Economic Growth Policy Research Articles

Sustainability Strategy in the Development of Msmes by Bank Indonesia in Increasing Economic Growth by Using Green Economic Policy as an Intervening Variable

Objective: The main objective of this study is to assess the impact of Bank Indonesia's MSME Development program on economic growth, with a specific focus on the role of green economic policies as an intervening variable. This research seeks to identify key factors that contribute to the sustainability and growth of MSMEs in Indonesia. Theoretical Framework: This study draws upon theories of sustainable economic development, focusing on the role of green economics in business sustainability. The framework integrates concepts from corporate sustainability, economic growth, and environmental policy, exploring how MSMEs can leverage green practices to boost economic performance. Method: A mixed-method approach was employed, combining quantitative analysis of survey data and statistical tests with qualitative methods such as interviews and case studies. The quantitative analysis examines the direct and indirect effects of the MSME development program, while the qualitative analysis provides deeper insights into the processes and challenges faced by MSMEs in adopting green economic policies. Results and Discussion: The findings indicate that MSMEs that implement Bank Indonesia's MSME development program experience significant positive effects on economic growth. These effects are further enhanced when green economic policies are incorporated into MSME practices. Specifically, the research identifies several key factors contributing to growth 1.Corporate Structuring: Positive impact on economic growth through the establishment of stronger business foundations, 2.Capacity Building: Expansion of business capabilities leads to improved performance and sustainability,3. Market Expansion: Broader market access fosters economic resilience and growth, 4.Outboarding: The adoption of outboarding strategies leads to improved international competitiveness, 5.Intervening Role of Green Economic Policies: Green policies significantly enhance the effects of MSME development initiatives, contributing to greater economic stability and growth. Research Implications:. This research highlights the importance of integrating green economic policies in MSME development programs, providing a roadmap for policymakers to design sustainable growth strategies. By focusing on sustainability, MSMEs can not only contribute to economic growth but also support broader environmental and social goals.. Originality/Value: This study is one of the first to explore the intersection of MSME development, economic growth, and green economic policies in the context of Indonesia. It contributes valuable insights into how sustainable practices can be integrated into MSME strategies to foster long-term economic resilience..

Models of technological development: The influence of investment structure

The problem of refining Russia’s model of economic development through achieving the technological sovereignty dictates the need for making strategic decisions within the investment policy of economic growth. The paper aims to determine the models of technological modernisation according to the structure of investments in “old – new” technologies and develop an algorithm for identifying these models by assessing the relationship between investment and risk. Methodologically, the study rests on the theory of technological change. The paper employs elements of structural, statistical, regression and econometric analysis, as well as applies taxonomy methods to pinpoint various options for investment and technological modernisation models. T he evidence is the data on the investment in fixed assets and expenditures on tech nological innovations for 2010–2022 coming from the Federal State Statistics Service of the Russian Federation. The result is the identification of a model of technological modernisation in the Russian economy according to the structure of investments in “old – new” technologies and the sensitivity of the general technological intensity to investments. The paper distinguishes four general strategies of technological devel opment by the impact of expenditures on the dynamics of technological intensity, namely “leadership”, “breakthrough”, “giving up”, and “degradation”. Then, accord ing to the impact of investment in new technologies on technological modernisation it justifies the models “blockage”, “rigidity”, “modernisation”, “saturation”, and, in a similar manner, validates the models “degradation”, “backwardness”, “reliance on old technologies”, “reliance on new technologies” according to the impact of investment in old technologies on technological modernisation. The paper constructs a theoreti cal model of the connection between investment and risk, institutional parameters of investment process. The findings reveal that the Russian economy follows the model of backwardness with local technological innovations, which requires a massive in crease in investment in new technologies, mitigation of risks, and modification of institutional conditions.

Identifying the factors influencing the development of bilateral investment treaties with health safeguards: a Machine Learning-based link prediction approach

A network analysis approach, complemented by machine learning (ML) techniques, is applied to analyse the factors influencing Bilateral Investment Treaties (BITs) at the country level. Using the Electronic Database of Investment Treaties, BITs with health safeguards from 167 countries were charted, resulting in 534 connections with countries as nodes and their BITs as edges. Network analysis found that, on average, a country established BITs with six other nations. Additionally, we used node embedding techniques to generate features from the network, such as the Jaccard coefficient, resource allocation, and Adamic Adar for downstream link prediction. This study employed five tree-based ML models to predict future BIT formations with health inclusion. The eXtreme Gradient Boosting model proved to be superior, achieving a 64.02% accuracy rate. Notably, the Common Neighbor centrality feature and the Capital Account Balance Ratio emerged as influential factors in creating new BITs with health inclusions. Beyond economic considerations, our study highlighted a vital intersection: the nexus between BITs, economic growth, and public health policies. In essence, this research underscores the importance of safeguarding public health in BITs and showcases the potential of ML in understanding the intricacies of international treaties.

THE FINANCIAL LIBERALIZATION POLICY AND ITS IMPACT ON THE GROWTH OF SMALL AND MEDIUM ENTERPRISES

The country's development is mainly concerned with the foundation of a stable economy. An efficient financial system is mandatory for the development of solid economy. Small and Medium Enterprises (SMEs) are essential in stabilizing the economy. This is remarkably accurate in emerging economies like Pakistan. The objective of financial liberalization is to facilitate financing access and stimulate investment. However, the impact of this policy on SMEs can vary based on factors such as the regulatory framework, market structure, and institutional support. Therefore, it is crucial to assess the impact of financial liberalization on SMEs to foster inclusive economic growth and shape policy development. The study intends to find whether or not the growth of small and medium enterprises depends upon the government's financial liberalization policies. Using the ARDL econometric method, we find that Shareholder’s Equity is positively associated with SME growth rate, holding other variables constant. Moreover, total assets positively affect the SMEs' growth rate. Financial Development does not have a statistically significant effect on SME growth in the short run. Economic Growth rate positively influences SME growth. External financing changes may not immediately affect SME growth in the short run. The results show that changes in the number of bank branches do not significantly affect SME growth in the short run.

Sustainable Development of Production–Living–Ecological Spaces: Insights from a 30-Year Remote Sensing Analysis

The rapid pace of urbanization and industrialization has reshaped land use patterns globally, particularly within the interconnected domains of ‘production, living, and ecological spaces’ (PLES). Understanding the spatiotemporal evolution of these spaces is crucial for guiding sustainable development. Although a number of previous studies have explored aspects of their dynamics and driving factors, further investigation is needed to fully understand their long-term spatiotemporal evolution and the broader influences of socio-economic and environmental forces. This study aims to fill that important gap by leveraging advanced remote sensing techniques to analyze PLES transformations over a 30-year period. Using Henan Province, China, as a testbed, this study applies high-resolution Landsat data, land use transition matrices, dynamic degree analysis, Principal Component Analysis (PCA), and multiple linear regressions to uncover trends and underlying drivers. The results reveal a substantial reduction in production spaces by 3394.62 km² steady growth in living spaces by 4459.41 km² and complex, non-linear changes in ecological spaces, which decreased by 1067.43 km². Key driving forces, such as economic growth, urbanization, and fiscal policies are identified and discussed. These insights provide a robust framework for sustainable land use planning, with broader implications for rapidly urbanizing regions worldwide.

Load Capacity Factor and Environmental Quality: Unveiling the Role of Economic Growth, Green Innovations, and Environmental Policies in G20 Economies

Load Capacity Factor and Environmental Quality: Unveiling the Role of Economic Growth, Green Innovations, and Environmental Policies in G20 Economies

Macro Indicators and Housing Prices in the U.S.

This study examines the influence of macroeconomic indicatorsU.S. GDP, tax rates, population, and interest rateson housing prices across the United States, utilizing data from 1982 to 2018 sourced from the Federal Reserve Economic Data (FRED). Employing a comprehensive analytical framework, including multiple linear regression, time series analysis, and a mixed-effects model, the research identifies GDP and tax rates as significant factors affecting housing prices. GDP positively correlates with housing prices, whereas higher tax rates have a negative impact. The study highlights the importance of accounting for regional variations through mixed-effects modeling, which captures the diverse impacts of economic indicators across different states. This approach offers nuanced understandings to the real estate market's dynamics, emphasizing the role of economic growth and fiscal policies. The findings aid policymakers in understanding the economic forces shaping housing markets and suggest further research avenues, particularly in incorporating recent global economic events like the COVID-19 pandemic.

Financial inclusion, ICT development and economic growth in WAEMU countries: evidence of governance

PurposeThe main objective of this paper is to examine how short- and long-term dynamics can be promoted through economic growth policies, financial inclusion initiatives, institutions and ICT infrastructure development. The study focuses on West African Economic and Monetary Union (WAEMU) member countries over for the period 2000–2020 and the empirical evidence is based on the autoregressive distributed lag (ARDL) method. Our empirical results show that the synthetic index variables of financial inclusion, ICT infrastructure development and individual or composite governance institutions indicators are positively and significantly interrelated in both the short and long runs. A dynamic combination of variables is essential for WAEMU countries to achieve long-term economic development. Policy implications are discussed.Design/methodology/approachConsistent with our goal of testing the dynamics of financial inclusion, governance and ICT on economic growth, we will estimate our equations using the ARDL panel method. ARDL models or autoregressive models with staggered or distributed delays are dynamic models. The particularity of these models is that they take into account temporal dynamics (i.e. expectations, adjustment delays and inter alia), so we adopted a lagged autoregressive model (ARDL). The popularity of the ARDL approach also stems from the fact that the cointegration of nonstationary variables is equivalent to an error correction (EC) process.FindingsThe empirical results simultaneously depict strong endogenous associations between these variables in the short and long run. The short-run analysis indicates that economic growth, financial inclusion, institutional quality and ICT infrastructure development are strongly interdependent. These union states, in their economic growth policies, encourage the financial inclusion (access and penetration of bank branches) of disadvantaged communities. However, efficient institutional policies reinforce this sustainable growth. The efficient use of telecommunications infrastructure requires the regulation of informal employment in WAEMU countries for the better deployment of efficient, secure and cost-effective digital financial payment systems (fintech).Research limitations/implicationsThe findings in this study evidently leave space for future research, especially as it concerns considering how composite governance can be employed as a moderating indicator for financial inclusion. In conclusion, there is an interdependence between financial inclusion, ICT, institutions and economic growth. An effective combination of these elements can create an ecosystem conducive to economic development by promoting access to financial services, harnessing the benefits of ICT and building robust institutions. However, challenges can also arise, such as the need for appropriate regulations and security guarantees for electronic transactions.Practical implicationsGovernments should strengthen financial inclusion and promote policies aimed at improving access to financial services, such as microcredits, mobile banking and initiatives for the unbanked. Financial education is crucial for enhancing financial inclusion. Educational programs that teach citizens how to use financial services can increase participation and stimulate economic growth. Moreover, policies should focus on improving digital infrastructure, such as broadband networks and data centers, to facilitate access to the internet and other technologies and to promote innovation and startups. Governments should strive to create a balanced regulatory framework that encourages investment and innovation while avoiding excessive regulation that could hinder growth. Implementing targeted regulatory reforms to improve efficiency and transparency can enhance investor confidence and support a more dynamic economic environment.Originality/valueThis work constitutes a considerable contribution to the literature on finance, institutions and growth in WAEMU countries and in terms of methodology. The findings in this study evidently leave space for future research, especially as it concerns considering how composite governance can be employed as a moderating indicator for financial inclusion. In conclusion, there is an interdependence between financial inclusion, ICT, institutions and economic growth. An effective combination of these elements can create an ecosystem conducive to economic development by promoting access to financial services, harnessing the benefits of ICT and building robust institutions.

Assessing the synergistic effect of “pollution and carbon reduction” and “economic growth”: a perspective from bilateral trade between China and RCEP countries

IntroductionWith the accelerating process of globalization, trade activities have had profound impacts on both the environment and economic development.MethodsThis paper comprehensively evaluates the synergistic effect of bilateral trade on “pollution reduction” and “carbon mitigation,” as well as “economic growth,” utilizing panel data from China and RCEP countries spanning the period from 1997 to 2020.ResultsThe empirical results reveal that bilateral trade significantly propels economic growth in RCEP countries and exhibits a positive “pollution reduction” effect, whereas its “carbon reduction” effect remains uncertain. To delve into the underlying reasons for bilateral trade’s failure to effectively mitigate carbon emissions, this paper undertakes a mechanism test along two opposing paths. Notably, the influence of bilateral trade on economic growth and “pollution reduction” in RCEP countries varies regionally. Specifically, bilateral trade is more efficacious in fostering economic growth in ASEAN countries. Additionally, bilateral trade enhances environmental quality in ASEAN countries, yet it deteriorates in non-ASEAN countries. Furthermore, this paper examines the intricate relationship between bilateral trade, economic growth, and “pollution reduction” through the application of the PVAR model. It concludes that optimizing environmental quality in RCEP countries is conducive to both local economic growth and bilateral trade.ConclusionThis study not only bears significant implications for understanding the complex interplay between economic growth, environmental quality, trade liberalization, and environmental policies, but also provides invaluable guidance for policy formulation and implementation aimed at achieving green transformation and fostering sustainable economic development.

The Role of AI-powered financial analytics in shaping economic policy: A new era for risk management and national growth in the United States

The integration of AI-powered financial analytics is revolutionizing how U.S. enterprises and policymakers’ approach economic forecasting and risk management. This article explores the role of AI-based tools, such as machine learning and predictive analytics, in enhancing financial decision-making processes and shaping national economic policy. By providing real-time insights and accurate predictions, AI enables businesses and regulators to anticipate economic trends, mitigate financial risks, and foster financial stability. Through case studies, the research demonstrates how AI has driven economic growth, reduced risks, and enhanced financial oversight within key sectors. Additionally, it investigates the implications of AI on policymaking, highlighting how AI-enabled tools support the development of data-driven economic policies for long-term national growth. Despite the transformative potential, the article also addresses the ethical and regulatory challenges in deploying AI for economic decision-making. Ultimately, this research emphasizes that the future of economic policy in the United States is increasingly tied to the continued advancement and integration of AI-powered financial analytics.

Financial Implications of Fuel Subsidy Removal on Economic Indicators: Global Insights from Nigeria

Nigeria's economic stability is intricately connected to its transportation sector and fuel pricing. This study aims to investigate the financial implications of fuel subsidy removal on fuel prices, transportation costs, and broader economic indicators by examining Nigeria's public and private sectors. The study employs secondary data from the National Bureau of Statistics of Nigeria and financial reports from selected firms. Statistical methods include panel regression models (random effects), descriptive statistics, and diagnostic tests such as the Hausman test. The study reveals a substantial negative impact of fuel subsidy removal on petrol prices and transportation costs. Post-subsidy removal, fuel prices and transportation costs significantly increased. Additionally, removing subsidies has led to a noticeable rise in inflation, highlighting broader economic consequences. The findings suggest that removing fuel subsidies has adverse financial effects on fuel prices, transportation costs, and overall economic metrics in Nigeria. The study recommends that policymakers implement targeted social safety nets, including cash transfer programs and subsidies for essential goods, and consider a gradual approach to subsidy reform to mitigate economic shocks and foster sustainable growth. Economically, the removal of fuel subsidies has led to increased fuel prices and transportation costs, contributing to inflation and economic instability. Socially, it disproportionately affects low-income households, exacerbating income inequality and social unrest. Policymakers need to consider the trade-offs of subsidy removal and implement measures to protect vulnerable populations, monitor inflation, and adjust monetary policy for sustainable economic growth.

The Dynamics Model of Cross-Regional to Enhance Economic Growth: New Empirical Evidence from Indonesia

Abstract Economic growth growth is crucial to improve community welfare in the long term. Although Indonesia’s economic growth is on an upward trend, Indonesia must remain vigilant in its relationship with the global world due to the rapidly changing and highly uncertain dynamics. Indonesia’s economic growth is also inseparable from the influence of various provinces’ economic growth, which varies due to the economic dynamics between regions. These dynamics can influence the region’s contribution to national economic growth. Therefore, identifying the important role of the determining factors of economic growth and appropriate policies in dealing with economic dynamics between regions is crucial because sustainable economic growth is also essential for improving community welfare. This study examines the determinants of Indonesia’s economic growth from a regional economic perspective, using a Dynamic Panel Data analysis model with three estimation models. The first model focuses on the primary variables of technological progress, population, and investment. The second model adds the human capital variable, while the third model further incorporates the variables of open economy, economic structure changes, and income inequality. The study utilizes data from the Indonesian Central Statistics Agency, covering 27 provinces from 2015 to 2022. The results indicate that increased technological progress, population, investment, human resources, economic openness, and economic structure changes can increase economic growth, while inequality of income harms economic growth. This research has implications that in creating determinant conditions for conducive economic growth, it needs to be carried out evenly in all provinces in Indonesia.

Labor market dynamics in developing countries: analysis of employment transformation at the macro-level

Understanding labor market dynamics remains a pivotal aspect within contemporary economic discourse, as necessitates the pursuit of effective employment models to ensure steady progress in the conditions of changes in the economic structure. The aim of the research is to examine the dynamics of the labor market in developing countries, with particular emphasis on China and Kazakhstan, taking into account economic, social, and technological trends. The methodology includes the analytic and comparison of trends in the labor market in developing countries, such as China and Kazakhstan over the past 20 years, and also monitoring the socio-economic nature of the labor process. The study identified changes in the labor market and provided empirical evidence for new forms of employment, utilizing comparative analysis and data visualization of the sectoral structure of the economy and global labor market trends up to 2027. The obtained results provide three main conclusions: a decrease in demand for low-skilled workers and an increase in demand for highly qualified individuals; the emergence of jobs with low levels of social protection; new forms of employment-oriented towards workers outside the social security system, domestic workers, and self-employed individuals. These types of employment can fill jobs in platform and piecework economies, cooperativism, and the sharing economy, which allows employers in developing markets to optimize employment. The findings of the study can contribute to understanding the functioning of the labor market in developing countries including the development of small and medium-sized businesses, startups, and innovative projects, and may be applicable in the development of economic and social policies for sustainable economic growth and social stability.

Retraction Note: Assessing the impact of human capital, renewable energy, population growth, economic growth, and climate change policies on achieving the sustainable development goals.

Retraction Note: Assessing the impact of human capital, renewable energy, population growth, economic growth, and climate change policies on achieving the sustainable development goals.

Investigating the factors affecting outward FDI of Vietnam: Does political index matter?

Considering the important role of foreign direct investment (FDI) in economic growth and integration, this paper seeks to thoroughly analyze the outward FDI pattern of Vietnam to its 15 major FDI recipients (accounting for approximately 94% of Vietnam's OFDI) using the gravity theory and a robust panel data approach for the comprehensive annual data over the period of 2007 – 2022. By determining the main destinations of Vietnam’s Outward FDI through the creation of social, economic, and political indices via the principle component analysis (PCA), the empirical results conclusively prove the positive impacts of the political index, social index, the existence of a common border, and accession to the WTO on the Vietnamese OFDI volume, while geographical distance is found to negatively impact the flow. As the main practical policy implications, issuing policies for sustainable economic growth, creating the novel strategy of FDI neighborhood policy, and fostering regionalism through FTAs (Free Trade agreements) are highly recommended.

How does economic policy uncertainty influence energy policy? The role of financial sector development

It is necessary to warrant the long-term viability of the energy policy for sustainable economic growth. However, certain factors exist that can create a threat to energy policy. In this essence, the current analysis explores the impact of EPU (economic policy uncertainty) and financial sector development on fossil fuel energy, renewable energy (REC), and total energy (EGY). The empirical analysis utilized the CS-ARDL model and focused on a sample comprising G7 economies. The robustness of analysis was examined by employing fully modified ordinary least square (FMOLS) technique. The estimated coefficients outline the significant negative impact of all main explanatory variables on fossil fuel energy and total energy and EGY in the long run and a significant negative impact on renewable energy in the short run. The findings further demonstrate the significant positive impact of financial development on fossil fuel energy and total energy and the significant negative relationship between financial development and renewable energy. Particularly, the analysis discloses the moderating role of financial development in the EPU-energy policy nexus. It is advised to policy officials that they should enhance the cooperation between the financial sector and the energy sector for the success of energy policy and for responding to the uncertain economic situation. This study robust the empirical findings of studies exploring the EPU-energy nexus and extends the literature by pointing out the moderating role of FCD.

Green growth governance and total factor energy efficiency: Economic growth constraint and policy implementation in OECD countries

This study aims to examine the nature and governance of green growth strategy in OECD countries. As the strategy implies a sustainable relationship between economic growth and energy efficiency, we considered economic, environmental, and policy factors to empirically analyze green total factor energy efficiency (GTFEE) performances for 2001–2020 period. For this purpose, we employed a two-step methodology. In the first step, we estimated GTFEE scores from an undesirable output model by using robust order-m frontier efficiency method. In the second step, we used GTFEE estimates and built a panel data model to investigate the impact of governance and environmental policy factors. The panel data regression results point to several implications. Firstly, market-based environmental stringency policies are found to be effective. Also, economic globalization is found to be effective only in market-based and mix policy cases. The findings indicate the key roles of market-based pricing mechanisms and economic actors for the inclusive governance of green growth. Secondly, economic growth is found to be negatively related with GTFEE which shows the trade-off between economic growth and energy efficiency. Lastly, the analysis by commitment periods of the Kyoto Protocol points to the importance of global consensus on the implementation of green growth strategy.

Fiscal policy for economic growth and environmental quality: insights from Pakistan’s fiscal decentralization

Fiscal decentralization is perceived as a viable strategy for fostering economic growth in Pakistan. Concerns persist regarding its potential impact on environmental quality, particularly in relation to increased carbon emissions. Employing diverse analytical methods such as structural vector autoregressive (SVAR) modeling and autoregressive moving average model evaluations, this study comprehensively explores the dynamic relationships among fiscal decentralization, economic development, and environmental quality over the period 1979–2019. Intriguing trends emerge, revealing positive correlations between environmental efficiency and variables, including revenue collection, tax autonomy, and transfer payments. Conversely, a negative correlation is observed between government spending and economic growth. The interplay of these variables results in oscillations in the influence of fiscal decentralization on carbon emissions, presenting a complex challenge for policymakers. Notably, positive fiscal decentralization shocks lead to an increase in carbon emissions, while positive expenditure decentralization and economic development correlate with decreased carbon emissions. Despite economic growth's statistically significant negative impact on carbon emissions, the intricate nature of the relationships underscores the complexity of the link between fiscal decentralization, economic expansion, and environmental outcomes. From a policy perspective, the study emphasizes the need to adjust fiscal policies and coordinate intergovernmental fiscal ties across all government levels to enhance environmental efficiency. These findings provide policymakers with valuable insights to navigate the intricate landscape of fiscal decentralization and its environmental implications.

Investment Opportunities in Uganda's Real Estate Market

Uganda's real estate market presents lucrative opportunities for investors driven by rapid urbanization, economic growth, and favorable government policies. Key urban centers like Kampala, Entebbe, and Mbarara are experiencing significant development, and increasing demand for residential, commercial, and industrial properties. This growth is bolstered by a steady rise in GDP, enhanced infrastructure, and increased foreign direct investment. However, investors must navigate challenges such as regulatory complexities, land ownership issues, economic volatility, and infrastructure deficiencies. Successful investment strategies include thorough market research, due diligence, strategic location choices, local partnerships, and sustainable practices. With careful planning, investors can capitalize on Uganda's dynamic real estate market and contribute to its ongoing development. Keywords: Urbanization, Economic Growth, Investment Opportunities, Real Estate Market, Infrastructure Development

Analysis of Economic Freedom, Foreign Direct Investment, and Economic Growth

This research analyzes the relationship between economic freedom, foreign direct investment (FDI), and economic growth using the Vector Error Correction (VECM) model and the Granger causality test. Panel data from several free trade agreement countries in the Regional Comprehensive Economic Partnership (RPEC) for 1997 – 2022. VECM captures cointegration relationships and models short-term adjustments toward long-term balance. Meanwhile, the Granger causality test helps identify the direction of the causal relationship between economic freedom, FDI, and economic growth. Empirical results show a long-term but weak cointegration relationship between these variables in the short term. In addition, it was found that there is a two-way causality between economic freedom and economic growth, as well as between FDI and economic growth. These findings imply that policies encouraging economic freedom and attracting foreign investment can increase a country's economic growth. This research provides empirical insights into the important role of economic freedom and FDI in driving economic growth and related policy implications for creating an environment conducive to investment and sustainable economic growth.