Foreign capital inflows and economic growth of Pakistan

This study investigates the relationship of foreign capital inflows, namely foreign direct investment, workers’ remittances, and external debt with economic growth of Pakistan by employing time series data from 1976 to 2015. Cointegration results indicate that foreign capital inflows and economic growth have a significant relationship with economic growth in the long run. Ordinary least square results indicate foreign direct investment has a significant and negative effect on economic growth, whereas a significant positive effect of remittances and external debts on economic growth is found. Rolling windows analysis highlights the yearly effect of three different models. Two different sensitivity analyses confirmed that initial results are robust. The final section concludes the study and provides some policy implications.     

Human capital inequality and income inequality: testing for causality

This study investigates the causal relationship between human capital inequality and income inequality in case of Pakistan. The annual time series data ranging from 1973 to 2009 is used for econometric analysis. Johanson co-integration and Granger Causality tests are used to confirm the existence of long run relationship and the causal relationship between human capital inequality and income inequality. The results indicate that there is positive relationship between the two types of inequalities in the long run. The estimates of causality test indicate that income inequality causes the human capital inequality but human capital inequality does not cause income inequality. Policy initiatives to reduce income inequality may empower people economically to avail skill building opportunities and accumulate their human capital through access to educational services.     

Impact of economic growth volatility on income inequality: ASEAN experience

The study attempts to examine the symmetric and the asymmetric impact of volatility of economic growth on the inequality of income in the major ASEAN economies over the period 1980–2015. Financial development, trade openness as a proxy of globalization, inflation, human capital formation, and fiscal policy are utilized as major control variables. The paper tries to explore the causal association between inequality of income distribution and economic growth volatility, exploring simultaneously the long-run association and the short-run dynamics in the time series structure. The study applied Clemente–Montanes–Reyes unit root test to identify the structural break in the time series. Further, the cointegrating relationship of the time series observations was explored by applying the ARDL (linear) bounds test approach along with the nonlinear ARDL for making fruitful comparisons in the long-run relationship among the variables. The countries chosen are Malaysia, Indonesia, Thailand, Singapore and The Philippines. The empirical findings strongly suggest a long-run cointegrating relationship between income inequality and growth volatility with a positive and statistically significant impact. Also, the causality analysis was explored using the Toda and Yamamoto (1995) method of Granger causality. The causality test shows that there exists bidirectional causality from inequality transmission to economic growth volatility. The implications that are developed from this study helps us to understand the various policy reforms in the ASEAN region, that are more transparent and can make these economies less susceptible to risks.     

Re-examining the relationship between economic growth and inequality in the New Member States

The link between income inequality and economic growth has raised many debates in the literature and has generated a large spectrum of results over time. This paper aims at analyzing the relationship between economic growth and income inequality, as well as their macroeconomic and institutional determinants in the New Member States, between 2000 and 2009. In the presence of a set of explicative variables, the economic growth influences the social inequality through a U-shaped relationship. Health, education and gross capital formation generate different direct and indirect effects on income inequality as the per capita GDP growths, while the transition indicators are found to be either common or specific determinants of inequality and growth.     

An Empirical Test of the Institutionalist View on Income InequalityEconomic Growth within the United States

This paper analyzes the relationship between income inequality and economic growth within the United States using state level data. It describes income inequality in the U.S. since 1960, then employs a two-step causal model to test the institutionalist contention that income inequality leads to socio-political instability, which has a negative impact on economic progress. The empirical results offer support for the institutionalist view.     

An Empirical Test of the Institutionalist View on Income Inequality

This paper analyzes the relationship between income inequality and economic growth within the United States using state level data. It describes income inequality in the U.S. since 1960, then employs a two‐step causal model to test the institutionalist contention that income inequality leads to socio‐political instability, which has a negative impact on economic progress. The empirical results offer support for the institutionalist view.     

Foreign inflows and economic growth: An emiprical study of the SAARC region

The study examines and highlights the impact of selected foreign inflows (aid, trade, FDI, debt and remittances) on the economic growth of the South Asian Association for Regional Cooperation (SAARC) countries. The existent literature lacks a comprehensive analysis of the SAARC countries as countries like Afghanistan, Bhutan and the Maldives have largely been ignored due to the shorter time periods of available data. The study is empirical in nature and utilizes panel data techniques on macroeconomic data for the period 2008–2015. Foreign aid and foreign direct investment are found to impact economic growth positively. Foreign debt and trade flows are found to adversely affect economic growth. No relationship is established between the flow of remittances and the economic growth of these countries. The obtained results are robust to different proxy variables and the addition of macroeconomic variables. For the first time, the study provides policy implications based on the data of all SAARC countries. The study recommends focusing on increasing the inflows of resources in the form of aid and foreign direct investment (FDI) from the developed world to achieve higher economic growth.     

IFRS,financial development and income inequality: An empirical study using mediation analysis

Income inequality continues to be an issue of concern. Early work on economic development suggested that, as a country’s economy grows, incomes would rise and reduce any income disparities. However, there is growing evidence that as countries develop, income inequality actually worsens. Some studies argue that this is the result of financial development and the growth of the financial sector. Although there is a good deal of empirical research on the relationship between financial development and income inequality, there is no prior work that examines how accounting standards, in particular International Financial Reporting Standards (IFRS), might influence this relationship. This study examines the relationship of IFRS and financial development with income inequality using mediation analysis over the period from 1998 to 2018. The results indicate that the impact of IFRS on income inequality is mediated by financial development. Moreover, there is a direct relationship between IFRS and inequality.     

Global estimates of growth–inequality–poverty (GIP) triangle: evidence from World Bank’s classification countries

This study extended the concept of ‘growth–inequality–poverty (GIP) triangle’ by using the principle component approach which allows us to composite different poverty and inequality indicators into one single index that contains most of the useful information from the original dataset. Using the idea of GIP triangle, this study examines the long-run relationship among weighted poverty index (which comprises headcount ratio, poverty gap and squared poverty gap); weighted inequality index (i.e., Watts Index, Gini Index and MLD Index) and average monthly per capita income in the designated 138 countries according to World Bank’s classification over a period of 2005–2010. The data set mainly contain countries’ unit record household survey at least one which is conducted between the countries during the sample period. The regression model encompassing the impact of economic growth and income inequality on poverty reflects that income inequality increases poverty while economic growth decreases poverty. It indicates that the impact of inequality in increasing poverty is a somewhat greater than that of growth in average income in reducing overall poverty in a sample countries. The other regression model encompassing the impact of economic growth and poverty on income inequality showed that the poverty itself is also likely to be a barrier for poverty reduction; and inequality seems to predict lower future growth rates. The final regression model depicting the impact of poverty and income inequality on mean income of the household suggests that poverty itself reduces mean income of the household while income inequality increases economic growth. The results are interesting and simply suggest that whenever social institutions malfunction, the incidence of damage would usually be distributed unevenly over the society’s members.     

Higher education and growth performance of Pakistan: evidence from multivariate framework

This study investigates the relationship between higher education and economic growth in Pakistan by using the annual time series data from the period of 1980–2011. The ARDL bound testing cointegration approach confirms the valid positive relationship between higher education development and economic growth in long run as well as in short run. Results of Granger causality test, Toda and Yamamoto Modified Wald causality test and variance decomposition test confirm the bidirectional causal relationship between higher education and economic growth in Pakistan. Results of rolling window estimations suggest that the contribution of higher education in economic growth is significantly increased after the formation of higher education commission of Pakistan in 2002. It is clear from our findings that higher education commission plays an important role in the development of higher education in Pakistan which leads to enhance economic growth. It is recommended that policy makers should make policies to strengthen the higher education commission to ensure continuous and rapid economic growth in Pakistan.     

When is there a Kuznets curve? Some evidence from the ex-socialist countries

This paper investigates when there is a Kuznets curve, that is, under which conditions income inequality eventually declines with economic growth. The analysis was performed on a sample of 26 ex-socialist countries from the former Eastern Bloc, during the post-socialist years. These countries had very similar characteristics when socialism collapsed, but very different experiences with transition afterwards, which makes them a suitable group for analysing the relationship between GDP and inequality. We focus on four factors that may shape this relationship – labour market institutions, the market power of companies, social benefits and taxes. Our findings suggest that the Kuznets curve is present only when control of companies’ market power is effective and taxes are high.     

Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach

This study investigates the effects of foreign capital inflows and economic growth on stock market capitalization in 18 Asian countries by using the panel data from the period of 2000–2010. The ARDL bound testing cointegration approach confirms the valid long run relationship between the considered variables. Results indicate that foreign direct investment has significant negative and economic growth has significant positive relationship with the stock market capitalization, whereas, the results of workers’ remittances is found insignificant in long run. The error correction model confirms the significant positive relationship of economic growth and workers’ remittances while, FDI has negative and significant impact on stock market capitalization in short run. Results of causality test based on Toda and Yamamoto (J Econom 66: 225–250, 1995) show the bidirectional causal relationship of foreign direct investment and economic growth with stock market capitalization. However, no causal relationship is found in between workers’ remittances and stock market capitalization. It is suggested that investor should not idealize the inflow of workers’ remittances to invest in Asian stock markets in long run. Simultaneously, size of the economy is a better leading indicator for Asian stock markets. On the other hand, inflows of FDI may mislead the investor to invest. Investor should keep on eye whether FDI come in the competition of domestic market or not? If this happens so investor should not invest in the stock market of host country.     

Income Tax Progressivity: Trends and Implications

This paper discusses how the structure of the tax system affects its progressivity. It suggests a measure of progressive capacity of tax systems, based on the Kakwani index, but independent of pretax income distributions. Using this and other progressivity measures, the paper (i) documents a decline in progressivity over the last decades and (ii) examines the relationship between progressivity and economic growth. On this relationship, regressions do not reveal a significant impact, suggesting that efficiency costs may be small – at least for degrees of progressivity observed in the sample. Finally, the paper finds that increasing tax progressivity reduces pretax inequality.     

Boom, bust, and the poor: Poverty dynamics in the Middle East and North Africa, 1970–1999

This paper analyzes changes in poverty and inequality in the Middle East and North Africa. It finds that the structural relationship between poverty reduction, income growth and distribution is the same for MENA and other developing economies. Prior to 1985 rapid growth sharply reduced poverty. After 1985, despite very low income growth, a rising share of income accruing to the lowest quintile meant that the average income of the poor rose more rapidly than that of the non-poor. These unusual poverty dynamics were primarily due to international migration. Remittances both increased per capita incomes in labor exporting countries and increased the share of income accruing to the poor.     

EFFECTS OF LABOR REALLOCATION ON PRODUCTIVITY AND INEQUALITY—INSIGHTS FROM STUDIES ON TRANSITION

From a theoretical perspective, the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, that is, the economic transition from a centrally planned to a market-oriented economy in CEE. We have collected over 450 estimates of job flows from the literature and used these inputs to estimate the short-run and long-run relationship between labor market flows, labor productivity, and income inequality. We apply the tools typical for a meta-analysis to verify the empirical regularities between labor flows and productivity growth as well as income inequality. Our findings suggest only weak and short-term links with productivity, driven predominantly by business cycles. However, data reveal a strong pattern for income inequality in the short run—more churning during reallocation is associated with a level effect toward increased Gini indices.     

我国的收入分配发展趋势是否为倒U形

阐述了国内外学者对库兹涅茨"倒U假说"所持的观点和认识。用我国的实际数据对库兹涅茨"倒U假说"进行了检验,认为我国的收入分配基本上不符合倒U形状,不能靠经济增长来解决收入差距的拉大问题;收入现状的改善需要政府政策的支持。     

Business cycles and redistribution: The role of government quality

We study how government quality mediates the relationship between business cycles and redistribution. Our key hypothesis is that the potential of income redistribution to reduce rising inequality levels after an economic crisis depends on government quality. The empirical evidence based on a panel of 46 countries over the period 1996–2016 lends strong support to this hypothesis. We find that macroeconomic recessions promote redistribution of income in high government quality contexts, but they lead to wider economic inequalities in countries with poor quality of government.     

THE RELATIVE IMPORTANCE OF EXPORTS IN DETERMINING LEVELS OF REGIONAL OUTPUT AND INCOME: A Model and Empirical Evidence from Kenya

Exports have long been assumed by many to be the most important variable in driving regional growth, although factors such as government expenditure, investment demand, and remittances, among others, have also been recognized as significant. In addition, supply-side constraints to the promotion of regional growth and development have recently received increased attention in the literature. This paper evaluates the relative importance of exports, investment demand, and remittances, as well as supply-constrained agricultural production, in determining levels of regional output, value added, and household income in a single region in Kenya. The analysis is based on a mixed endogenous/ exogenous model derived from a social accounting matrix (SAM) which allows for incorporation of both demand and supply-side considerations. The paper finds that exports are, in fact, the most important factor in explaining regional output and wage income in the region studied, although not overwhelmingly so. In addition, the analysis demonstrates the importance of supply-constrained agricultural production as a determinant of income at the household level.     

Agricultural exports and economic growth in Pakistan: an econometric reassessment

Agriculture sector works as backbone of Pakistan economy. In this modern era, exports work as locomotive of growth train. Pakistan earned a handsome amount through exports of agricultural raw material and refined products. This research investigates that either there is unidirectional or bidirectional association between agricultural exports and economic growth in Pakistan? For empirical investigation of relationships between economic growth and agricultural exports in Pakistan this study used most reliable econometric estimation tools, augmented Dickey–Fuller unit root test, Johansen co-integration and Engle–Granger causality tests for 45 time series annul observations from 1970 to 2014. This research winds up that Pakistan’s agricultural exports have positive but insignificant association with gross domestic product growth. It is due to the primary and raw material agricultural products exports which cannot compete in international markets due to close competitions, lower quality and dearer price. Consequently, receive a trifling amount as exports earnings; contribute slightly in national economic growth.     

Corruption, economic growth, and income inequality in Africa

This paper uses panel data from African countries and a dynamic panel estimator to investigate the effects of corruption on economic growth and income distribution. I find that corruption decreases economic growth directly and indirectly through decreased investment in physical capital. A unit increase in corruption reduces the growth rates of GDP and per capita income by between 0.75 and 0.9 percentage points and between 0.39 and 0.41 percentage points per year respectively. The results also indicate that increased corruption is positively correlated with income inequality. The combined effects of decreased income growth and increased inequality suggests that corruption hurts the poor more than the rich in African countries. Received: March 19, 2001 / Accepted: December 14, 2001 RID="*" ID="*" An earlier version of this paper was presented at the first AmFiTan International Conference on Development Ethics in February 2000, Dar er Salaam, Tanzania. I thank two anonymous referees of this Journal for helpful suggestions. I am, however, solely responsible for any remaining errors.