Economic Growth Targets Research Articles

Savings and growth nexus in the context of Southern African Customs Union countries

Orientation: The primary goal of Southern African Customs Union (SACU) is to promote economic development through regional coordination. Consequently, SACU members have set economic growth targets through various medium- and long-term policies.Research purpose: The article investigates the savings-growth nexus among SACU countries.Motivation for the study: This study is motivated by low economic growth among SACU countries and the gap in the saving-growth literature. Specifically, previous studies assumed linear relationship, thereby ignoring the fact that savings may be related to economic growth in a nonlinear fashion.Research approach/design and method: The study utilised several panel estimation techniques with data over 1990–2021 for the SACU countries.Main findings: Firstly, there is a strong evidence of long run relationship between saving and economic growth in SACU countries. Secondly, domestic saving exhibits a positive and statistically significant effect on economic growth both in the short-and long-term. Thirdly, there is evidence of non-linear relationship between domestic saving and economic growth. Lastly, it is shown that 16% threshold level of domestic savings to gross domestic product (GDP) ratio is consistent with 6% GDP growth target aspired by SACU union.Practical/managerial implications: The findings of this article suggest that domestic saving is a prerequisite for economic growth provided the funds are channelled to productive investments. Consequently, there is a need to design appropriate policies that can help to promote and mobilise savings.Contribution/value-add: This article contributes to the ongoing debate on saving-growth in the context of developing countries. In addition, it addressed the linearity assumption of the previous studies by incorporating nonlinear assumption.

Research on the impact of public environmental participation on foreign direct investment: evidence from China

Since the reform and opening up, the scale of foreign direct investment (FDI) inflows into China has been continuously expanding, but the imperfect environmental governance mechanism has led to increasingly severe environmental problems in China. This paper studies the impact and mechanism of public environmental participation (PEP) on FDI. The results show that PEP has a significant negative impact on the FDI inflow of enterprises. Hindrance effect of PEP on enterprise FDI is more obvious in economically developed eastern regions, coastal cities and first-tier cities. PEP has a greater impact on FDI in high-tech industries. The economic growth target has a restraining effect on China’s environmental protection, weakening public supervision of FDI. The constraint of economic growth targets increases the pressure to develop the economy, and weakens the inhibitory effect of PEP on corporate FDI. This study provides important empirical evidence for improving China’s environmental governance system and high-quality utilization of foreign investment.

The impact of local economic growth target management on carbon emissions efficiency

The impact of local economic growth target management on carbon emissions efficiency

Towards cities' green growth: The combined influence of economic growth targets and environmental regulations

Cities' green growth hinges on both sustained economic growth and ongoing ecological improvement. This study uniquely examines the roles of economic growth targets and environmental regulations in fostering this growth. Using China as a case study, we found that economic growth targets have a limited impact on cities' green growth due to varying outcomes from resource allocation strategies aimed at meeting these targets. A closer look at China's economic growth targets management model reveals that the pressures from meeting the ill-fitted economic growth targets often leads to green growth setbacks, with local governments prioritizing economic over green growth by relaxing environmental regulations. Therefore, we propose that cities can achieve a balance by setting realistic economic targets, with the central government enhancing oversight of local environmental regulations and adopting an innovation-driven development strategy for economic growth targets. This approach can make economic targets and environmental regulations work together to achieve green growth. Our empirical findings offer new insights into cities' governance for sustainable development.

Exploring the Impact of Local Economic Growth Targets on Labor Price Distortions

The completion of local economic growth target designation will promote the reform of market-oriented allocation of factors and achieve a quality "demographic dividend" by reducing labor price distortion and improving labor allocation efficiency. Research and analysis of local economic growth targets acting on labor price distortions through labor bargaining power channels show that increasing local economic growth targets will intensify labor price distortions, and at the sub-regional level, the eastern region will have the greatest impact . At the sub-city scale level, large Cities have the largest impact. The results of the intermediary effect analysis show that local economic growth targets will have a negative impact on labor price distortion by exacerbating the imbalance of labor bargaining power. The quantile analysis results show that the greater the labor price distortion, the greater the impact of local economic growth targets on labor price distortion. The greater the impact of labor price distortion.

Does energy consumption play a key role? Re-evaluating the energy consumption-economic growth nexus from GDP growth rates forecasting

Given the strong link between economic growth and energy consumption, we construct a new set of energy consumption indices (ECI) to forecast GDP growth rates. The findings demonstrate the strong predictive power of the new indices. In particular, the electricity consumption index from the industrial sector has an excellent predictive performance and deserves the attention of the government and academia to help formulate economic growth targets. The mixed-frequency model with the Least Absolute Shrinkage and Selection Operator approach (MIDAS-LASSO) enables the full exploitation of energy consumption information for stable forecasting performance, even in the context of crisis fluctuations and geopolitical risk shocks. Furthermore, we apply forecast encompassing tests and variable selection to statistically investigate the predictive information. By analyzing energy consumption characteristics, we contribute to the economic growth hypothesis at the level of energy consuming sectors and provide new insights into GDP forecasting.

Government GDP targets and corporate capacity expansion – Empirical evidence based on A-share listed companies

The phenomenon of Chinese-style capacity expansion is widespread and closely tied to the interventionist behavior of local governments. Using data from A-share listed companies between 2010 and 2021, we find a significant correlation between economic growth targets and corporate capacity expansion. The impact of growth targets on capacity expansion is more pronounced during the National Party Congress, when officials use stricter constraints and when the municipal party secretary is around 55 years old. Officials influence capacity decisions by allocating key resources such as land and finances. We provide valuable insights into Chinese-style capacity expansion, offering reference significance for promoting China's supply-side structural reform.

How environmental regulation affects entrepreneurship: evidence from China’s low-carbon city pilot policy

ABSTRACT As an important strategy for China to achieve green development, the low-carbon city pilot (LCC) policy has been studied mainly focusing on its positive impact on pollution control, while ignoring the potential economic effects, especially not focusing on the impact of the policy on entrepreneurship. For this reason, based on the registration data of new manufacturing enterprises at the city level of China from 2005 to 2019, we take the LCC policy as a quasi-natural experiment and adopt the time-varying difference-in-differences (DID) approach to systematically explore the impact of the LCC policy on urban entrepreneurship. The empirical results show that: (1) The LCC policy significantly crowds out manufacturing enterprises’ urban entrepreneurship, and this crowding-out effect gradually rises with the implementation time of the policy. (2) The crowding-out effect of the LCC policy on entrepreneurship is stronger for state-owned enterprises, heavily polluting enterprises, environmentally friendly cities, and low-market cities. (3) The mechanism analysis demonstrates that raising the economic growth target and lowering environmental constraints can alleviate the crowding-out effect of the LCC policy. Moreover, LCC policy has a spatial spillover effect that obviously crowds out manufacturing enterprises in neighbouring cities.

Does the setting of local government economic growth targets promote or hinder urban carbon emission performance? Evidence from China.

Growth target management drives China's economic expansion, leading to potential carbon emission externalities. This study examines the impact of economic growth target setting on carbon emission performance in 257 Chinese localities from 2004 to 2020. Using cluster standard error regression, 2SLS instrumental variable regression, and the spatial Durbin model, the results show that moderate growth targets improve urban carbon emission performance. Conversely, aggressive targets do not enhance regional carbon emission performance. Moderate growth targets foster innovation in green technology, while aggressive ones encourage investment in fixed assets and new city growth, impeding performance. Cities in the eastern and western regions, with larger populations and less reliance on natural resources, benefit more from effective economic development targets. The establishment of local targets negatively affects neighboring regions' carbon emissions performance, particularly at a spatial scale of 100 to 200km. This paper contributes to understanding the environmental consequences of growth target setting and offers insights for balancing economic growth with carbon emission governance in emerging market countries.

The Dynamic Impact of Economic Growth, Foreign Direct Investment and Infrastructure in Laos

This study examines the dynamic impacts of economic growth, foreign direct investment, and some infrastructure variables in Laos with the time series data from 1995-2020, which have used the Generalized Method of Moments (GMM) and Autoregressive Distributed Lag (ARDL) model approach. The unit root test to check the stationarity of all variables in this study using the Augment Dicky Fuller (ADF) test with considering both level and at first difference. The empirical results of GMM found that the FDI is a major catalyst for economic growth in Laos which has a positive impact and is statistically significant at the level. Similarly, the role of infrastructure variables such as agriculture, industry, and service is the main of the most important indicators in supporting the economic growth in Laos, while telecommunication, electricity, air transport, and trade are positive but insignificant at the level. However, this study also found some variables such as labor, population growth, and life expectancy in support of economic growth which have a strongly positive and significant impact at the level, but the human capital is insignificant at the level. We, therefore, recommend that the government of Laos should attract and sustain more foreign direct investment and increase the infrastructural development to achieve the target of sustainable economic growth in the near future.

The Effect of Foreign Direct Investment and Infrastructure on Economic Growth in Laos

The main of this study examines the long-run relationship between foreign direct investment and infrastructure on economic growth in Lao PDR using time series data from 1995-2020. The empirical evidence of cointegration among the variables in the long run by Autoregressive Distributed Lag (ARDL) bounds test estimates. The empirical results indicate that the FDI variable has a positive and significant impact on the level of Laos’ economic growth in the long run. Similarly, infrastructure variables such as telecommunication, electricity, and air transport play important roles in supporting economic growth in the long run and there are positive and statistically significant impacts at the level. As a result, to achieve the target of sustainable economic growth the government of Laos should attract and sustain more foreign direct investment and improve the infrastructure such as telecommunication, electricity, and air transport to boost economic growth shortly.

Carbon intensity constraint, economic growth pressure and China's low-carbon development

Within the context of promotion tournaments among local governments, the management of economic growth goals plays a crucial role in China's economic development. Despite China's rise as the second-largest economy globally, it has also emerged as the largest emitter of carbon emissions. Since the implementation of the 12th Five-Year Plan in 2011, the Chinese central government has made carbon intensity targets mandatory indicators for national economic development. This has prompted local governments to pursue low-carbon growth and adjust their economic growth targets (EGT) to comply with carbon intensity constraints. In this study, a sample of 282 prefecture-level cities in China is used to empirically examine the impact of carbon intensity constraints on total factor carbon emission efficiency (TCE) using the intensity difference-in-differences (DID) framework. The study also emphasizes the role of the transmission channel for economic growth pressure (EGP). The findings of the study reveal several key results. Firstly, the implementation of carbon intensity constraints leads to an average increase of 8.24% in total factor carbon emission efficiency (TCE), which is supported by robustness tests, parallel trend analysis, and placebo tests. Secondly, these constraints result in an average decrease of 0.1828 in local governments' economic growth targets (EGT) and a reduction of 0.1269 in economic growth pressure (EGP). Thirdly, cities with a higher proportion of secondary industry experience a more significant mitigation effect, although the promotion of provincial EGT hinders this effect. Fourthly, synergistic policies can effectively promote low-carbon development, and government expenditure on technology and marketization can facilitate a positive relationship between carbon intensity constraints and TCE. Lastly, the effects of carbon intensity constraints vary across the east, middle, and west regions, suggesting the presence of heterogeneity. The article proposes a shift in the assessment of lower governments by superior governments, from growth assessment to low-carbon growth assessment.

Greening south Asia: Investing in sustainability and innovation to preserve natural resources and combat environmental pollution

Over the past few years, South Asian economies have witnessed consistent growth. Despite the region's vast wealth in natural resources, the impacts of climate change are evident across its diverse climatic zones. The integration of Green Finance (GIFN), Environmentally Friendly Investments (EFI), and Green Technology Innovation (GTI) can significantly alter the trajectory for South Asian nations. These mechanisms not only support economic growth targets but also mitigate the escalating environmental pollution in the region. Consequently, this study was undertaken to assess the potential of NTR, GIFN, EFI, and GTI in addressing CO2 emissions within the South Asian economic framework. Utilizing the Method of Moments of Quantile Regression (MMQR) on the dataset revealed that NTR has a positive impact on CO2 emissions. Conversely, GIFN, EFI, and GTI demonstrated negative impacts on CO2 emissions. Based on these findings, there's a pressing need for robust governance and policy enforcement by regional institutions to enhance environmental well-being.

Integrating Estimation of Inflation Threshold and Nowcasting Regional Economic Growth Using Classical, Machine Learning, and Ensemble Method

In line with the global economic recovery, Indonesia's post-pandemic economic recovery is experiencing major challenge caused by uncertainty due to increasing inflationary pressure. Efforts to reduce inflationary fluctuations were carried out by the government in order to maintain optimal economic growth under the inflation targeting policy framework. Hence it is necessary to inspect the inflation threshold for economic growth in determining the inflation target. This study attempts to integrate inflation threshold estimation and nowcasting modelling of regional economic growth as an early warning system for achieving the government's economic growth target by utilizing several classical, machine learning, and ensemble models. Threshold estimation for the National level and East Java is applied to provincial groups obtained from clustering time series with dynamic time wrapping (DTW), author's justification, and the west-east region. In addition, estimates were also carried out in the period before Covid-19 as well as the entire period and the addition of predictor variables to test the sensitivity of the inflation threshold estimate. The results show that there was a non-linear relationship between inflation and economic growth with an inverted U shape. There are differences in the inflation threshold range due to provincial groupings, addition of control variables, both for the National level and for East Java. Evaluation of the inflation level in East Java and eight cities shows that in several periods, East Java inflation has exceeded Bank Indonesia's ITF target. Taking into account the estimated threshold range, it is recommended to set a more flexible inflation target at the regional economic level. Finally, the results of nowcasting with several specifications, such as the use of machine learning models and weighted ensemble models based on accuracy, as well as out-sample predictions with one-step ahead can improve the accuracy and consistency of the model for both short-term and long-term.

Setting local economic growth targets: does it mitigate nationwide policy uncertainty?

ABSTRACT Institutional theory holds that local governance is essential in shaping regional economic activity. This study evaluates whether local economic growth targets offset the detrimental effect of nationwide policy uncertainty on local business performance. Regression analyses of data from industrial firms and manually collected data on city economic growth targets in China show that higher local growth targets result in greater corporate investment, conditional on nationwide policy uncertainty, and that the impact is substantial through financial subsidies and allocating credit resources. However, local discretion in economic growth target setting might cause investment misallocation and efficiency loss.

Does green credit promote firm environmental performance? A new perspective of economic growth target constraints.

Green credit encompasses financial instruments and services utilized to mitigate greenhouse gas emissions and facilitate adaptation to global climate change. Establishing a long-term stable green credit institution is crucial to promoting carbon abatement goals. This study uses the difference-in-difference (DID) model to discuss the impact of green credit policy (GCP) on environmental performance based on the China industrial enterprise data. Our results show that GCP inhibits the pollution emissions and improve firm environmental performance. This improvement effect is attributed to a reduction in production scale, and financing constraints. Moreover, GCP increases the firms' exit risk from market and promotes the technological innovation of incumbent firms. Economic growth target constraints trigger a positive moderation role in the implementation of GCP. Heterogeneity results show that such improvement effect is more pronounced in state-owned firm, large-scale firms, and high R&D intensity firms. Importantly, our findings also suggest the environmental monitoring effect of green credit is dependent on the institutional quality. Only in a sound market environment can GCP effectively improve firm environmental performance. Finally, we propose to build a systematic incentives and constraints mechanism to achieve the sustainable development. The conclusions of this paper provide empirical evidence and policy implications for the implementation of GCP.

Leadership Mobility and Target Adaptation: Does Previous Target Achievement Matter?

Target setting (or goal setting) is a process of incremental adaptation. Prior studies have mainly focus on organization-level adaptation of performance target setting. Based on the geographical leadership mobility within the Chinese political personnel system, this study explores leader-level adaptation of their organizations’ performance target setting. Using a Chinese province-level panel data-set from 1999 to 2019, we empirically confirm that performance targets in one administrative jurisdiction where the current incumbent provincial governor previously served positively influence performance targets in their current provincial leadership position. Furthermore, if the performance targets in the provincial governor’s previous working locality were achieved successfully, the provincial governor will be more motivated to learn from past target-setting experiences. Finally, provincial governors show significantly different policy learning motivation in economic growth target setting before and after the reform of China’s cadre evaluation system in 2013. These findings show that local executives display conditional learning in their individual-level targets aspiration adaptation process.

Can civilized city construction facilitate green total factor productivity? A quasi-natural experiment based on China’s pilot civilized city

This paper uses a double difference method to examine the impact of civilized city policies on urban green total factor productivity and its mechanism of action using Chinese city-level data from 2005 to 2021. The study finds that the civilized city policy promotes urban green development. The mechanism test finds that the civilized city policy achieves urban green development by strengthening government investment in environmental governance, optimizing industrial structure upgrading, and promoting urban innovation. The moderating mechanism finds that economic growth targets and environmental regulations influence the green growth effect of civilized city policy. Heterogeneity analysis found that the green growth effect of civilized cities has an asymmetric relationship in the east-central region, in areas with lower population density, and was more pronounced in cities with high human capital, high local government financial autonomy, and high levels of information technology.

THE EFFECT OF FOREIGN DIRECT INVESTMENTS ON CORPORATE TAX REVENUES: AN EMPIRICAL ANALYSIS FOR OECD COUNTRIES

Foreign direct investment (FDI) increased globally in the 1980s, parallel to the increasing liberalization of financial markets, the reduction of exchange rate controls, increased capital mobilization, and accelerated technological developments. FDIs offer versatile macro and micro scale positive effects to the host economies. In this context, FDIs have been the focus of academicians and policymakers for reasons such as filling the domestic savings gap, providing financial stability, achieving economic growth targets, and increasing social welfare, which is needed for developing and developed countries. Therefore, governments tend to build attractive investment zones for FDIs by providing tax cuts/advantages and bureaucratic conveniences in financial legislation. In this study, using system-GMM estimator, the effect of FDIs on corporate tax revenues for 35 OECD member countries in the 2005-2020 period was examined and it was understood that the said effect was limited but negative.

Transmission Mechanism of Monetary Policy Through Asset Price and Exchange Rate Channel in Indonesia

Many studies have been related to monetary policy transmission toward economic growth targets. However, research on monetary policy transmission by including bond yields as a channel has never been done in Indonesia. Therefore, this study will analyze the effectiveness of monetary policy transmission through bond yields compared to monetary policy transmission through asset price and exchange rate channels. This study uses secondary data obtained from the Central Bureau of Statistics (BPS), the Indonesia Stock Exchange (IDX), the Indonesian Economic and Financial Statistics (SEKI) of Bank Indonesia, and the website investing.com. The analysis technique used in this study is Vector Autoregression (VARs). Based on research results, a relatively effective monetary policy transmission channel is the stock asset price channel. It is because the variables in the channel of stock asset prices only take one month to respond permanently to monetary policy, but the contribution between variables is still low. In the bond yield and exchange rate channel, the response shown is only temporary, and the contribution between variables is still weak, so the two channels are ineffective in transmitting monetary policy with the target of economic growth in Indonesia.