Powering economic growth and development in Africa: telecommunication operations

This study investigates the effect of telecommunication operations on economic growth and development in selected African countries. The analysis considers a panel of 46 African countries from 2000 to 2015. To measure economic growth, real gross domestic product serves as the proxy, while economic development is measured by the Human Development Index, and telecommunication operations by a composite index of telecommunication computed from mobile line, fixed/CDM line and Internet access penetration via principal component analysis. The physical capital stock is measured by gross fixed capital formation, level of employment by the employment to population ratio, human capital development by enrolment in secondary education for both sexes and technology transfer by net inflows of foreign direct investment in Africa. The empirical results suggest that telecommunication operations promote economic growth and development in Africa. These results imply that for every positive expansion in telecommunication operations and physical capital stock, aggregate output and standard of living will adjust positively in Africa. Thus, an appropriate policy to improve overall investment in Africa and most especially in the telecommunication sector since the spillover effect cut across other sectors and the general economic performance.     

EMPIRICAL IMPACT OF PUBLIC INFRASTRUCTURE ON THE JAPANESE ECONOMY*

We study the impact of public capital investment on individual sectors of the Japanese economy using time‐series data for the period of 1970–1998. We employ a production function approach and also estimate a dynamic VAR/ECM model. We find significant differences in the employment effects, output effects and private investment effects across sectors. Public capital investment has a positive effect on employment in the finance, insurance and real estate (FIRE), manufacturing, construction and utilities sectors; on private investment in the FIRE, agriculture, transportation, trade and services sectors; and on output in the mining, FIRE, trade and manufacturing sectors.     

Technology,Growth and Employment

The relationship between technology, productivity and employment is a complex one. Increased productivity can lead not just to increased market share, but through falling relative prices can help expand markets, and through product innovation can develop new markets. On the other hand, if demand and hence output does not expand in line with productivity, then an inverse relation between productivity and employment will result. The European Union seeks to improve living standards in Europe by boosting productivity, competitiveness and employment together. How, though, is this to be achieved? This paper looks at the effects on productivity of different forms of investment--in physical capital, in Research & Development, and in human capital. The paper also distinguishes between the high-tech and low-tech sectors. There does appear to be scope for boosting both productivity and employment, particularly in the high tech sectors. But to do so will require increased investment across all three categories--in machinery, in innovation and in people.     

Structural Change and Economic Growth in China

This study develops a new analytical framework to account for sources of rapid economic growth in China. The traditional Solow approach is expanded to include another source of economic growth—structural change. The empirical results show that structural change has contributed to growth significantly by reallocating resources from low‐productivity sectors to high‐productivity sectors. It is found that the returns to capital investment in both agricultural production and rural enterprises are much higher than those in urban sectors, indicating underinvestment in rural areas. On the other hand, labor productivity in the agricultural sector remains low, a result of the still large surpluses of labor in the sector. Therefore, further development of rural enterprises and an increase in labor flow among sectors and across regions are key to improvements in overall economic efficiency.     

Technological leadership and sectorial employment growth: A spatial econometric analysis for U.S. counties

This paper studies the determinants of technological catch‐up considering spatial and sectoral aggregation of industries. We investigate how geographical and technological proximity to the technology leader impact regional employment growth. We model technological progress by means of a hierarchical process of catch‐up to the technology leader. We also incorporate measures for knowledge spillover effects to test the roles of competition, specialisation, and diversity at the industry level. Empirical results using data at the county level for different economic sectors (2‐dig NAICS) for the United States indicate that human capital plays a crucial role in promoting sectoral employment growth. The association between technological/geographical distance to the technology leader and employment growth varies across sectors.     

Long-Run Effects of Monetary Expansion in a Two-Sector Model of Endogenous Growth

This paper explores the long-run effects of monetary expansion by introducing a cash-in-advance constraint into one of the basic models of endogenous growth. In our model, the real side of the economy consists of two production sectors, one of which produces a final good that can be used either for consumption or for investment and the other produces new human capital. Both sectors use physical and human capital under constant returns to scale technologies. We first characterize the balanced-growth equilibrium and then examine how a rise in money growth affects the relevant variables, such as the long-term growth rate and the relative prices.     

ASSESSING THE IMPACT OF CHINA'S WTO ACCESSION ON INVESTMENT

Abstract.  After a boom in foreign direct investment (FDI) in China in the early 1990s, FDI slowed in the late 1990s. More recently, with China's accession to the World Trade Organization (WTO) a reality, FDI has once again picked up. This paper explores the linkage between WTO accession and investment in China. We find that investment and capital stocks increase substantially. Moreover, foreign ownership of Chinese assets doubles by 2020. Central to this increase is the expected catch-up in the productivity of the services sectors driven by reforms. These estimates are far larger than those predicted by earlier studies, which ignored the reforms affecting Chinese services sectors, and abstracted from international capital mobility.     

Innovation spending and productivity growth in the German economy 1980–1986

A newly developed technique involving vertically integrated input-output sectors is used to examine the relationship between labour productivity and innovation expenditures in the German economy during the period 1980 to 1986. The productivity measures used, dubbed Harrod-Robinson-Read (HRR), take into account the direct and indirect labour used in each consumption goods sector. Included in these measures is the labour content of new capital investment.

The HRR measures show higher rates of productivity growth in most sectors, compared to the simple direct labour requirements measures. This is due to the fact that the HRR measures take into account the increased efficiency with which new capital is produced. The second part of the study examines the relationship between labour productivity and innovation expenditures as measured by the IFO (Institute for Economic Research – Munich) innovation survey. Using cross section data for 58 German industries, a strong correlation was found between direct labour productivity growth and direct innovation expenditure.

These results suggest that with more detailed capital expenditure data it should be possible to describe more precisely the relationships between innovation activity, spending on new capital, and productivity changes. The key to examining these relationships in more detail is the growing wealth of information contained in recent innovation surveys such as those done by the IFO.     

Capital Mobility in Open OLG Models of Neoclassical Growth

This paper explores whether the international mobility of physical and/or financial capital is essential for productive efficiency in each of three open OLG models of neoclassical growth that vary in terms of dimensional attributes. A tradeoff between capital mobility requirements and dimension has previously been established by example where, ceteris paribus , neither form of capital mobility is required with three productive sectors, only physical capital mobility is required with two sectors, and both forms of mobility are required with a single sector. This paper reconsiders that tradeoff using a generalization of the production and utility functions which introduces the potential for specialization along the transition path—an event which would imply inconsistent capital mobility requirements along the growth path for models with fixed dimension. Conditions are established under which the tradeoff between capital mobility requirements and dimension remains valid.     

Operating efficiency and output insensitive employment contracts for capital management

Summary This paper considers a problem in which an agent is hired to manage a capital investment and subsequently receives private information regarding the productivity of the capital investment. The capital manager must decide whether to invest capital supplied by the firm (the principal), or to divert these investment funds to perquisite consumption. If the manager decides to invest, the manager must then select the level of operating efficiency (productivity) of the capital investment, this latter choice being unobservable and constrained by the (maximal) productivity of the investment. In this setting we demonstrate that the optimal employment contract, from the perspective of the firm hiring the manager, is the contract whichminimizes the dependence of the manager's compensation on firm output. This contract pays the manager a fixed wage whenever output from the investment exceeds the wage and provides the manager with all of the projects rents whenever output falls below this level. Thus, we provide a setting in which fixed wage contracts are the optimal incentive contract even when agents are risk neutral and contracts can be costlessly written on future output.We would like to thank the participants in the Princeton Economics and Finance Workshop and the Ohio State University Finance Workshop for their comments on an earlier draft of this paper. The second author gratefully acknowledges the research support of the Georgia State College of Business Administration Research Council.     

International transmission of the business cycle in a multi-sector model

Standard multi-country models do not replicate important features of the international transmission of business cycles, predicting cross-country correlations of output and consumption which are, respectively, too low and too high. In this paper we modify the supply side of a two-country model by adding multiple sectors and trade in intermediate goods. The model generates a higher cross-country correlation of output than standard one-sector models. It also predicts cross-country correlations of employment and investment that are closer to the data. We analyze the relative impact of multiple sectors, trade in intermediate goods, imperfect substitution between domestic and foreign goods, home preference, capital adjustment costs, and capital depreciation in order to pinpoint the features which move the model's predictions closer to the data.     

How China is Reorganizing the World Economy*

We analyze the impact of China's integration into the global economy on other countries, Asian countries in particular. We first examine how the growth of China's exports is affecting the exports of other countries in Asia and the rest of the world. Our innovation is to distinguish exports of capital goods, consumer goods, and intermediates and to disaggregate textiles and consumer electronics, the most visible sectors where China's presence is felt. We next look to the impact of China on direct foreign investment flows. Here our innovation is to distinguish vertical and horizontal foreign direct investment (FDI) and to consider how they are affected by supply‐chain relationships. We then look more closely at factors influencing the articulation of these supply chains, the fragmentation of production, and the emerging international division of labor, focusing on two industries, electronics and autos, that exhibit very different responses. The results suggest that countries specializing in the production and export of components and raw materials feel positive effects from China's growth, while countries specializing in the production of consumer goods feel negative effects. Similarly, countries that compete with China for horizontal FDI find it more difficult to attract foreign investment as a result of that country's emergence, while countries that are potentially attractive destinations for vertical FDI find it easier to attract foreign investment as a result of trade links, especially in components and intermediates, that allow them to take advantage of supply chains involving their large and dynamically growing neighbor.     

中国产业结构升级 内生动力：需求还是供给

一国产业结构转型的内生动力包括需求和供给两个方面。本文构建了综合上述两类影响因素的产业结构转型模型。通过对模型的校准和模拟，本文发现需求方面的收入增长和供给方面的资本深化两个因素对我国结构转型的影响较大，而技术进步率差异的影响程度较小。因此，保持一定的投资速度，从而稳定增长，提高居民收入，深化资本劳动比是调整产业结构的重要力量。同时，为了在未来推动产业结构升级，需要进一步提高第一产业和第二产业的技术进步率。     

人口老龄化、公共人力资本投资与 经济增长*

本文利用内生化老龄化的世代交叠模型,探讨了老龄化社会中为了促进经济增长可选择的公共人力资本投资的最优相对规模和结构。本文研究表明,公共人力资本投资相对规模（即占GDP比例）和公共健康支出占比（即占公共人力资本投资比例）均与经济增长呈倒U型关系,且最优值通过老龄化对经济增长的作用表现出来。即当老龄化对经济增长有促进（抑制）作用时,政府促进经济增长的政策是提高（降低）人力资本投资相对规模和公共健康支出占比。基于中国省级面板数据的实证研究发现,老龄化不利于经济增长,公共人力资本投资相对规模及公共健康支出占比偏大,均处在倒U型曲线的下降阶段,分别通过挤出对经济增长更具促进作用的私人投资、公共物质资本投资和公共教育支出而不利于经济增长。本文的政策含义是,政府需提高公共教育支出占比,引导和鼓励更有效率的社会私人资本进行人力资本投资,以逐步降低公共人力资本投资的相对规模。当前公共物质资本投资则需继续加强。     

Intangible Investment and Market Valuation

This study derives performance‐ and expenditure‐based estimates of intangible capital and measures the extent to which intangible capital is captured by the equity market measures of firm value. Intangible capital is evaluated using occupational information available in the Finnish linked employer–employee data for the 1997–2011 period. The performance‐based organizational investment in value added is approximately 3 percent; R&D and ICT investment shares are lower, at 1.5 percent, and all are clustered in intangible‐intensive sectors that represent 40 percent of the private sector. Expenditure‐based organizational capital also exists in clusters other than that intensively investing in managerial and marketing effort, and performance‐based R&D capital is concentrated in the cluster with intensive R&D activity; both increase the market value of firms beyond the level that can be explained by standard economic analysis.     

Migration networks and microenterprises in Mexico

Are migration networks associated with lower capital costs, or the alleviation of capital constraints? We examine these questions with data measuring access to remittance flows among small-scale entrepreneurs in Mexico. Using a survey of more than 6000 self-employed workers and small firm owners located in 44 urban areas of Mexico, we estimate the impact of attachment to migration networks on the level of capital investment, the capital–output ratio, sales, and profits of microenterprises. The impact is identified from the geographic pattern of migration from Mexico driven by the completion of rail lines in the early 1900s. For the full sample of firms, we find that migration is associated with higher investment levels and higher profits, but not higher sales. The strongest effects on investment are in the categories of automobiles, tools and inventories. When the sample is limited to firms in high-capital sectors, investment, sales, and profits all increase with attachment to the migration networks, suggesting that attachment to the migration network alleviates capital constraints in those sectors.     

Public Investment and Economic Growth in Latin America: an Empirical Test

The paper analyzes the impact on economic growth of public investment spending and other relevant variables (such as human capital) for nine major Latin American nations over the 1983–93 period. The results suggest that both public and private investment spending contribute to economic growth. Overall central government consumption expenditures, on the other hand, are found to have a negative effect on private investment and growth. Finally, public expenditures on education and healthcare are found to have a positive and statistically significant effect on private capital formation and long–term economic growth. From a policy standpoint, the results suggest that indiscriminate cuts in public and private investment spending are likely to be counterproductive in the long run, and more importantly, scarce public expenditures should be channeled to the promotion of new human capital (via primary and secondary education) and the maintenance of existing human capital (through healthcare expenditures).     

基于教育人力资本投资视角的陕西经济增长问题分析

人力资本投资和积累对促进就业起重要作用,而就业是带动经济增长的重要条件。以柯布—道格拉斯函数为基础建立生产函数模型,选择教育经费作为人力资本投资的衡量标准,对陕西省1996—2010年的数据进行回归分析,并对回归结果进行检验,计算得出基于教育的人力资本投资对经济增长的贡献,在此基础上提出促进就业发展经济的相关对策。     

The composition of foreign capital stocks in South Africa: The role of institutions,domestic risk and neighbourhood effects

Foreign capital inflows are an important source of funds to finance investment in developing economies. International finance literature is therefore concerned with how institutional factors like property rights and corruption affect foreign capital inflows. We investigate the determinants of the absolute volumes and composition of foreign capital stocks in South Africa, focusing on the role played by institutional quality (property rights), domestic default risk and neighbourhood effects as potential determinants. The empirical results show that secure property rights and low default risk in the host country positively affect the absolute volumes of both long-term foreign capital and short-term foreign capital, but tilt the composition in favour of long-term foreign capital. Empirical results also demonstrate the existence of neighbourhood effects where the institutional environment in Zimbabwe significantly impacts on South Africa's foreign capital inflows. In this regard, weak property rights in Zimbabwe lead to an increase in South Africa's foreign direct investment (FDI), but a reduction in South Africa's portfolio investment. This suggests that Zimbabwe and South Africa compete for foreign direct investment in similar sectors, and present two alternative investment destinations to foreign investors. By contrast, weak property rights in Zimbabwe appear to raise the perceived risk for portfolio investment in South Africa.