Per-capita Income Growth Research Articles

Multvariate Analysis of Variance of Demograhic Transition:Evidence from Africa

Africa is the second-largest and second most populous continent on earth. The population growth is in excess of 2 percent every year in most countries of Africa. The present paper is concerned with the study of the nature of demographic transition in Africa across the countries. Using five variables of demographic transition and with the help of multivariate analysis of variance (MANOVA), the paper attempts to answer a question whether there is a significant percapita income growth effect on demographic transition across countries of Africa during 1980-85 to 2011 and throws some lights for policy implications for demographic management. The significance of the GDP per capita growth effects on demographic transition is confirmed using MANOVA test statistics.

Growth in a Cross-section of Cities: Location, Increasing Returns or Random Growth?

This article analyses empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we consider a large database of urban, climatological and macroeconomic data from 1,173 US cities observed in 1990 and 2000. The econometric model is robust to the presence of spatial effects. Our analysis shows the existence of increasing returns and two distinct equilibria in per-capita income and population growth. We also find important differences in the structure of productive activity, unemployment rates and geographical location between cities in low-income and high-income regimes.

An Application of Gamma Distribution to the Income Distribution and the Estimation of Potential Food Demand Functions

Poverty and hunger are the central issues against the sustainable development. Today, more than 800 million people are suffering from insufficient nutrition according to FAO (FAO, 2010). However, on the other hand, it is often pointed out that the per capita food production already meets the demand for the per capita food requirement. The above contradictory observation suggests that many people cannot access the food market because of the low income. The availability of electricity and other energy is also the case. Since these issues are mainly caused by the inequity of income distribution, its quantitative analysis is indispensable to evaluate the societal policy towards the sustainable future. However, since the existing indicators such as Gini coefficients do not represent the income distribution explicitly, they fail to assess the effects of social policy for the improvement of purchasing power of poor people. Population of absolute poverty who gets less than 1.25 US dollar per day is also provided by World Bank. This indicator does not show the distribution pattern of middle to high income classes. The authors would thus point out the need for an alternative method. This paper describes an application of Gamma distribution to the income distribution patterns. The parameters are statistically estimated based on the income quintile data provided by World Bank. The results show how the income distribution has changed historically by country. Based on the future income distribution and the simulation results of the author’s crop market model, we evaluate the share of people who cannot afford the major crop. The authors also propose a procedure to estimate the potential food demand function considering the income distribution changes, suggesting that the future demand could be affected by not only the per-capita income growth but the income distribution changes.

A Spatial Analysis of Incomes and Institutional Quality: Evidence from US Metropolitan Areas

We use the Stansel (2013) metropolitan area economic freedom index and 25 conditioning variables to analyze the spatial relationships between institutional quality and economic outcomes across 381 U.S. metropolitan areas. Specifically, we allow for spatial dependence in both the dependent and independent variables and estimate how economic freedom impacts both per-capita income growth and per-capita income levels. We find that while economic freedom and income levels are directly and positively related, increases in economic freedom in one area result in negative indirect effects on income levels in surrounding areas. In addition, we find that economic freedom has an insignificant relationship with economic growth.

Growth, deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries

We examine the relationship between fiscal deficits and per-capita income growth in a panel of 27 European countries, allowing for perceived risks, in terms of fiscal sustainability, associated with additional government spending. Such risks are proxied by the conditional variability of manufacturing production and stock market returns and by the unconditional variability of two survey-based economic-sentiment indicators. To help clarifying how fiscal variables impact on growth and to provide a point of reference for the interpretation of the empirical results a structural growth model is first identified. We find evidence of an asymmetric relationship, in that fiscal deficits give rise to adverse growth effects if they coincide with high uncertainty regarding the prospects of the economy and no significant negative growth effects in the low-uncertainty case.

Why do U.S. states adopt public–private partnership enabling legislation?

Public–private partnerships, or PPPs, have the potential to address a range of urban economic issues. As of late 2012, thirty-two U.S. states and Puerto Rico had enacted legislation enabling the use of PPPs. PPP enabling laws address such issues as the treatment of unsolicited PPP proposals, prior legislative approval of PPP contracts, and the mixing of public and private funds. We utilize 13 key elements of PPP enabling laws to develop an index reflecting the degree to which a state’s law is encouraging or discouraging of private infrastructure investment. We examine why states pass such laws, and why some states pass legislation that is relatively more favorable to private investment. We consider demand side, supply side, and political/institutional drivers of passage. Vehicle registration growth and greater traffic congestion both increase the likelihood of passage, as does political agreement between a state’s executive and legislative branches. Traffic congestion, growth in per-capita income, and the percent of Republicans in the state’s House of Representatives all increase a law’s favorability to private investment. There is little indication that traditional public finance variables, such as federal highway aid, affect the likelihood of passage or the favorability of a state’s PPP enabling law.

Endogenous Growth in an Aging Economy: Evidence and Policy Measures

This paper presents a two-sector overlapping generation (OLG) model to capture the impact of population aging on a regional economy (Illinois) and compares the effectiveness of government policy in an endogenous growth perspective. Comparing the computational results of a one-sector OLG model, where an agent’s productivity is given exogenously, this paper confirms that endogenously determined investment in human capital significantly offsets the negative effects of the aging population on the regional economy. This paper also explores if there is room for the government to weaken and prevent the negative effects of the aging population. This paper examines the effects of two kinds of government transfer systems on the regional economy: money transfer and educational transfer systems. The money transfer, which is redistributed to agents by the government, could be used for an individual’s consumption, saving and educational investment. Educational transfer is made directly to the individual proportional to his or her opportunity cost stemming from educational investment. The results show that the educational transfer system is superior to the money transfer system in the long run in terms of per-capita income growth, aggregate welfare improvements and factor price stabilization. However, the results imply that the implementation of an educational transfer system accompanies trade-offs between economic growth and a more equal distribution of income and wealth.

Impact of Corruption on Per-Capita Income Growth: A Meta-Analysis

Corruption is an indication of weak institutional quality and could have potentially adverse effects on economic growth. To synthesize the empirical findings, we extracted 406 effect estimates from 32 studies, following a peer-reviewed and pre-published systematic review protocol. The evidence base indicates that the partial correlation coefficients for the effect of corruption on per-capita GDP growth are predominantly negative and tend to be significant beyond study selection bias. However, these results from simple precision-effect and funnel-asymmetry tests (PETs and FATs) also indicate that the association is weak (about 0.05-0.10) and may conceal substantial between-study variations. Meta-regression analysis (MRA) accounts for about 29-40 percent of the variations and indicates that the negative association between corruption and per-capita GDP growth is not robust to inclusion of moderating variables reflecting study characteristics. We also report that direct effect of corruption is weaker than indirect effects, adverse effect of corruption in low-income countries is less adverse than mixed-country samples, and journal articles tend to report stronger negative effects.

Do Institutions and Social Cohesion Enhance the Effectiveness of Aid? New Evidence from Africa

Using the Arellano-Bond dynamic panel GMM estimator, this paper explores the effects of aid, institutions, and social cohesion on per-capita income growth in 34 African countries, focusing in particular on the interplay of aid and institutions and the interplay of aid and social cohesion. The empirical results indicate that social cohesion enhances the growth effects of aid but there is a threshold effect, suggesting that aid becomes effective in enhancing growth in countries with higher social cohesion. Surprisingly, the results show that beyond a certain level of improvements in institutional quality, institutions (political rights and civil liberties) reduce the effectiveness of aid. We discuss the implications of these results.

Fiscal Deficit, Macro-Uncertainty, and Growth in Argentina

We analyze the relationship between fiscal deficit, macroeconomic uncertainty and growth for the period 1915-2006, and conclude that the deficit, possibly through the volatility in relative prices it generates, is a significant restriction on per-capita income growth in Argentina.

Structural Change and the Kaldor Facts in a Growth Model with Relative Price Effects and Non-Gorman Preferences

Growth of per-capita income is associated with (i) significant shifts in the sectoral economic structure, (ii) systematic changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic expenditure structure difference between rich and poor households. Ngai and Pissarides (2006) and Acemoglu and Guerrieri (2008) are consistent with observation (i)-(iii) but abstract form non-homotheticities of preferences. However, they cannot replicate the structural change between the U.S. goods and service sector quantitatively. This paper presents a growth model, which reconciles both forces of structural change - relative price and income effects - with balanced growth on the aggregate. The theory is simple and parsimonious and contains an analytical solution. The model can replicate shape and magnitude of the nonbalanced sectoral facts as well as the balanced nature of growth on the aggregate. In a structural estimation, the model’s functional form is exploited to obtain estimates for the relative importance of income and price effects as determinants of the structural change.

Analysis on the disparity in economic growth and consumption between urban sector and rural sector of China: 1978–2008

This paper designs a theoretical model of excess per-capita income growth and brings forward such indices as excess per-capita income, per-capita base consumption and decreasing factor as well as the corresponding measurement methods. It studies from a brand new aspect the disparity between the economic growth in urban sector and rural sector of China in the past 30 years after the reform and opening-up, together with the disparity between the effects of such growth on consumption. The research results show that: At present the problem of the duality of urban and rural sector of China is still serious; the impaired amount of economic growth in urban sector is larger than that in rural sector while the impairing strength in rural sector is higher than that in urban sector; and it is vital to increase the excess per-capita investment in rural sector in order to effectively strengthen consumption related policies. Therefore, promoting urbanization but reasonably controlling the urbanization progress while strengthening the infrastructure construction in rural areas would be the efficient approach to reduce the impairing strength over the economic growth, to build up consumption market, to improve the duality of economy and to realize sustainable development.

Physical and Human Capital Complementarity and Worker Effort Level by Nutritional Level within Labor-Augmenting Solow Type Model

Whether the convergence occurs is one of the important issues in economic growth. Besides occurrence of convergence, another important issue in the theory of economic growth is whether the growth of per-capita income depends on the ratio of physical to human capital (K/H) where human capital is defined by the education and the worker effort level calculated by per capita dietary energy supply (DES). This study provides evidence for imbalance effects of (K/H) on growth rate besides convergence issue in a sample of 36 countries. This dependence causes the change in size of convergence rate where with the conditions on (K/H) ratio, convergence rate increases.

FOREIGN DIRECT INVESTMENT IN POST-REFORM INDIA: LIKELY TO WORK WONDERS FOR REGIONAL DEVELOPMENT?

We make use of a new and detailed database on FDI approvals since the early 1990s to address two major issues related to FDI and regional development in India in the post-reform period. First, we analyze the location choices of foreign investors. The evidence indicates that the concentration of FDI in a few relatively advanced regions may have prevented FDI effects from spreading across the Indian economy. Second, we evaluate whether the link between FDI and economic growth has become stronger in the aftermath of reforms. Various categories of FDI are indeed positively correlated with per-capita income growth across Indian states. However, it is only for the richer states that FDI appears to be associated with higher growth. FDI is thus likely to increase regional income disparity in India. ; We make use of a new and detailed database on FDI approvals since the early 1990s to address two major issues related to FDI and regional development in India in the post-reform period. First, we analyze the location choices of foreign investors. The evidence indicates that the concentration of FDI in a few relatively advanced regions may have prevented FDI effects from spreading across the Indian economy. Second, we evaluate whether the link between FDI and economic growth has become stronger in the aftermath of reforms. Various categories of FDI are indeed positively correlated with per-capita income growth across Indian states. However, it is only for the richer states that FDI appears to be associated with higher growth. FDI is thus likely to increase regional income disparity in India. ; Direktinvestition; Regionale Entwicklung; Standortwahl; Regionale DisparitA¤t; SchA¤tzung; Indien; FDI approvals , sub-categories of FDI , location choice , economic growth , regional divergence;

Snapshots of Chinese Classrooms Illustrate Disparities

JIN SITS in a rural classroom early on a Saturday morning working on math problems with her three-year-old brother asleep on her lap. Her parents work long hours in the farm fields for a low wage. There is no running water, and the family's clay and straw home barely keeps the stench of the outhouse from being noticed. The thought of having the same life as her parents focuses Jin's concentration deeper on her work. As a sixth grader, Jin understands. In a few weeks, she will take a test that will largely determine the course of her life. If she scores poorly, she will be among the approximately 80% of Chinese students who will not be allowed to attend high school, leaving her in the same situation as her parents. Most children who do not attend high school are forced to leave rural areas and travel to large cities to seek employment as construction workers, waiters, or providers of some other service. Some, however, fall into petty crime, and many eventually return home to do farm work. If Jin scores well on the test, she will be able to attend a better junior high that will help her prepare for high school. If she is one of the 20% of those who attend high school, she will need to be in the top 40% of her class to be selected for college. In rural China today, only 0.2% have a college education. (1) Since 1980, China has sustained the highest rate of growth in per-capita income in the world. (2) From 1981 to 2001, the number of poor people living on less than $1 per day was reduced from 634 million to 211 million. The poverty problem, however, has not been solved. With 1.3 billion people, China is more than four times the size of the U.S. About 600 million Chinese live on $2 per day or less, and the country still has almost one-fifth of the poor people in the world. (3) China has more than 200 million students in primary and middle schools and about 80% of those students live in rural areas. Providing facilities and educational services required by the nine-year compulsory education law enacted in 1986 is a goal still to be realized. Premier Wen Jiabao hopes to improve this situation for children living in impoverished rural areas by 2010. (4) In 2005, a delegation of professional educators, mostly from higher education, participated in an educational exchange in China through People to People International. In 1956, former President Dwight Eisenhower founded People to People International to create opportunities for individuals from different nations to interact, one-on-one, and to exchange thoughts and ideas that promote international understanding. (5) The goal of the delegation trip was to engage in a dialogue comparing the U.S. and Chinese education systems. Understanding the complexities faced by the education system in China is impossible by observing only three schools. However, our visit did illustrate some key issues facing Chinese education: poverty, isolation, and diversity. Perhaps the main message of these three snapshots is the disparity in learning opportunities in China. We witnessed some very powerful learning as well as less than ideal situations. Clearly, China and all the nations of the world will need to continue to address the important issue of how to best educate all children equitably and well. RELATED ARTICLE: DADUKOU VILLAGE SCHOOL To better understand the educational complexities and the degree of impoverishment in rural China, the delegation visited a rural public school, DaduKou Village School, southeast of Kunming. This village school served about 400 students in grades 1 through 6 in a community of 2,000 people (about 400 families). Within villages in China, the last names of individuals are often similar. That was the case for this village, as most students' last names were either Ma or Dang. More than half of the students lived in the village while others commuted from smaller nearby villages. A large percentage of the students' families were farmers who grew vegetables, rice, tobacco, and flowers. …

The finance–specialization–growth nexus: evidence from OECD countries

Empirical evidence is increasing by emphasizing the positive influence of financial markets on the level and the rate of growth of a country's per-capita income. Theoretically, the rationale for the finance–growth nexus appears to be straightforward: in imperfect economies, financial markets provide valuable services such as mobilizing savings, diversifying risks, allocating savings to investments and monitoring the allocation of managers. By performing these services financial markets work as a very important catalyst of economic growth. Empirical research has so far paid little attention to the mechanisms through which financial development is related to growth. Using a panel data set covering 22 OECD countries over the period 1970 through 2000, we present empirical evidence which suggest that the finance–growth nexus in industrialized countries is due to a higher degree of specialization made possible by financial advancement.

Population growth in a model of economic growth with human capital accumulation and horizontal R&D

This paper reconsiders the effects of population growth on per-capita income growth within a Romerian (1990)-type endogenous growth model with human capital accumulation. One important novelty of our contribution is that in the human capital supply equation we explicitly consider the possibility that agents’ investment in skill acquisition might be positively, negatively or not influenced at all by technological progress. We find that both the growth rate and the level of real per-capita income are independent of population size. Moreover, the population growth may affect or not real per-capita income growth depending on the size of the degree of altruism of agents towards future generations and on the nature of technical progress, for given agents’ degree of altruism.

Entry and growth in a perfectly competitive vintage model

A perfectly competitive vintage-knowledge model of Schumpeterian growth is introduced to study the relation between growth, technology-lifetime, entry, and productivity-dispersion. The incentive to innovate is generated by the productivity-dispersion (latent in traditional vintage models) between new and old plants, rather than by monopoly rents. The model has a unique steady-state REE with endogenous growth. The endogenous extent of entry constitutes a buffer, dampening the effect of research-efficiency and completely neutralizing the effect of population size or population growth rates on per-capita income levels and growth rates. Variations of research-efficiency lead to a negative relation between growth and vintage-lifetime and a non-monotonic relation between growth and productivity-dispersion.

Tourism as an alternative source of regional growth in Portugal: a panel data analysis at NUTS II and III levels

The role of tourism is of vital economic importance, particularly for small countries with a privileged geographical location and favourable weather conditions. This paper examines the importance of tourism as a conditioning factor for higher regional growth in Portugal by employing the conditional convergence hypothesis of Barro and Sala-i-Martin, associated with the endogenous growth theory. The panel data estimation approach provides evidence of the positive impact of tourism (through the accommodation capacity) on the growth in per-capita income among the Portuguese regions, increasing the rate of convergence. Therefore, tourism can be considered as an alternative source for stimulating higher regional growth in Portugal, if the supply characteristics of this sector are improved.

Do increases in petroleum product prices put the incumbent party at risk in US presidential elections?

This article investigates the impact of petroleum product prices on recent United States’ presidential elections by modelling the probability of the incumbent presidential party losing a state (under the United States’ electoral college system) it had carried the previous presidential election. The main finding is that the probability of the incumbent party losing a state previously carried increases with petroleum product prices but only in those states that have primarily energy consuming economies. We also find that increases in the number of international conflicts, increases in real state per-capita income growth, and increases in state per capita grants-in-aid all reduce the likelihood of losing previously carried states while higher taxation growth increases this likelihood.