Physical Capital Stock Research Articles

The Effects of IT and Financial Development on Economic Growth in BRICS-T Countries: Insights from the Solow Growth Model

The aim of the study is to examine the impact of IT and financial development on economic growth in BRICS-T countries for the period 1990-2022 using the panel quantile technique. For this purpose, IT technology and financial development variables were added to the basic Solow model. According to the findings, the impact of physical capital stock on economic growth is positive in all quantiles. The effect of population growth on economic growth is significant starting from 0.4 quantile and the negative effect increases as the quantile level increases. Information technology, which is the subject of the study, positively affects economic growth and this effect decreases as the quantile level increases. The variables we used to represent the level of financial development, financial institutions have a positive but statistically insignificant coefficient sign, while financial markets have a statistically significant but negative coefficient sign. This negative effect increases as the quantile level increases.

Economic Growth Determinants in Pakistan: An Empirical Analysis Using ARDL Model

The objective of this study is to examine the determinants that affect Pakistan’s economic growth. The study examines the causal relationship between economic determinants and growth from 1972 to 2021. Key determinants in the model include physical capital stock, employed labour force, bank credit, human capital, exports, and imports. Autoregressive Distributed Lag (ARDL) model was used to fulfil the research objectives. The study found long-term co-integration between the variables. Both physical capital and human capital were found to be statistically significant, positively affecting economic growth. Thus, both are complimentary to economic growth rather than substitutes. The study noted that employed labour force, bank credit, exports, and imports did not affect economic expansion. It suggests that neither import substitution nor export promotion is effective in achieving sustainable growth in the period of study. Furthermore, an increase in the employed labour force is not sufficient for economic growth after controlling for the effect of human capital. Results suggest that improvement in infrastructure and human capital productivity are essential to achieve sustainable growth.

Travails of Conflict and Economic Development in Syria

ABSTRACT The war that engulfed Syria in March 2011 is considered to be the most destructive event in its modern history. In addition to the massive human losses and millions displaced, physical capital stock and trade losses are comprehensive; by 2019, the United Nations estimated conflict-related damage to physical capital at US$442.2 billion (infrastructure destruction estimated at US$120 billion); and trade witnessed a collapse of about 100% in just a decade. The study focuses on the impact of the conflict on capital and trade and their specificity in a “multipolar” world to a small but “node” country like Syria. Using the error correction model, findings supported the view that (1) underdevelopment is linked to persistent and widespread international and regional intervention and economic sanctions; (2) political and geopolitical factors are highly associated with the state’s capacity to raise investment and trade volume. Further, the study pointed out the importance of both public capital and trade in growth in the pre-conflict phase, but not the private capital. Recovery and reconstruction are possible only with relative peace drawn by political settlement between the dominant and contending parties in the geopolitical context.

The measurement of China's provincial physical capital stock based on the improved method and indicators.

Physical capital stock is the basic indicator of macroeconomic empirical studies and also an important manifestation of macroeconomic activity capacity. When measuring China's provincial physical capital stock by the perpetual inventory method, the treatment for the depreciation rate and the initial physical capital stock in the existing literature has some defects in reflecting the economic performance. The purpose of this paper is to build the most reliable and reasonable statistical series of China's provincial physical capital stock. We establish a measurement formula in form of the variable depreciation rate and improve the treatment for the depreciation rate and the initial physical capital stock. For the depreciation rate, we measure the benchmark depreciation rate of physical capital and determine the variable depreciation rate according to the economic growth rate, which makes the variable depreciation rate reflect the economic growth. For the initial physical capital stock, we measure the initial physical capital stock according to the capital output ratio, which makes the initial physical capital stock reflect the economic aggregate. Based on these improvements, we measure China's provincial physical capital stock from 1952 to 2022 by the perpetual inventory method. Through analyzing the measurement results, we have a more distinct insight into the temporal and spatial characteristics of China's provincial physical capital stock: The growth rate of physical capital stock at the provincial level has slowed in spite of remaining high; The eastern region is much higher than the central and western regions. According to these two characteristics, it is suggested that policymakers need to improve market mechanisms and adjust investment policies to promote a benign profile of economic growth and a regional optimization of capital formation.

Female Labor Force Participation and Uganda’s Economic Growth

This comprehensive study explores the impact of various female labor force participation indicators on Uganda's economic growth, encompassing participation rate, educational levels, and fertility rate while considering confounding factors like capital formation and inflation. Utilizing a quantitative approach and a causal relationship research design, the study employs the ARDL (3, 3, 1, 1, 1, 2) model on quarterly data from 1990 to 2021. Results reveal a significant adverse short-term causal impact of the female labor force participation rate on economic growth, with no such effect in the long term. The educational levels and fertility rate exhibit statistically insignificant impacts in both short and long terms. The findings suggest a prevailing trend of female labor contributing predominantly to labor-intensive agriculture and the informal economy, without a noticeable shift to more lucrative sectors over the long run. Additionally, the study underscores the potential for short-term economic growth through birth control measures and policies enhancing physical capital stocks, contributing to our understanding of Uganda's economic progress within the neoclassical and U-shape development frameworks.

Economic development and Foreign Direct Investment: Evidence from OECD and selected African Countries

This study analyses the impact of foreign direct investments on economic performance of African and OECD countries, to elicit explanations for the economic development disparities between home economies of foreign direct investors and their host counterparts. Design/methodology/approach – Employing annual observations spanning from 1980 to 2018 of 43 African countries and 28 OECD countries, this study estimates a panel cointegration model based on dynamic OLS technique. Findings – The analysis found that foreign direct investment exerts strong predictive influence on the direction of economic growth, while controlling for the impact of financial development, human capital development, economic institutions, and physical capital stock. It was found that economic institutions and physical capital stock drive stimulative effect on economic growth across economies in Africa and OECD countries, while financial development and human capital exert influences on one or more of the sampled countries. Originality/value – The originality of this study lies in the application of the panel cointegration model based on dynamic OLS technique to analyse the cross-regional dynamics in the interaction between foreign direct investment and economic growth. Practical implications – Policy makers should ensure the sustenance of a conducive economic and political environment to the attract more foreign investors as increase in foreign investments drive positive trends in national productivity and enhances capital mobilization, job creation and social improvement. Keywords: African countries, OECD, FDI, Economic performance, Economic growth, Economic institutions, Physical capital stock, financial development, Economic freedom index, Human capital index, Real GDP, DOLS model.

Population Aging, Pension Systems, and Economic Growth: Applying an Overlapping Generations Model to the Informal Sector

This paper analyzes the effects of an unfunded pension system on economic growth using an extended overlapping generations model to include the informal sector. Emerging countries usually have a more significant informal sector than advanced ones. The findings based on the Thai economy data suggest that an increase in unfunded pension payouts and the noncontributory old-age allowance induces lower output and changes the consumption profiles of the workers. Furthermore, it reduces households’ incentives to save and provide labor, especially among formal workers, which lowers the physical capital stock in the new steady state.

Human Capital and Economic Growth in India: The ARDL Approach

We used time series data on variables, real GDP, physical capital stock and human capital index of India to examine the relationship between these three variables oyer the period 1972-2019. The auto-regressive distributed lag (ARDL) model and the bound test of co-integration reveal that physical capital stock, human capital index and GDP are co-integrated only when GDP is used as the dependent variable. Moreover, the negative and statistically significant value of the coefficient of adjustment in the error correction model further reinforces that there is a long-run relationship between these variables. This long-run relationship also reveals that both physical capital stock and the human capital index positively impact GDP growth in India. Growth in the human capital index is not found to be dependent on either GDP or physical capital stock. Since the human capital index is constructed based on years of schooling and returns to education, we infer from it that education stimulates economic growth in India. Hence, India has reaped the benefits in the form of economic growth by adopting the policy of free and compulsory education for its populace.

Effects of terrorism and economic policy uncertainty on economic complexity in Africa: A study of the moderating role of governance institutions

AbstractFollowing the paucity of empirical evidence on the effects of terrorism and uncertainty on economic complexity in Africa and the moderating role of governance institutions on these relationships, this study raised two important questions. First, how are terrorism and uncertainty impacting on economic complexity in Africa? Second, how are governance institutions moderating the effects of terrorism and uncertainty on economic complexity in Africa? To answer these questions, the study employed pooled ordinary least squares and dynamic system generalized method of moments (GMM) estimators, with a panel of 33 African countries over the period 2010–2021. We find that the unconditional effects of terrorism and uncertainty on economic complexity in Africa are predominantly negative and significant. We also find that governance institutions predominantly have unconditional positive and significant impact on economic complexity in Africa but failed to moderate the adverse effect of uncertainty on economic complexity. However, trade openness, international tourism and lagged economic complexity are potent factors promoting economic complexity in Africa, while physical capital stock remained a deterring factor. The study concluded that policymakers and leaders in Africa should engage in collaborative efforts at the African Union level to promote high‐quality institutions, while simultaneously addressing the detrimental effects of terrorism and uncertainty on the continent.

Non-linear links between human capital, educational inequality and income inequality, evidence from China.

This study aims to reveal short-run and long-run asymmetries among human capital, educational inequality, and income inequality in China over the period 1975-2020 using a nonlinear autoregressive distributed lag (NARDL) model. The estimated long-run asymmetry parameters reflect that positive shocks to secondary education (SSE) and higher education (HE) are negatively correlated with income Gini coefficient. The adverse shocks of secondary education (SSE) and higher education (HE) stimulate the Gini coefficient of income, but the effect of secondary education (SSE) on the Gini coefficient of income is not significant, while that of higher education (HE) is significant. The results also highlight that, in the long run, there is a significant asymptotic effect of the education Gini coefficient (educational inequality) and economic growth on the income Gini coefficient (income inequality). However, physical capital stock has a significant adverse effect on income inequality in the long run. Higher education significantly promotes educational inequality, while the square of higher education significantly reduces educational inequality, thus verifying the inverted U-shaped Kuznets curve hypothesis between higher education and educational inequality. Strategically, this study suggests higher education as a powerful tool for mitigating income inequality by emphasizing educational equity.

Human Capital and Non-Renewable Natural Resources in Latin America and the Caribbean: ‘Is It a Curse or a Blessing’?

This study examines the role of non-renewable natural resources in the accumulation of human capital in a sample of eighteen Latin American and Caribbean countries from 1995 to 2018. We assess the influence of non-renewable resources through six distinct variables and employ panel data co-integration techniques (PMG-ARDL). Our findings reveal a positive long-run effect, whether measured by abundance or dependence indicators. Even in cases where negative short-run effects are observed, the positive impact is consistent in the long term. Furthermore, physical capital stock, institution quality, and a more open economy are the most important drivers of human capital accumulation in the region. Although the long-run effect of non-renewable natural resources on human capital was positive, the estimated elasticities account for a relatively low effect. Consequently, even in the absence of the ‘curse’ effect, we do not deem it appropriate to consider these results as a blessing.

Economic growth, human capital, and energy consumption in Algeria: evidence from cointegrating polynomial regression and a simultaneous equations model

This article aims to empirically analyze the direct and the indirect effects of human capital on energy consumption in Algeria, as well as to test the possible presence of the energy-environmental Kuznets curve (E-EKC) hypothesis, over the period 1970–2017, using cointegrating polynomial regressions (CPR) with break points, and a simultaneous equations model. The obtained results indicate that human capital directly reduces energy demand, and indirectly increases it through income and physical capital stock channels. However, the direct effect is higher than that of the indirect effect. Additionally, CPR results confirm a monotonic increasing relationship between energy use and real GDP per capita; therefore, there is no evidence of the E-EKC hypothesis. This means that increasing economic growth leads to a rise in energy consumption and, in turn, to an intensification of CO2 emissions. The results also indicate that physical capital stock per capita, urban population ratio, and real GDP per capita are positively linked to energy use per capita. In that context, it may be appropriate to adapt the energy system to the growing demand, promoting greater use of renewable energies, if emissions growth is to be contained. Investment in education and improving the quality of human capital is a good way for Algeria to reduce energy consumption and protect the environment, without negatively impacting economic growth.

Analysis of the Influence of Human Resources on the Economic Development of Minority Areas Based on Data Mining.

In order to break the bottleneck of the human capital stock restricting local economic growth in the typical western regions with backward national economic development, a research on the analysis of the impact of human resources on the economic development of ethnic regions based on data mining is proposed. On the basis of systematically reviewing the current situation and the theoretical basis of the relationship between human capital and economic growth, the method of combining normative research and empirical research is adopted, and the theories of macroeconomics, development economics, and regional economics are synthesized. In the research, the human capital and economic development in a certain western region are analyzed by establishing an econometric model. The results show that the average value of each year is taken as the inspection index, and the contribution rate is 0.0012, which shows that the contribution of human capital stock in economic growth is very small, indicating that physical capital stock is still the main driving force for local economic development. It is concluded that the research provides some relevant recommendations for human capital development to achieve sustainable local economic development.

Energy transition, economic growth and environmental sustainability in Algeria

This article aims to empirically analyze the relationship between energy transition, economic growth and CO2 emissions in Algeria, over the period of 1980-2018, using simultaneous equations model. The empirical results reveal that human capital, physical capital stock per capita, energy transition and oil prices stimulate real GDP per capita. Likewise, real GDP per capita positively affects CO2 emissions; however the latter are negatively linked to energy transition and exports. Therefore, increasing the share of renewable energy to fossil fuels consumption is one of the suitable strategies to stimulate economic growth and improve environmental sustainability.

Human Capital and Economic Growth in Romania: A Vector Error Correction Model (VECM)

Abstract This paper aims to evaluate the human capital on economic growth impact in Romania. Variables have been selected according to an endogenous growth model basing on including the human capital in the Cobb-Douglas production function (Lucas, 1988). As all over usual, here gross domestic product (GDP) will be the endogenous of gross fixed capital formation (GFCF, as physical capital stock), employment (as labour), life expectancy and secondary enrolment rate(as proxies for human capital). We also use expenditure in research and development (R&D) sector (as its percentage in GDP), as control variable. Once our model developed, variables are found as integrated of order one (1) and co-integrated, here allowing a vector error correction model (VECM) for estimation. This will be a system of six equations covering a 25 years (1995-2019) interval for Romania. A long-term relation comes out of our empirical findings, as similarly to Wang (2016), so the GDP growth sees itself determined by: secondary school enrolment, life expectancy(i.e. for human capital), R&D expenditure and labour. Short run causalities have not been found significant for this model

ACCESS TO CREDIT AND PHYSICAL CAPITAL STOCK: A STUDY OF NON-FARM HOUSEHOLD ENTERPRISES IN NIGERIA

This study investigated the influence of access to credit on the physical capital stock of non-farm household enterprises in Nigeria. The study used the binary logistic regression technique and Nigeria’s 2018-19 General Household Survey data (Wave 4). We find that the influence of access to credit on the physical capital stock of nonfarm household enterprises in Nigeria is positive and significant. This implies that access to credit enhances the capacity of these enterprises to procure physical capital stock. Our results also indicate that expenditure on raw materials, profit, and years of operations are other key drivers of physical capital stock accumulation. Consequently, we conclude that there is a need for policies to enhance access to credit by non-farm household enterprises in Nigeria to strengthen their operations on a sustainable basis.

A Study on the Contribution of Human Capital to Economic Growth of Graduate Students in Xinjiang

Based on the Cobb-Douglas production function model, the data of the number of graduate students, physical capital stock, education expenditure and regional gross national product in Xinjiang from 2002-2019 were selected as the basis for calculating the human capital stock of graduate students by using the method of years of education to further analyze the impact of graduate education on economic growth. The results show that postgraduate education in Xinjiang region promotes the national economic growth of Xinjiang region and the contribution rate reaches 0.1360%, and the stock of social physical capital and the investment of the whole society in education funding have a greater role in promoting economic growth. On this basis, relevant countermeasures and suggestions are given for economic development and improving the quality of postgraduate education in Xinjiang region.

Evaluating the optimal air pollution reduction rate: Evidence from the transmission mechanism of air pollution effects on public subjective well-being

Estimation of the effects of air pollution on residents' subjective welfare, which is always monetized as willingness to pay (WTP), is essential for policymakers to set the optimal abatement targets. This paper adopts Life Satisfaction Approach to explore the mechanism of air pollution affecting residents' subjective well-being (SWB), and calculates the optimal abatement rate. Based on CGSS data, we use the Probit model and the instrumental variables method to conduct empirical analysis. Results show that the positive indirect effect of air pollution through economic growth channel covers nearly 1/3 of the negative direct effect on SWB, which reduces people's willingness to pay for pollution control. Under the maximization of SWB, the optimal reduction rate is 62.857%. To achieve the optimal rate, about 5% of per capita GDP would have to be sacrificed, equivalent to a 20% increase in physical capital stock per capita, or a 13% boost of the human capital stock. When residents have lower education and higher self-rated health, the transmission mechanism amplifies the extent to which the indirect effects mask the direct effects, and the optimal reduction rate drops to 50%. • Explore the effects of air pollution on residents' SWB by LSA. • Construct the ventilation coefficient as the instrument to alleviate the endogeneity. • Further gauge the public's WTP for air pollution treatment. • Estimate the optimal air pollution rate of China by happiness data.

Capital stranding cascades: The impact of decarbonisation on productive asset utilisation

A timely low-carbon transition will require a significant decline in fossil fuel production and consumption. This in turn exposes the rest of economic sectors to the risk of reduced usability of physical capital stocks via international production network linkages. We propose and apply a simple measure to assess the extent to which fossil shocks might trigger underutilisation of capital stocks across countries and productive sectors (‘stranding multipliers’). Our results highlight the relevance of supply-side transition risks. First, among all productive activities, the global fossil sector exhibits the highest stranding multiplier on the rest of the economic system. Second, some of the most exposed sectors are downstream activities, mainly affected by second-round effects. Third, we rank countries according to their external stranding potential, finding France, Australia and Slovakia at the top, and the USA, Italy and China at its bottom. Finally, we rank countries according to their exposure to stranding risk and analyse more in depth the origins and transmission channels of the stranding links affecting some of the most exposed countries (USA, China and Germany).

CAPITAL AND GROWTH


 This paper develops and discusses a neoclassical growth model with two inputs: physical capital stock and combined stock of human and intellectual capital. The production process is subject to diminishing returns to capital in perfect markets, in sharp contrast to new endogenous growth models that assume increasing returns to capital in imperfect markets. The model finds that a high saving rate raises both transitional and steady state growth rates of output through increases in physical, human, and intellectual investments that augment labor productivity—a key extension of the Solow (1956)-Swan (1956) growth model. Additionally, the paper derives an optimal rule for choosing the saving rate that maximizes consumer welfare. Implications for growth policies are drawn.