development even in the face of coronary crisis challenges of the economy. At the same time, it is very important to ensure an increase in the long-term structural rates of economic growth.

Housing, Distribution and Welfare

Housing is a long-lived asset whose value is sensitive to variations in long-term growth and interest rates. When a large fraction of the population is leveraged, housing price fluctuations cause large-scale redistribution and consumption volatility. We find that a practical way to insure the young and the poor from the housing cycle is through a well-functioning rental market. In practice, home-ownership subsidies keep the rental market small and the housing cycle affects aggregate consumption. Removing home-ownership subsidies hurts older home-owners, while leverage limits hurt younger home-owners.

Socially Conscious Investors: Mitigating Stock Market Losses During Pandemic Times

Recent years have witnessed a surge in investors with a socially responsible investment mandate. We study stock returns associated with this practice in the COVID-19 crash and the surrounding months. Stocks with greater socially responsible investor demand experience superior returns, lower volatility, and better market valuations during the crash. These effects largely disappear post-crash. No differences are found with respect to sales, gross profitability, and operating income as well as expectations about the long-term growth rate of earnings per share. This suggests that socially responsible investors can act as a moderating force by mitigating losses in a time of crisis.

The Easterlin Paradox

The Easterlin Paradox states that at a point in time happiness varies directly with income, both among and within nations, but over time the long-term growth rates of happiness and income are not significantly related. The principal reason for the contradiction is social comparison. At a point in time those with higher income are happier because they are comparing their income to that of others who are less fortunate, and conversely for those with lower income. Over time, however, as incomes rise throughout the population, the incomes of one's comparison group rise along with one's own income and vitiates the otherwise positive effect of own-income growth on happiness. Critics of the Paradox mistakenly present the positive relation of happiness to income in cross-section data or in short-term time fluctuations as contradicting the nil relation of long-term trends.

Crescimento econômico com restrição externa: uma análise da Lei de Thirwall para os períodos FHC e Lula

Este artigo buscou avaliar os períodos dos governos FHC e Lula, bem como o período completo de 1995 a 2010, com objetivo de investigar em que medida o Brasil teve seu potencial de crescimento econômico limitado por restrições no balanço de pagamentos e quais diferenças observáveis entre os períodos. Para a análise empírica, adotou-se o procedimento econométrico de cointegração, empregado para estimativas de elasticidades-preço e renda da demanda por importação dos períodos, tendo como resultado um relaxamento na restrição externa no período Lula comparativamente ao governo FHC. Os resultados indicam que embora as restrições externas tenham reduzido durante o governo Lula em relação ao governo FHC, há evidências de que continuaram desempenhando papel relevante sobre a taxa de crescimento de longo prazo do Brasil.

The impact of climate damage function on the social cost of carbon and economic growth rate

This paper analyzes the impact of climate damage function on the social cost of carbon (SCC) and the economic growth rate. In a two-sector economic model with endogenous growth, we construct a 7-dimensional nonlinear system and then linearize the nonlinear system to derive the expression of the SCC containing the damage function. We find that the selected damage function has significant impacts when we calculate the SCC. In our model, the long run SCC per unit of output is the discount flow of the damage function caused by temperature rise and it is also affected by temperature adjustment rate and some other parameters. The specific form of damage function directly affects the social evaluation of the externality of pollution. The concavity of the SCC in the time path depends on second derivative of the damage function in infinite time. Higher-order damage function increase the SCC. We find that when the society is in an optimal state, the long-term economic growth rate can still be guaranteed to be positive when the convex damage function is chosen. The key of mitigation and adaptation strategies is the development of effective climate policies. Thus, as global recommendations for mitigation and adaptation strategies, we recommendation policy makers to use a highly convex damage function to calculate the SCC. We suggest policy makers consider carbon tax policies based on SCC. This makes the economic view of pollution closer to the mitigation target of climate policy-makers.

Growth responses of branching versus massive corals to ocean warming on the Great Barrier Reef, Australia

As oceans continue to warm under climate change, understanding the differential growth responses of corals is increasingly important. Scleractinian corals exhibit a broad range of life-history strategies, yet few studies have explored interspecific variation in long-term growth rates under a changing climate. Here we studied growth records of two coral species with different growth forms, namely branching Isopora palifera and massive Porites spp. at an offshore reef (Myrmidon Reef) of the central Great Barrier Reef (GBR), Australia. Skeletal growth chronologies were constructed using a combination of X-radiographs, gamma densitometry, and trace element (Sr/Ca) analysis. General additive mixed-effect models (GAMMs) revealed that skeletal density of I. palifera declined linearly and significantly at a rate of 1.2% yr−1 between 2002 and 2012. Calcification was stable between 2002 and 2009, yet declined significantly at a rate of 12% yr−1 between 2009 and 2012 following anomalously high sea surface temperatures (SST). Skeletal density of massive Porites exhibited a significant non-linear response over the 11-year study period (2002−2012) in that density was temporarily reduced during the 2009–2010 anomalously hot years, while linear extension and calcification showed no significant trends. Linear extension, density and calcification rates of I. palifera increased to maximum growth of 26.7–26.9 °C, beyond which they declined. In contrast, calcification and linear extension of Porites exhibited no response to SST, but exhibited a significant linear decline in skeletal density with increasing SST. Our results reveal significant differences in coral growth patterns among coral growth forms, and highlight both the resistant nature of massive Porites and sensitivity of branching I. palifera. Future research should target a broad range of coral taxa within similar environments to provide a community-level response of ocean warming on coral reef communities.

Valuation and Long-Term Growth Expectations

A standard DCF corporate valuation usually includes a terminal value based on a long-term growth rate to reflect value from beyond the typical forecasting horizon of three to seven years. Despite often having a dominant effect on overall firm value, both the academic literature and practitioner conventions provide very little guidance on how this long-term growth rate should be determined. This paper addresses this gap: we undertake an exploratory analysis of how firms’ long-term growth is related to various firm and industry characteristics. We apply an extensive selection of potential predictors based on firm, industry, and market characteristics, in order to explain the variation in firms’ long-term growth rates. As such, we provide a predicted long-term growth rate for all firms, which can then be used as an input into a DCF valuation. We find that market prices do not seem to capture the full information that we find in long-term growth predictions. Thus, a trading strategy that goes long the decile with the highest long-term growth expectations and short the bottom decile yields positive and statistically significant abnormal returns in the range from ten to thirteen percent per year.

Dynamique des populations d'azobé, Lophira alata Banks ex C. F. Gaertn., et implications pour sa gestion durable au Cameroun

L'impact de l'exploitation forestière sur le renouvellement du stock de bois d'œuvre reste largement méconnu en Afrique centrale du fait du manque de données sur la dynamique des populations d’arbres exploités. C’est en particulier le cas pour l’azobé, Lophira alata, un bois d’œuvre de grande valeur commerciale. L'objectif de cette étude était double : quantifier l'effet du type forestier et de l’exploitation sur la croissance de l’azobé et simuler l'évolution du stock exploitable et du taux de reconstitution après exploitation. Nous avons effectué pendant trois ans un suivi annuel de la croissance et de la mortalité dans trois types forestiers au Cameroun : en forêt sempervirente, en forêt mixte et en forêt semi-caducifoliée. Le recrutement a été étudié uniquement en forêt mixte, sous deux conditions : en milieu exploité et non exploité. Nous avons calibré, avec ces données, un modèle matriciel de Usher. Douze scénarios d’exploitation ont été simulés en faisant varier le diamètre minimum d’exploitation de 60, 70 et 80 cm, et l’intensité de prélèvement des arbres de 100, 80, 60 et 40 %. La croissance de l’azobé est influencée à la fois par le type forestier et l'exploitation. Les arbres de forêt sempervirente ont une croissance plus faible jusqu’à 50 cm de diamètre, alors que la croissance maximale prédite pour ce type forestier est la plus élevée. L'exploitation a par ailleurs stimulé la croissance. Enfin, l’exploitation de l'azobé ne respecte pas le principe du rendement soutenu : ses taux de croissance à long terme varient entre 0,54 et 0,83. Pour garantir la durabilité de son exploitation au Cameroun, une sylviculture dynamisant la croissance des futurs arbres exploitables, ainsi que leur régénération, s’avère indispensable.

Poverty, emergence, boom and affluence: a new classification of economies

The paper offers a new country classification system defined in relative terms and jointly based on the level and the medium–long term rate of growth of per capita income. The classification system identifies four categories of economies: poor (low income–low growth), emerging (low income–high growth), booming (high income–high growth) and affluent (high income–low growth). After classifying 122 countries in periods 1985–1999 and 2000–2014, the paper focuses on the comparison of poor and emerging economies and, in parallel, of emerging and high-income economies, and characterizes their transitions across categories. In line with the empirical literature on economic growth, the results of multinomial logit analysis suggest that higher growth rates of export and investment are the main factors distinguishing emerging from poor economies. Further, a better institutional setting, measured by various dimensions of economic freedom, plays an important role in driving the transition of low income countries from low to high growth. Moreover, along with a better technological advancement, it also represents the crucial attribute differentiating high-income from emerging economies.

Radiocarbon dating of Chinese Ancient Tea Trees

ABSTRACTThe jungles of Linyun and Longlin Autonomous Prefecture, located in the heart of the southwestern Guangxi Zhuang Autonomous Region of China, are home to the oldest tea trees (Camellia sinensis) in the world. In the absence of regular annual rings, radiocarbon (14C) dating is one of the most powerful tools that can assist in the determination of the ages and growth rates of these plants. In this work, cores were extracted from large ancient tea trees in a central Longlin rain forest; extraction of carbon was performed with an automated sample preparation system. The 14C levels in the tree cores were measured using accelerator mass spectrometry (AMS) at the University of Tsukuba. These measurements indicated that contrary to conventional views, the ages of trees in these forests range up to ~700 years, and the growth rate of this species is notably slow, exhibiting a long-term radial growth rate of 0.039±0.006 cm/yr. It was demonstrated that 14C analyses provide accurate determination of ages and growth rates for subtropical wild tea trees.

PRACTICAL APPLICATION OF INCOME CAPITALIZATION METHOD IN BUSINESS VALUATION – SOME HIGHLIGHTS

The paper describes the advantages and disadvantages of the income approach in business valuation, the essence of the method of income capitalization, as well as the peculiarities related to its application. Two main variants of the method are presented, depending on the choice of income to be capitalized. The first option is based on the net cash flow and is mainly applied to the valuation of enterprises with high investment absorption and, respectively, high share of depreciation in total expenses. The second option is based on net profit and is preferred by valuers when valuing low investment absorption firms or holding companies.A practical case study is presented to evaluate a holding company related to the determination of the market value of a minority share package. The cost of equity of the rated entity is determined by the CAPM model modifications for emerging markets. At the end, conclusions have been drawn and some problems have been described that appraisers should pay attention to. The Income Capitalization method has an easy algorithm, but its practical application is not so simple. Both fundamental knowledge and experience, as well as evaluators' attention are required, as a number of factors and circumstances must be taken into account regarding: the choice of income to be capitalized, the choice of variant for valuation methodology, model for determining the cost of equity or the weighted average cost of capital, determining the “small firm risk premium”, determining the normalized income, the long-term rate of income growth, adjustments for minority or majority ownership, adjustments for marketability and others. In this method, the market value of equity (VE) is highly sensitive to the discount rate (the cost of capital), the long-term growth rate and the capitalization rate, respectively. Even small differences in these parameters can lead to a large difference in the value of the estimate. This requires precision and good argumentation on the part of the valuers regarding the pricing of equity, the cost of debt and the long-term average annual growth rate of income.For companies with stable incomes and good prospects for development, this method provides a relatively accurate estimate of the market value of equity. However, it must be borne in mind that the future is always uncertain. In this regard, appraisers should make a sufficiently accurate assessment of the level of business risk and financial risk of the entity being evaluated.

Long-Term Incidence and Growth of Chorioretinal Atrophy in Patients with Polypoidal Choroidal Vasculopathy

Purpose: To investigate the long-term incidence and growth rate of chorioretinal atrophy (CRA) in patients with polypoidal choroidal vasculopathy (PCV) and determine the associated risk factors. Methods: The medical records of 88 patients with unilateral symptomatic PCV who received anti-vascular endothelial growth factor (anti-VEGF) injections with or without photodynamic therapy (PDT) were analyzed retrospectively. Near-infrared fundus imaging and spectral domain optical coherence tomography were used to measure the CRA area and growth rate. Kaplan-Meier survival analysis was performed to estimate the CRA incidence. Logistic and linear regression analyses were used to investigate risk factors (e.g., age, frequency of abnormal OCT findings, PDT history, total injection number, and choroidal thickness) associated with the CRA incidence and growth rate, respectively. Results: The overall CRA incidence was 40.8% at 5 years. The absence of subretinal fluid, the presence of intraretinal fluid, and a thin choroid were significant risk factors for CRA occurrence with a history of PDT. Overall 5-year CRA growth rate was 0.69 mm²/year. Faster CRA growth was significantly related to the presence of subretinal hyperreflective material and thin choroid. PDT history was not significantly related to CRA growth. Conclusions: Thin choroid may be a significant risk factor for long-term development and growth of CRA in eyes with PCV. Intraretinal fluid seems to promote the development of CRA, while subretinal fluid seems to be associated with CRA prevention. The history of PDT was significantly related to the occurrence of CRA, but not to the growth rate of CRA.

Partie I. Coup de frein sur la croissance

Since the Great Recession of 2009, the global economy first went through a rebound phase – in 2010 and 2011 – and then grew at an average annual rate of 3.3% between 2012 and 2017. The acceleration observed in 2017, when global GDP grew by 3.5% due in particular to the late recovery in the euro zone, gave rise to hopes for a more long-term growth rate that would make it possible to absorb the imbalances inherited from the crisis, such as unemployment and the public debt. The slowdown in activity seen in the first half of 2018, with a further deceleration towards year end, heralds a less favourable scenario. Trade tensions, the difficult Brexit negotiations, the slowdown in Chinese growth and the application of new standards in the automotive sector have put the brakes on the momentum for growth, which fell back to 3.3% in 2018. Many cyclical surveys indicate that this trend will continue in early 2019. Some more alarmist indicators, such as the trend in the US yield curve, suggest an increased likelihood of a recession1. Yet, beyond the obvious climate of uncertainty, many factors are still boosting activity and preventing the outbreak of a recessionary spiral. Despite the lack of international coordination, many countries will benefit from expansionary monetary policy and / or fiscal policy. Thus, the European Central Bank and the Bank of England are delaying the normalization of their monetary policy. In the United States, the Federal Reserve’s support for GDP will be reduced, but monetary policy should not become restrictive. On the fiscal policy side, many governments – in the euro zone, the United States and also among the emerging countries – will adopt measures to boost the economy at least for 2019.JEL classification: F01.

Tree-ring analysis for sustainable harvest of Millettia stuhlmannii in Mozambique

Millettia stuhlmannii (Taub.) is a highly desirable timber species throughout its range in southeastern Africa and one of the three most important timber trees in Mozambique where it is intensely harvested. Relatively little is known with regard to the species' long-term radial growth rates, leaving open the question of whether current harvest schemes are sustainable. Tree-ring analysis is a useful method for obtaining accurate estimations of age and growth rate of tropical tree species. This paper presents results of tree-ring analyses of M. stuhlmannii from a large timber concession in the Sofala Province of central Mozambique. The analyses include estimates of: (1) tree age, (2) radial growth dynamics, and (3) the relationship between tree diameter and the percentage of heartwood relative to diameter. Our findings indicate that annual radial growth can be highly variable among and within individual M. stuhlmannii trees at the site. We also find that the relationship between stem diameter and percentage heartwood is significantly positive, suggesting that optimal harvesting diameters for this characteristic can be reliably determined. Given the lack of information on growth history and the potential for unsustainable exploitation, these findings are highly relevant to the sustainable management of this important timber species.

Picea (spruce) growth rate (mm year−1) changes in southwest Yukon (Canada) since the mid 19th century

Analyses of maximum early tree ring growth within a regional curve standardization (RCS) framework were used to construct ring width chronologies in mm year−1 to estimate historical growth rates in southwest Yukon (Canada), without the necessity of correcting for age related changes. The analysis relied on the use of the 11th–50th year growth rings to standardize chronology comparisons. This age range represents the period of peak radial growth for Picea albertiana and P. glauca (white spruces), which are common trees on upland boreal sites in the study area. Of 1,460 available Picea ring series, 1,029 fit the criteria for inclusion in the study and they represented five commonly occurring RCS curve types. When converted to chronologies, all curve types had year-to-year fluctuations in average ring widths (RW11–50), but nine of the 12 RCS types (four types in three study areas) also had long-term growth rate increases of 15–132% between ad 1850 and 2000, based on regression modeling (R/r = 0.54–0.76, p 0.94, n > 100) with conventional tree ring width index values derived from multiple RCS curves. This indicates that the two chronology construction approaches have very similar temporal patterns despite the maximum early growth analysis technique representing ring widths in mm.

The Rate of Return on Real Estate: Long-Run Micro-Level Evidence

Real estate—housing in particular—is a less profitable investment in the long run than previously thought. We hand-collect property-level financial data for the institutional real estate portfolios of four large Oxbridge colleges over the period 1901–1983. Gross income yields initially fluctuate around 5%, but then trend downward (upward) for agricultural and residential (commercial) real estate. Long-term real income growth rates are close to zero for all property types. Our findings imply annualized real total returns, net of costs, ranging from approximately 2.3% for residential to 4.5% for agricultural real estate.

Growth trajectories and ages of main tree species in dry Afromontane forest fragments of northern Ethiopia

Information on long-term growth rates, ages, and survival of dominant tree species is vital to understand forest dynamics. In this study, tree-ring analysis was used to reconstruct lifetime growth patterns and to examine age–diameter relationships of selected tree species from the dry Afromontane forest fragments in northern Ethiopia. Ring width measurements were based on increment core samples and stem discs collected from three tree species (Juniperus procera, Olea europaea subsp. cuspidata, and Podocarpus falcatus). Standard dendrochronological methods were used for data collection and analysis. Overall, across species and sites, significant mean radial growth differences were found. P. falcatus trees showed the highest mean annual radial growth (2.45 mm/year), while O. europaea trees showed slow growth rates, with average annual growth ranging between 1.6 mm in Desa’a and 2.0 mm in Hugumburda. The mean ring width of an individual J. procera tree ranged between 1.8 mm/year (in Desa’a site) and 2.3 mm/year (in Hugumburda site). Many trees of the sampled species exhibited more or less sigmoid growth curves. Age variation is mainly determined by the variation in passage time through the smaller diameter classes (juvenile classes). In general, the results obtained in this study have important implications for understanding growth dynamics of tropical dry Afromontane forests and for planning conservation and restoration activities. This study has to be supported by eco-physiological studies to further understand the responses of these and related main tree species to the varied environmental gradients to better explain the dynamics in relation to emerging environmental changes.