A 'Generalised' Version of the Balance-of-Payments Growth Model: An application to neighbouring regions

This paper applies a 'generalised' version of Thirlwall's balance-of-payments (BOP) constrained growth model by testing for long-run relationships between the output growth rates of OECD countries and two neighbouring regions; South Africa (SA) and the rest of the Southern African Development Community (RSADC). The empirical results find strong support for the 'generalised' BOP growth model, which stresses the mutual interdependence of the world economy where one country's growth rate depends on others'. Although the policy implications are not mutually exclusive, they may be viewed from the individual perspectives of SA and RSADC. SA is only BOP constrained with respect to OECD. The message to SA's policy makers is that faster growth rates may be the result of an improvement in the structural demand features of its exports to OECD. RSADC is only BOP constrained with respect to SA. Growth-promoting policies in SA may have a high and positive impact on the whole SADC region. Policy-makers in RSADC, however, are advised to reduce their dependence on SA by improving the structural demand features of their exports to OECD.     

Growth and decline of the paper industry: an econometric analysis of US regions

An explanation was sought of the different growth of the paper and paperboard industries in regions of the United States. To that end, a theory of regional demand and supply was formulated. Elasticities of regional production with respect to important supply and demand factors were then calculated by econometric methods, with data for the period 1950–78. These elasticities were used, together with the observed average annual percentage changes of the corresponding variables, to determine the contribution each had on the growth of production. The results indicated that demand was the major factor causing the differences in growth rates. The rapid growth of paper and paperboard production in the regions of the South and West was spurred mostly by high economic and demographic growth in their market area. Supply (cost) factors, and the price of paper substitutes, were found to have played a minor role in comparison.     

Growth,unemployment and labour market institutions: evidence from a cross-section of EU regions

The responsiveness of unemployment to growth is an issue of ongoing political and academic interest. Economic growth is supposed to be the key to increase labour demand and reduce unemployment. Departing from Okun's law, most research on the unemployment intensity of growth has focused on national disparities and the role of labour market institutions. Empirical evidence at the regional level is scarce. We investigate differences in regional labour market responsiveness and their potential determinants for a cross section of European regions. The data set covers the NUTS 2 regions in the EU15 for the period 1980 to 2002. Following a spatial modelling approach interaction among neighbouring labour markets is taken into account. Our findings point to substantial differences in labour market effects of output growth among European countries and regions. Both national labour market institutions and regional characteristics, such as structural change explain a significant part of these disparities.     

Price convergence across regions in India

The paper attempts to examine whether there is price convergence across various regions in India. Using panel unit root tests that are robust to cross-sectional dependence, it is found that relative price levels among various regions in India are mean-reverting. Further, we decompose each series into a set of common factors and idiosyncratic components. The decomposition enables us to test stationarity and estimate half-lives of the common factors and the idiosyncratic components separately. Both these components are found to be stationary. Idiosyncratic price shocks, however, are found to be more persistent as compared to the common factor. Results also indicate that transportation cost proxied by distance can explain a part of the variation in prices between two locations in India. The authors would like to thank Dibyendu Bhaumik for arranging the data for this study. Views expresed in the paper are personal and do not reflect the views of the organizations.     

Inequality and credit growth in Russian regions

We test the Rajan hypothesis using data for Russian regions from 2000 (after the ruble crisis) to 2012 (before the introduction of international sanctions). The Rajan hypothesis predicts that rising income inequality leads politicians to expand credit for the poor, which in turn, fuels a consumer credit boom. Russia provides a unique research opportunity becaise it is a post-communist transition country with 75 diverse regions. We find that a rise in income inequality is positively correlated with personal loan growth in Russia. We also find a statistically weaker, albeit economically larger, relationship between economic inequality and corporate credit. Taken together, our results provide support for the Rajan hypothesis in a country with extreme regional differences and a long history of populist policies.     

Cooperation and specialization in German technology regions

In this paper we focus on the technological knowledge of a region and the pattern of cooperative behavior of the innovative actors within that region as a means of transferring this knowledge. In particular, we are concerned with the relationship between the kind and level of knowledge and/or the degree of specialization within a region, the propensity to cooperate and the kind of cooperation. Based on a theoretical discussion of research cooperation we derive appropriate hypotheses and provide an econometric analysis based on data of co-patenting. We find that technologically moderately specialized regions show the highest number of research cooperations, and the higher a regions specialization, the more cooperations take place with partners inside that region.JEL Classification: L29, O31, R12We thank Jens J. Krüger, Michel Quéré, Cees van Beers, Henry Overman and participants of the ZEW Summer Workshop on Innovation, Location and European Integration in Mannheim as well as two anonymous referees for their helpful comments and suggestions.     

Financial cycles in asset markets and regions

This paper provides a comprehensive analysis of financial cycles in asset markets and regions. Using a large sample of 38 advanced and emerging economies to enable a comparative assessment, the analysis conforms with the prevailing literature pertaining to the characterization of financial cycles in advanced economies, but finds that equity market cycles in emerging market economies (EMEs) in Asia, Latin America, and Eastern Europe may be a more useful gauge of the financial cycle compared to cycles in credit and property markets. Similar to more advanced economies, it is found that financial and business cycles in emerging economies are synchronized, albeit partially and with some cross-country heterogeneity. This underscores the importance for policy makers to be vigilant of interlinkages between real and financial sectors, pointing toward a need for carefully designed macroprudential policies. Finally, it is found that financial cycles in emerging markets remain vulnerable to global risk aversion in financial markets and spillovers from the US, thereby reinforcing the importance of continuing to strengthen domestic macroeconomic fundamentals, and develop further local financial sectors through targeted structural reforms.     

保护"全球公域"的法律问题

根据国家管辖范围,国际环境和资源可以分为国家管辖范围内的环境和资源、由两个或多个国家共享的环境和资源以及国家管辖范围之外的环境和资源三个类型。前两个类型由于有国家主权的支持作保障,相对容易得到保护,第三类型的环境和资源,尤其是其中比例较大的被称为“全球公域”(theglobal commons)则保护较为困难。保护“全球公域”的意义,不仅在于国家管辖范围之外的环境对于全球环境质量的保护和改善至关重要,还在于“全球公域”的保护提出了一系列国际法尚未很好解决的问题。如“全球公域”的保护对国家主权概念产生的冲击;“全球公域”的损害是否可以防止,又由谁代表“对一切人的共同利益”来防止?这些都是“全球公域”保护中亟待解决的法律问题。     

Human capital and economic growth in Spanish regions

Modern economic growth theory has emphasized on the human capital effects on economic growth. In this case, the externalities from a better education could enhance economic growth process and facilitate the progress in different regional areas. The main objective of this paper is to analyze the effects of human capital on economic growth process by taking into account the case of Spanish regions. The authors examine whether a better education process and social capital can improve the economic growth process in such area and if it can explain the differences in per capita GDP existing in those regions. The paper uses data from Spanish Statistical Institute and from different institutes of the European Union. The Castilla La Mancha Regional Government has provided financial support for the Project PDI-02-025.     

Growth in stages

Existing North–South growth models generally ignore the possibility that the South becomes an innovating high-wage country. The present paper presents an analytically tractable North–South growth model in which the North innovates all the time, while the South is at first engaged in imitation and potentially starts to innovate too, later on. Three interesting results emerge from the analysis. First, a perfect foresight growth equilibrium may fail to exist. Second, there may be global indeterminacy in that both convergence to the steady state of the regime with imitation in the South and switching to the regime with innovation in the South represent perfect foresight equilibria. Third, technology policies in the South may have hysteresis effects: a temporary policy may lead the South permanently from imitation-driven to innovation-driven growth.     

中国经济增长方式转换和增长可持续性

本文考察了中国经济增长方式正在发生的转换,发现改革开放以来我国生产率(TFP)呈上升趋势,最近10年约在3.6%左右。TFP的来源在发生变化,外源性效率提高的因素在下降,技术进步和内源性效率改善的因素在上升。在要素投入方面,教育带来的人力资本质量提高正在替代劳动力数量简单扩张的作用。目前的世界经济危机正在对中国经济增长造成不良影响,但并不是不可克服的。实证分析发现,行政管理成本的膨胀和消费率的持续下降是影响经济增长的两个内在因素。如果能够克服这些负面影响,中国经济在2008—2020年间仍然可能保持9%以上的增长率。     

Growth Effects of Bubbles in an Endogenous Growth Model

This paper examines the possibility of the existence of bubbles and their effects on the growth rate by using an endogenous growth model. A necessary and sufficient condition for the existence of steady-state equilibrium with bubbles is provided. If non-zero rates of the useless asset supply are allowed, a steady-state equilibrium with bubbles exists even if the growth rate of the bubbleless equilibrium is lower than the market interest rate. The growth rate in the steady state with bubbles depends positively on the supply rate of the useless asset. Dynamic properties of bubbles are also analysed.
JEL Classification Numbers: E52, O41, O42.     

Human capital effects on labour productivity in EU regions

Recent years have seen a wealth of articles on spatial effects in empirical growth specifications. Endogenous growth models, together with the arguments of the new economic geography, have led to spatial dependence being identified with the existence of externalities which cross regional borders. This article continues in this line of research and offers new empirical evidence on the contribution of human capital and agglomeration economies to the differences in productivity in European Union regions. The article uses the spatial Durbin model with different weight matrices to explain the relation between human capital variables and labour productivity, with the advantage that it allows the effects of spatial externalities associated to human capital and agglomeration economies to be quantified.     

Identification and analysis of underdeveloped resource-rich regions in China

This paper analyzes the existence of developmental views and compares the results of previous studies for underdeveloped regions.In view of the limitations of previous studies,this study details regional unit,expands index system,applies factor-analysis to structure index system,uses the fuzzy comprehensive evaluation model to improve analytic hierarchy process,and identifies the economic developmental levels of 384 regions,including 4 municipalities,333 cities at prefecture level,and 47 counties under the jurisdiction of province.The levels of the 47 counties are identified by dividing the rank of comprehensive values of more than 337 regions unit into five equal graduations and then matching the 47 counties with the five-graduation results.This study provides the distribution of resources-rich region in China qualitatively and quantitatively in terms of coal,oil gas and other 14 kinds of metal mineral resources.Finally,by matching the two parts of results,this study identifies the distribution of underdeveloped resource-rich regions （URRRs）.URRRs are mainly distributed in Shaanxi,Shanxi,Guizhou,Yunnan,Sichuan,He ＇nan,Shandong,Guangxi and Gansu provinces,which accounts for 78.57% of the total in China.To a certain degree,the result of this paper proves that ＂resources curse ＂ existing in the national stratification plane in later 20^th century still takes places in some cities in China,especially in the counties of these cities ＇jurisdiction.     

Fiscal federalism in rentier regions: Evidence from Russia

When does sub-national fiscal autonomy prompt regional growth and recovery and, under what conditions, does it have adverse effects? We argue that unearned income streams, particularly in the form of revenues from natural resource production or from budgetary transfers from the central government, transform regions dependent on these income sources into rentier regions. Governments in these regions can use local control over revenues and expenditures to shelter certain firms, i.e., natural resource producers or loss-making enterprises, from market forces. Using fiscal data from 80 Russian regions from 1996 to 1999, we test this hypothesis in both cross-sectional and panel specifications. Our results indicate that tax retention, which is a proxy for fiscal autonomy, has had a positive effect on regional reform and investment since the break-up of the Soviet Union. However, we also find that this effect decreases as rentable income streams to regions increase. Journal of Comparative Economics 33 (4) (2005) 814–834.     

Sources of employment fluctuations in Taiwan's industries and regions

This empirical study explores the sources of employment fluctuations in Taiwan's industries and regions over the period 1978 to 2004. The quarterly growth rates of employment in nine industries and four regions are modelled with a structural vector autoregression (VAR), and the employment shocks are measured by VAR residuals. The covariance matrix of the VAR residuals is decomposed using system estimation method that selects the parameters to make the error model close to the covariance matrix and, in turn, to estimate the relative importance of national as well as industry-specific and region-specific shocks. The empirical results show that industry-specific shocks account for the major fluctuations in industries and regions. On average, about 83.95% of an industry's cyclical variations and 56.28% of the volatility in a region may be attributed to industry-specific shocks. National shocks account for little employment volatility in industries. Only the finance and personal service industries are highly sensitive to national shocks.     

Growth in Australian Cities

This paper is an empirical investigation of the determinants of city growth in Australia from 1981 to 1991. Our basic goal is to explain the population and labour force growth of a cross-section of cities in the time period using variables representing the initial characteristics of cities. While we find that city growth is negatively correlated with initial size, government sector employment and a city's level of specialization, we also find it to be positively correlated with various measures for the degree of human capital investment in the city. Our results, while simple and non-structural, mirror the conclusions of studies in the US indicating the importance of studying city level growth in order to understand economy-wide growth.     

Growth in transition countries

This study analyzes the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate on ‘big‐bang vs. gradualist approach’. It builds a new indicator for the speed of transition reforms based on a three‐way principal component analysis. It shows that: (i) the speed of transition reforms Granger‐causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative, but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization programmes, also drive economic growth. Although the first two results are robust to different estimators, the impact of control variables depends on the econometric specification.     

Pursuing Problems in Growth

This paper explores the theoretical implications of Schmooklers (1966) argument that a key determinant of technological change is the usefulness of new technologies. There is both historical and empirical support for his argument. The analysis implies that on-going growth depends delicately on a tension between uses for solutions to technological problems and the allocation of resources toward pursuing those solutions. Even alongside an endogenously increasing number of problems pursued, increasing research labor need not increase technology growth or per capita income growth. The results provide reconciliation of stylized facts regarding technological change and growth in the United States and Western Europe.     

An economic model of waterlogging and salinization in arid regions

Waterlogging and salinization arise in arid areas largely because two essential resources, irrigation water and the assimilative capacity of unconfined aquifers, are not priced or allocated correctly to reflect scarcity values and opportunity costs. Farm-level and project-level models of crop production are examined to identify policies that will encourage farmers to consider opportunity costs and the effects of irrigation and leaching on depth to regional water tables. Appropriate policies include volumetric water pricing, water markets, tradable water allotments, adjustments in area-based cost recovery programs, and incentives for farmers to use irrigation methods that reduce deep percolation. Implementing appropriate versions of these policies may reduce the rate of increase in waterlogged and saline areas.