An empirical assessment of the relationship between competition policy and investment

The relationship between competition policy and investment is empirically examined. Empirical findings suggest that increasing market competition has a positive and robust impact on the share of total investment in GDP per capita. Developing countries enjoy benefits from competition legislation efficiency improvement, whereas the reduction of government anti-competitive price control intervention enhances the good investment environment in developed countries. In relation to the potential impacts of ASEAN competition policies, if ASEAN-4 countries (Indonesia, Malaysia, Philippines, and Thailand) become as competitive as Singapore, the investment shares are expected to increase to approximately 2–4%. Further, foreign direct investment inflows from the 30 OECD countries are expected to increase roughly 0.6–1.2%.     

Assessing systemic risk and its determinants for advanced and major emerging economies: the case of ΔCoVaR

The paper examines conditional risk relationships among sovereign CDS prices and stock market indices for 11 economies with particular relevance for international portfolio investment holdings (Canada, China, Brazil, France, Germany, Italy, Japan, Russia, Spain, the USA, and the UK). The analysis is based on delta conditional value at risk (ΔCoVaR). The UK, France, and Italy significantly contribute to the overall systemic risk in both markets. The USA, the UK, and Russia appear to be important contributors to it in the stock market. In the meantime, the advanced economies exhibit much higher resilience to the systemic risk propagation in comparison with China, Brazil and Russia. Gross government debt to GDP, state fragility index, EU membership and world gross GDP share of a country in distress are key determinants of ΔCoVaRs for the sovereign CDS prices. Stock market total value traded to GDP and world gross GDP share of a country in distress drive ΔCoVaRs in the stock market. In both cases geographic distance tends to deter systemic risk propagation. Inflation, trade and financial openness as well as common language and time zone differences are less important predictors of bilateral ΔCoVaR exposures.     

Persistent but not consistent: The growth of national income in Holland 1347–1807

In this paper we construct a detailed dataset of the national accounts of Holland (1347–1807). Using this dataset, we demonstrate that this economy was characterized by persistent economic growth caused by, depending on the period, structural change (share of industry and services in the economy increases), technological development, and factor substitution. During the entire period GDP per capita increased by on average 0.19% per year. This persistent growth, however, was highly unstable due largely to the importance of international services in the economy.     

Does Life Expectancy Affect Private Educational Investment in China？

In this paper, we emphasize the interactive effect between life expectancy and human capital accumulation, and test the positive feedback of longevity to educational investment in China. This is very important for understanding the pressure from the aging population and the increase in private educational investment in China. We first show in an extended human capital investment model that life expectancy growth acts as a driving force for educational investment. We then build a difference‐in‐difference‐in‐differences empirical framework and use cross‐province data to examine the effect in China. We use the maternal mortality rate (MMR) to identify the difference in life expectancy between genders, and the illiteracy rate or average years of education by gender for educational investment. The empirical results comply with the theory, in that increases in life expectancy significantly lower illiteracy rates and improve the average schooling years in China. This content of the present paper is closely related to crucial issues like population aging, human capital accumulation and gender discrimination. Policy implications are discussed based on the empirical results.     

Growth accounting for a technology follower in a world of ideas: The case of Singapore

We account for the sources of Singapore's growth by being explicit about the channels through which Singapore benefits from international R&D spillovers. We find that 61.5% of Singapore's real GDP per worker growth over the 1970–2004 period is due to multifactor productivity growth. More specifically, 52.1% of the growth is explained by an increase in the effectiveness of accessing ideas through improvement in Singapore's educational quality as well as increases in machinery imports and foreign direct investment from the G5 countries. Taking account of technology transfer raises the average rate of return to capital to 12.5%.     

Pension Challenges and Pension Reforms in Oecd Countries

The 30 OECD member countries have very diverse pension systems.Current old-age public pension spending varies between lessthan 1 and more than 10 per cent of gross domestic product (GDP).Public spending on pensions per person aged 65 or over variesfrom less than 15 to more than 40 per cent of economy-wide GDPper head. For workers entering the labour market today, thetarget pension from all mandatory sources for an average earnervaries between 30 and 100 per cent of individual earnings. Recentpension reforms have a number of common themes. First, pensioneligibility conditions have been tightened. Second, the indexationof pensions in payment has become less generous. Third, somepension schemes link benefit levels to changes in life expectancy.Finally, a number of countries have introduced defined-contributionpensions: privately managed schemes where the pension benefitdepends on contributions and investment returns. Footnotes ¹ E-mail addresses: peter.whiteford{at}oecd.org; edward.whitehouse{at}oecd.org     

Average Tax Rate Cyclicality in OECD Countries: A Test of Three Fiscal Policy Theories

This article investigates the cyclical properties of the average effective tax rate in 26 OECD countries over 1965–2003 to test the validity of three theories of fiscal policy: (i) the standard Keynesian theory, which recommends that tax policy should be countercyclical; (ii) the Tax Smoothing hypothesis, which implies that changes in GDP should be uncorrelated with tax rates; and (iii) the positive theory of Battaglini and Coate (2008), which predicts the average tax rate should be negatively correlated with GDP. Our main finding is that the correlations of tax rates with cyclical GDP are generally quite small and statistically indistinguishable from zero. This finding is quite robust and is more consistent with the implications of the Tax Smoothing hypothesis than either the recommendations of the standard Keynesian model or predictions of the political economy theory of Battaglini and Coate.     

Information & communication technology and true real GDP: economic analysis and findings for selected countries

The expansion of information & communication technology (ICT) is continuing in OECD countries and the world economy – partly due to the ongoing fall of relative ICT prices. The continuing absolute fall of ICT prices and ICT capital prices, respectively, is not adequately considered in the standard analysis of ICT. In the study presented here the ICT investment-GDP ratio is calculated in real terms and it is shown that this ratio is higher (order of magnitude is about 2 percentage points) than the nominal investment-GDP ratio which is misleading the ICT sector, policy makers and society at large. Moreover, we take an innovative look at the digital time budget of private households in selected OECD countries. Assuming that 10 % represents the relevant share of the time budget the digital value-added of private households stands for an unrecorded digital value-added of 2–5 % of gross domestic product; with a share of 20 % of the household’s internet time budget devoted to value-added the hidden internet value-added in the US would be in the range of 4.7–10.4 %. Hence the overall understimation of the ICT sector’s contribution to GDP is considerable and therefore changes in official statistical analysis and the System of National Accounts are required.     

Economic spillover effects in the Bohai Rim Region of China: Is the economic growth of coastal counties beneficial for the whole area?

This study uses panel data on the Bohai Rim Region of China to test for spatial autocorrelation, and measures economic spatial spillover effects with the space Durbin econometric model. We discuss whether the economic development of coastal counties benefits the whole area. To do this, we focus on the “distance from the coast” factor, which is influenced by transportation time. The results indicate the presence of significant spatial autocorrelation in the Bohai Rim Region. Further, economic spatial spillover effects exist in this region. “Distance from the coast” exerts a significantly negative impact on the local GDP per capita but a significantly positive impact on the GDP per capita of other districts. This means that the economic development of coastal counties does not benefit the whole region. “Value of exports” exerts a significantly positive influence on the local economy and no significant influence on other counties, while “foreign direct investment” exerts a significantly positive influence on the local economy and a significantly negative influence on other counties. “Number of employees in units” exerts a significantly positive influence on the local economy and a significantly negative influence on the other counties. The factors “primary industry's share in GDP” and “tertiary industry's share in GDP” influence the local economy positively, but the former exerts no significant influence on other counties and the latter exerts a negative influence on other counties. “Rate of fixed asset investment” influences the local economy negatively and has no significant effect on other counties. “Total retail sales of social consumer goods” has no significant influence on the local economy but a positive significant influence on the others. Finally, marine resource utilization and marine output can affect economic growth positively. On this basis, we propose policy suggestions for harmonious economic development in this region.     

Hours worked and output growth reserves

This paper discusses the role of the indicator of average time worked per employee in assessing current market situation and output growth reserves. This indicator, considered a key one worldwide, is not published in Russia at all (though estimated). Considered are general and specific factors underlying differences in hours worked in different countries and industries, with their dynamics across 20 industries of Russia’s economy in 1959–2004. Output growth reserves due to this indicator are assessed.     

Comparative assessment of state involvement in the economy in OECD studies

The role and features of state involvement in the economy have been analyzed based on the system of special indicators of the countries of the Organization for Economic Cooperation and Development (OECD). The change in the nature of state influence on the economic system in the geopolitical context that manifests at the national and international levels has been shown. The state uses various economic policy instruments, including soft power in the form of sanctions and countermeasures, which make it possible to strengthen its control of the economy. In the past two years, this tactic has manifested in Russia’s relations with Western countries.     

Public Debt,Economic Growth and Inflation in African Economies

We analyse the relationship between public debt, economic growth and inflation in a group of 52 African economies between 1950 and 2012. The results indicate that the limits of public debt are negatively related to economic growth and exhibit, from a given level of debt, an inverted U behaviour regarding the relationship between economic growth and public debt. Briefly, the high levels of public debt are coincident with reduced rates of economic growth and rising levels of inflation. Our results for three specific geographical areas resemble those of the overall analysis, despite some differences. In North African countries, the growth rates of the gross domestic product (GDP) and inflation also show an inverted U behaviour as the ratio of public debt/GDP increases. The highest rate of economic growth is recorded when the ratio of public debt/GDP is below 30% of GDP and corresponds to an average inflation rate of 5.33%. An identical behaviour of the GDP growth rates and inflation also appears in Sub‐Saharan countries until the third interval (60–90%). However, the highest growth rate of the GDP and GDP per capita is registered when the public debt/GDP ratio is in the second interval (30–60%). For the countries of the Southern Africa Development Community, the highest average rate of economic growth (6.8%) is similar to North African countries, when the ratio public debt/GDP is below 30% of GDP, with an average inflation rate of 11%. A number of robustness analyses were performed and the great majority of them confirm the general analysis.     

The Wealth-Health Nexus: New Global Evidence

Using a world sample of countries, this paper re-examines the U-shaped relationship between per capita GDP (wealth) and life expectancy at birth (health). Since cross-sectional dependence across countries is detected, second-generation panel unit root and cointegration tests are employed. All the variables are found to be integrated in one order as well as cointegrated. Various quadratic specifications are also employed and the hypothesis is confirmed.     

战后日本公共投资存在的问题及改革方向

战后,日本通过实施一系列大规模的公共投资政策,经济得以迅速恢复,而且在之后长时间内保持高速增长,泡沫经济破灭前,其平均增长速度均超过其他发达资本主义国家。大规模的公共投资对日本经济发展的促进作用是不可忽视的。20世纪90年代后,随着泡沫经济的破灭,公共投资的效用下降,原有的公共投资制度受到了广泛质疑。回顾日本公共投资的历史,不难发现公共投资制度发展过程中的一些问题,从而在新世纪掀起了公共投资改革的高潮。     

Telecommunications Investment in Africa: Implications of US Reform of the International Settlement Rate System*

Abstract: This paper investigates the possible effects of the US reform of the international settlement rate system on telecommunications investment in Africa. We estimate a telecommunications investment equation using a panel data of 51 African countries during the 1991–2003 period and find that settlement payments have significantly positive effects on telecommunications investment in African countries. A 10 percent increase in settlement payment, on average, increases the telecommunications investment expenditure to GDP ratio by 3.4 percent over a three‐year period. Using previously calculated revenue loss from the US reform, our estimates suggest that African countries stand to lose between 4.4 to 11 percentage points of their telecommunications investment in the medium run and with it, possible decreases in income growth rate. However, we argue that African countries can counter the effects of this revenue loss by increasing the efficiency of telecommunications investment through appropriate market restructuring, including the promotion of competition and privatization.     

Sectoral Trends and Shocks in Australia's Economic Growth

This paper examines the extent to which sectoral trends and fluctuations in the Australian economy can be understood using international trade theory and knowledge of key policy developments. It suggests they are consistent with theory, but it also reveals several features that make Australia's economy unusual. The most striking are the facts that (i) the agricultural sector's share of GDP remained fairly constant rather than falling during 1860–1960 and even during the latest mining boom; and (ii) the farm sector continued to enjoy a strong comparative advantage despite periodic spurts of growth in mining exports.     

中国对俄罗斯及中亚国家直接投资的贸易效应研究——基于面板数据的实证分析

本文在分析中国对俄罗斯及中亚国家直接投资和进出口贸易发展的基础上,以俄罗斯和中亚五国为研究样本,利用2003年-2012年的面板数据分析了中国对俄罗斯及中亚国家直接投资与进出口贸易的关系。研究结果表明：中国对饿罗斯及中亚国家的直接投资均具有明显的出口促进效应,除塔吉克斯坦和吉尔吉斯斯坦外也都具有进口促进效应;中国对饿罗斯及中亚国家直接投资的贸易效应存在较为明显的国别差异。造成这些差异的原因可能与俄罗斯及中亚国家在要素禀赋、中国对其投资行业结构、投资方式以及东道国自身投资自由度等方面的差异有关。     

Servicification of investment and structural transformation: The case of China

Structural transformation is a key feature of economic development. Traditional literature attributes it to changes in the sectoral composition of consumption. Different from it, we argue that “servicification” of investment goods, induced by investment-composition technological change, becomes an increasingly important reason for structural transformation, particularly for the rise of the services economy. Our study of the input output tables finds that the share of service inputs in investment goods has grown significantly in many countries since the 1980s, especially for investment-intensive economies such as China. To assess if the investment channel is quantitatively significant, we build a standard model with three broad sectors, but instead add an investment production function employing factors from all three sectors. Moreover, we incorporate investment-composition technological change by allowing the productivities of the three sectoral inputs to evolve over time. We calibrate the model to the Chinese economy from 1981 to 2014 and perform counter-factual experiments accordingly. We find that investment-composition technological change accounts for 33.1% decline in employment share of agriculture, 36.0% increase in employment share of manufacturing and 31.5% increase in employment share of services over the period. The magnitude of this effect on the share of services keeps growing, particularly after 2000. Our findings are not unique for China, but also apply to other economies experiencing the “servicification” of investment.     

Structural and investment policy as an instrument for modernizing the Russian economy

The article considers the current situation of the structural and technological imbalance in the Russian economy, as well as the nonproportional distribution of the factors of production and financial resources. The need for structural reforms in industrial production and income generation has been shown. The author discusses priorities of structural and investment policy, direction of new technological breakthrough in the long-term national strategy of entering international technological space. Special features of development of key economic sectors have been analyzed. In conclusion, quantitative estimates of economic dynamics in the long term up to 2035 have been given, which are predetermined by implementation of planned measures of structural and investment policy that provides potential for GDP growth until 2035 at a rate of no less than 3.5% on average per year.     

The Shadow Economy in Transition Countries: Friend or Foe? A Policy Perspective

By treating the shadow economy as a distinct entity, rather than just a symptom of policy failures, we are able to examine its short-term and dynamic consequences for development. First, we construct measures of the size of the shadow economy in 25 transition countries for 1990–97. We find hysterisis suggesting that, once established, the shadow economy is hard to remove: a dollar decline (rise) in official GDP is attenuated by a shadow expansion (contraction) of 31 (25) cents. We then examine whether the shadow economy prevents, merely slows down, or actually promotes economic growth and competitiveness, and through what mechanisms. We also consider implications for policymaking.