Sector Output Research Articles

An Analysis of The Contribution of Economic Restructuring to Social Labor Productivity Growth: A Case Study of Vietnam

This study analyzes and proposes a method to examine the impacts of sectorial restructuring on social labor productivity (LP) growth when changing the proportion of each sector in the total output values and the value-added rates out of sector outputs. This method aims to supplement or replace the shift share analysis (SSA)1, in which the central variable is the labor structure, with an application on the output. This new approach helps to avoid errors in calculation, and considers the aggregation of growth factors rather than labor mobility itself; hence, it provides a more comprehensive explanation of the origins of productivity growth and a meaningful assessment to improve the policies on restructuring economic sectors. The research uses methods of decomposing LP growth and explains the influence of factors contributing to productivity growth including: output restructuring, changing the quality of economic growth measured by the valueadded to gross output ratio, combination of interactions between structural change and change in value-added, and correlation between production expansion and labor attraction. The research analyzes the LP in Vietnam during 2000-2017 based on data collected from the general statistics office (GSO). Results show that the LP growth rate of Vietnam in recent years has improved but slowly due to the inefficient economic restructuring. It sheds light on proposing recommendations to increase the social labor productivity in Vietnam.

Foreign Direct Investment Inflows And Real Sector: A Vector Autoregressive (Var) Approach For The Nigerian Economy

The flows of foreign direct investment (FDI) to developing economies have been considered important for sustainable growth as they enhance job creation and the transfer of technology and management expertise. As a result, the attention of scholars has been drawn to examining the relationship between FDI and growth resulting in several studies in this area. Notwithstanding, few studies have been carried out on the impact of FDI on real sector growth, particularly in the Nigerian economy. Hence, this study examines the effect of FDI on the real sector in Nigeria between the periods 1981–2016 using the impulse response function (IRF) and variance decomposition (VDC) of VAR. The study found that agricultural sector output responded positively to shocks in FDI inflows but it was statistically insignificant. The IRF also revealed that industrial sector output responded positively to shocks in FDI and it was statistically significant. This presupposes that the inflows of foreign direct investment have positive effects on the growth of the industrial sector in Nigeria. The VDC showed that FDI inflows exert influence on both the agricultural sector output and industrial output. However, FDI inflows influence the industrial sector output in a greater proportion than the agricultural sector. Using the VAR Granger causality, the study also found that while FDI inflows cause growth in industrial sector output, they, however, do not cause growth in agricultural sector output. The implication of the study is hinged on the fact that FDI inflows have not been driving the growth of the agricultural sector in Nigeria. This could be adduced to some structural bottlenecks besetting the growth and competitiveness of the sector, which have made the sector unattractive to foreign investors. The study, therefore, recommends that the government should greatly invest in rural infrastructure development that will encourage foreign investment. Also, the government should intensify research and development institutions in order to seek new knowledge and enhance innovation in the agricultural sector.

Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis

We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labor productivity is affected by country-specific climate variables-defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by more than 7 percent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to about 1 percent. These effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions. We also provide supplementary evidence using data on a sample of 48 U.S. states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labor productivity and employment.

Impact of Foreign Direct Investment on Manufacturing Sector Output Growth in Nigeria

The role of the manufacturing sector in economic growth and development cannot be over-emphasized. Economic theory enthuses that economic growth can be further realized when the manufacturing sector makes steady positive contribution in the overall GDP growth rate. In an attempt to harp on this, this study investigates the impact of foreign direct investment (FDI) on manufacturing sector output growth in Nigeria for the period 1970 – 2016 using OLS and Granger causality tests analysis. Due to various constraints including paucity of funds capital, the positive contribution of the manufacturing sector has not been encouraging. So the need for foreign capital inflow may be a welcome development. Thus, the study estimates a logarithmic model of the impact of FDI inflow on manufacturing output growth in Nigeria in order to assess its possible contribution to economic diversification of the Nigerian economy which has been heavily dependent on the energy sector. The findings of this study reveal that there is a long-run relationship between FDI and manufacturing sector output growth (MSOG) though statistically insignificant. Granger causality result shows that there is a unidirectional causality from FDI and MSOG. The study recommends that the variables; electricity generation, exchange rate, private sector credit and political stability which show significant relationships to MSOG should be given priority by the government policy makers to diversify the economy through the manufacturing sector.

Causality between Financial Inclusion and Agricultural Sector Output in Nigeria

This study examines the causality between financial inclusion and Nigeria’s agricultural sector output (AOG). Ex-post facto research design was used and the annual time series data for various years were obtained from the Central Bank of Nigeria’s (CBN) Statistical Bulletin. The Unit Root Test, Engle –Granger Co- integration Test, Error correction Model (ECM) Test and Granger Causality Tests were used to analyse the data. Financial inclusion was proxied by the prime lending rate, the deposit rate, the agricultural credit guarantee scheme fund, the demand for deposits from rural areas and the deposits of bank loans to small scale enterprises as a percentage of total loan. The results revealed that financial inclusion explains 41% of the changes in the Nigerian agricultural sector output. Prob. (F-statistics) co-efficient of 0.070531 proved that the explanatory variables have an insignificant effect on the dependent variable and Granger Causality Test showed more support for the non-existence of a causal relationship between the variables of explanatory variables and the dependent variables. Hence, the study recommends that the agricultural and financial sectors operators be sensitized on the benefits of their services to each other through symposiums, lectures, seminars and workshops. The two sectors should be encouraged to depend on each other with the agricultural sector relying more on the services of conventional financial institutions than on unorganized or traditional financial bodies. Financial institutions should also concentrate more on rendering services to the agricultural sector.

IMPACT OF CREDIT MANAGEMENT ON AGRICULTURE OUTPUT IN PAKISTAN

There is a profound impact of agriculture credit on output, employment, and capital accumulation especially for agriculture-based economies like Pakistan. The empirical results show that agriculture sector output is positively and significantly affected by capital stock and labor force. The improvements in mechanization, seeds quality, timely availability of fertilizers and pesticides backed by enhanced farm management skills and the adoption of modern techniques have contributed to increasing agricultural output. Therefore, the policy initiatives fostering this transition will have a positive impact on overall agricultural practices in Pakistan. The productivity of capital and labor has increased mainly due to making available water at farm gate, installation of cost-effective techniques for tube wells, and easy access to credit for farmers. Central Bank has installed a mechanism to check the outflow of agriculture credit to other sectors of the economy that has improved the apportion efficiency of the available resources resulting in enhanced output

Jobless Growth in the Manufacturing Industry-Decoupling Sectoral Output and Employment in the United States and South Korea

Jobless Growth in the Manufacturing Industry-Decoupling Sectoral Output and Employment in the United States and South Korea

The Effect of Macroeconomic Variables on Industry Sector Output Growth of Ethiopia

Industrialization plays a key role in the process of a nation’s economic development. The experience of the developed world revealed that industrialization significantly increased their productivity and changed the economic structure. Mainly with the context of reoccurring unstable macroeconomic performance in Ethiopia, analyzing the effect of macroeconomic variables on industry sector output growth is a proper way to design suitable industrial policies. Therefore, this study aimed to examine the effect of some macro-economic variables on the industry output growth in Ethiopia. To do so the study used a time series data ranging from 1991 up to 2018 from Ministry of Finance and Economic Cooperation of Ethiopia. The study also used Augmented Dickey-Fuller (ADF) and the Phillip-Perron (PP) unit root tests of stationary, Auto Regressive Distributed Lag (ARDL) bound test to co-integration and error correction model. Accordingly the study confirmed the existence of a long-run relationship between industrial output growth and macroeconomic variables. Macroeconomic variables such as, lending rate, inflation rate and trade balance found to be affecting the industrial sector output growth negatively, positively and negatively, respectively in the long run. Therefore, the government has to keep lending rate to the level that could be amenable for firms and maintaining the trade balance; via manipulating the export and import.

Contribution of ICT Sector to Vietnamese Economy: An Input-Output Analysis

This article uses Input-output (IO) analysis to evaluate the impact of ICT on the Vietnamese economy. Two IO tables are used, including tables of 2007 and 2012. The results show that ICT sectors were small in Vietnamese economy and the spending on ICT products and services of an average sector of the economy was generally low. Regarding the impact on output of other sectors, the research results reveal that the ICT sectors' backward linkages were stronger than the forward linkages, i.e. the ICT generated more impact on sectors which provided it input rather than on sectors that used its products and services. The total output multiplying effect of the ICT was rather high; ICT was among the most influential sectors in Vietnamese economy. Among ICT sectors, the ICT manufacturing was the most pervasive which is followed by the ICT services and ICT media and content. The study implies that if Vietnam seeks to enhance the economy, the government needs to implement specific policies that facilitate ICT industry and ICT usage.

The Use Of Sustainable Livelihoods Framework In Evaluating Fishery Policies In Pangkor Island, Malaysia

The marine fisheries sector contributed 1.4% to Malaysia’s Gross Domestic Product (GDP) in 2016, of which 76% is contributed by coastal fisheries sector. Twenty-four percent of this coastal sector output is contributed by the State of Perak, where Pangkor Island is located, making Perak the major contributor to the fisheries sector of Malaysia. This article aimed to identify the gap between development policies implemented and sustainable outcomes achievement, and subsequently provide suggestions for future adjustments to the sector development policies. The gaps identified include the difference between (1) improvement in the quality of human capital through workshops to improve income level and the actual output enjoyed by fishermen due to the financial limitation; (2) desired outcome of aquaculture project and the actual benefits seen due to limited physical, human and financial capital; (3) improvement of physical capital such as housing area and the financial capital available to service mortgage and replace equipments; and (4) livelihood strategies adopted and the fishermen desired livelihood outcome. A few recommendations were presented to reduce the above mentioned gaps, which include (1) strengthen the current structures and processes to ensure desired outcome of each policies and projects are achieved; (2) encourage the involvement of other operators on the island in moving towards improving the livelihood of fishermen; and (3) a long term plan of changing the culture of “hand to mouth” through education. Keywords: sustainable development, Pangkor Island, coastal fisheries, livelihood strategies

Oil Price Shocks, Agriculture and Household Welfare in Nigeria: Results From an Economy-Wide Model

Following the recent plunge in the price of crude oil in the international market and its attendant implications on oil-exporting countries, this paper simulated the impact of a fifty per cent decline in world oil price on agriculture and household welfare using a general equilibrium model, and data from a social accounting matrix (SAM) for Nigeria. Results show that gross domestic output and supply of composites in the agriculture sectors increased substantially, causing agriculture prices to decline. Furthermore, the shock reduced incomes/expenditure in all household groups except urban-north households that recorded an increase. We therefore conclude that lower oil prices may not necessarily lead to output losses, but could boost output in other sectors, engendering diversification of the export base. Also, targeted interventions would prove more effective in mitigating the negative impact of oil price shocks on households than general palliative measures based on the results of the study.

Industrial Water Pollution Discharge Taxes in China: A Multi-Sector Dynamic Analysis

We explore how water pollution policy reforms in China could reduce industrial wastewater pollution with minimum adverse impact on GDP growth. We use a multi-sector dynamic Computable General Equilibrium (CGE) model, jointly developed by Harvard University and Tsinghua University, to examine the long-term impact of pollution taxes. A firm-level dataset of wastewater and COD discharge is compiled and aggregated to provide COD-intensities for 22 industrial sectors. We simulated the impact of 4 different sets of Pigovian taxes on the output of these industrial sectors, where the tax rate depends on the COD-output intensity. In the baseline low rate of COD tax, COD discharge is projected to rise from 36 million tons in 2018 to 48 million in 2030, while GDP grows at 6.9% per year. We find that raising the COD tax by 8 times will lower COD discharge by 1.6% by 2030, while a high 20-times tax will cut it by 4.0%. The most COD-intensive sectors—textile goods, apparel, and food products—have the biggest reduction in output and emissions. The additional tax revenue is recycled by cutting existing taxes, including taxes on profits, leading to higher investment. This shift from consumption to investment leads to a slightly higher GDP over time.

Is financial development in China green? Evidence from city level data

This paper examines the impact of financial development on environmental degradation in China using the city level data over the period 2007–2014. To achieve this task, the Seemingly Unrelated Regression (SUR) model is used. The empirical results show that financial development is helpful to improve the water quality but leads to more SO2 emissions in China. In particular, the financial development of China's big cities increases the burden on both air and water quality. Compared with other regions, financial development is influential in improving the environment in developed regions, namely the eastern coast of China. Together with financial development, the impacts of regulations such as “Beijing Olympic Air Control” and “Green Credit Guidelines” have significantly improved the quality of the environment. Moreover, the findings reveal that cities with higher provincial financial sector output have lower SO2 emissions and waste water discharge.

Floods, Bushfires and Sectoral Economic Output in Australia, 1978–2014

Using state‐level annual variation in natural disasters and economic output in Australia, we estimate the direct effects of floods and bushfires on sectoral gross value added during the period 1978–2014. We find that floods exert an adverse and persistent effect on the outputs of agriculture, mining, construction and financial services sectors. For example, our estimates indicate that a state that experienced a flood in a given year encountered, on average, 5–6 per cent lower agricultural output in both that year and the following year, compared to another state with no such flood experience. Sectoral responses to bushfires are more nuanced.

The Size of Tradable Sectors and Economic Growth

Using the dataset in a maximum of 187 countries for the period 1960-2014, I show that the size of tradable sectors is positively associated with economic growth. Empirical results illustrate that growth effects of the size of tradable sectors are significant and relatively higher in developing countries, compared with developed countries. The estimation results are robust to sensitivity to outliers, different measures of the size of tradable sectors, additional covariates and cross-sectional regressions. I also show that developing countries tend to have higher marginal output in tradable sectors, implying their comparative advantage in the production of labor-intensive industries.

Multiple impacts of environmental regulation on the steel industry in China: A recursive dynamic steel industry chain CGE analysis

With the increasing international attention paid to environmental issues, the ability to pursue continuous development while protecting the environment and thereby achieving a win-win situation has become a significant issue for developing countries such as China. In previous studies, environmental regulation has been proven to be an effective governance mechanism. However, few studies have attempted to analyse the comprehensive impacts and determine the optimal stringency of environmental regulation, especially for a specific industry, based on the actual situation in China. Therefore, this paper calculates the effects of the current and proposed environmental regulation of China's steel industry from 2006 to 2013 by adopting a pollution treatment approach, and based on this calculation, it constructs a recursive dynamic steel industry chain CGE model to investigate the macroeconomic, market and technology impacts from an industry chain perspective under 3 different levels of environmental regulation of the steel industry. The simulation results show that real GDP and the outputs of the downstream sectors of the steel industry will suffer slightly, while the outputs and exports of the steel industry itself will benefit from stringent environmental regulation over the long term. In addition, the material efficiency of steel use will be improved in the long term through the implementation of environmental regulation of the steel industry. Based on the results, it is recommended that a moderate level of environmental regulation should be adopted initially, which can then be smoothly transformed into more stringent regulation during a period of economic growth to avoid sudden and major shocks. In addition, this paper also provides a reference for other substantial industries in China when choosing the optimal pattern for the implementation of environmental regulations.

Farm waters run deep: a coupled positive multi-attribute utility programming and computable general equilibrium model to assess the economy-wide impacts of water buyback

Little is known about the economy-wide repercussions of water buyback, which may include relevant feedbacks on the output of economic sectors at a regional and supra-regional scale. Limited studies available rely on stand-alone Computable General Equilibrium (CGE) models that represent competition for water explicitly, but this approach presents significant data and methodological challenges in areas where mature water markets are not in place –the case of most regions worldwide. To bridge this gap, this paper couples a microeconomic Positive Multi-Attribute Utility Programming (PMAUP) model that elicits the value and price share to water with a macroeconomic, regionally-calibrated CGE model for Spain. Methods are illustrated with a case study in the Murcia Region in southeastern Spain. Economy-wide feedbacks amplify income losses in Murcia's agriculture from −20.5% in the PMAUP model up to −33% in the coupled PMAUP-CGE model. Compensations paid to irrigators enhance demand in the region, but supply contraction in agriculture and related sectors lead to overall GDP losses (up to −2.1%) in most scenarios. The supply gap is partially filled in by other Spanish regions, which experience a GDP gain through a substitution effect (up to +.034%). In all scenarios, aggregate GDP for Spain decreases (up to −.023%).

Spillovers from foreign direct investment in services: Evidence at sub-sectoral level for the Asia-Pacific

We take a sectoral level approach to analyzing the effects of foreign direct investment (FDI) inflows. We disaggregate FDI first by manufacturing versus services, then within services by financial services, trade services, and business services. We consider the effects of FDI inflows on growth of GDP per capita, then distinguish between growth in manufacturing and services value added per capita. Our data sample comprises 14 Asia Pacific economies for the period 1985–2012 to which we apply a dynamic panel generalized method of moments estimation technique. Services FDI as a whole is found to have a significantly positive impact on GDP growth while manufacturing FDI is found to have no effect. The impetus for growth from services FDI traces to financial services in particular, acting not only directly on service sector output but through manufacturing sector output as well. By contrast, trade services FDI is found to have a significantly negative effect on manufacturing output with no significant effect on services output. Foreign participation in trade services may act to expose domestic manufacturers to international competition and may also lead to domestic consolidation to take advantage of economies of scale.

Labor market frictions, monetary policy and durable goods

This paper argues that the labor market is key to understanding the “sectoral comovement puzzle”. We extend the two-sector New Keynesian model with flexible durable good prices and sticky non-durable good prices by introducing (i) labor search and matching frictions and (ii) internal habit formation in non-durable consumption. Search and matching frictions generate comovement and increase the persistence of sectoral outputs, whereas habit formation helps to appropriately distribute the impact of a monetary contraction over the two sectors. As a result, our estimated model closely replicates the amplitude and the curvature of the empirical impulse responses in both sectors.

Jobless Growth in Nigeria: Determining Employment Intensive Sectors

Abstract Growth rates in many African countries for over a decade, between 2002 and 2014 were relatively good and greatly applauded; however, high unemployment remains a persistent challenge of macroeconomic management. This situation now popularly called jobless growth, remains an important issue for policy makers, because it is linked with poverty and social unrests. The study therefore examines employment and sectoral output growth in Nigeria with a view to identifying sectors with high employment intensity. The Structural Vector Auto-Regressive (SVAR) framework was employed in the estimation strategy. Background analysis and stylized facts confirm the existence of jobless growth in Nigeria. Findings from the model estimation demonstrate that the agriculture sector has great potential for job creation. This underscores the need to focus on developing the sector and focussing on agriculture led economy that is able to diversify into other sectors that are by nature labour intensive, thus, making growth more inclusive.