Manufacturing FDI and economic growth: evidence from Asian economies

Previous empirical studies on inward foreign direct investment (FDI) and economic growth generate mixed results. This article suggests that the ambiguous results might be caused by the use of total FDI. We study the heterogeneous effects of different sector-level FDI inflows on host country's economic growth. Data from 12 Asian economies over the period of 1987 to 1997 are employed. Strong evidence shows that FDI in manufacturing sector has a significant and positive effect on economic growth in the host economies. FDI inflows in nonmanufacturing sectors do not play a significant role in enhancing economic growth. Furthermore, without the decomposition of total FDI inflows, the effect of manufacturing FDI on host country's economic growth is understated by at least 48%.     

Deep habits in consumption: a spatial panel analysis using scanner data

Using scanner data from a large European retailer, this paper empirically assesses deep habit formation in consumption. Deep habit formation constitutes a possible source of price stickiness and helps to mimic procyclical labour and real wage dynamics that are present in macrodata. To gauge the existence and the extent of deep habits in consumption, we estimate a dynamic time–space simultaneous model for consumption expenditure at different levels of product aggregation. This spatial panel model enables us to test for both internal and external deep habit formation at the same time. The former captures inertia or persistence in consumption and is included in the empirical specification as a time lag. The latter captures preference interdependence across households and is captured by a spatial lag. Our results show mixed evidence with respect to internal habit formation, whereas the external habit effect is almost always positive and significant.     

Human capital and economic growth revisited: A dynamic panel data study

This paper examines the role of human capital on economic growth by using a large panel of data including 93 countries. Given the cross-sectional character in most of the relevant studies, there is a possibility that when the long-run dynamics are considered, education might not be a significant determinant of growth. Following a dynamic panel data approach, the analysis indicates that education has, indeed, a significant and positive long-run effect on economic growth. Moreover, the size of this effect is stronger as the level of education (primary, secondary, and tertiary) increases. This has a straightforward policy implication that governments taking actions towards an expansion of their higher education may well expect larger gains in terms of higher economic growth in their countries. This is a revised version of a paper presented at the Fifty-first International Atlantic Economic Conference, Athens, Greece, March 13–20, 2001, and also at the conference on Post-Euro Era at the University of Ioannina, Greece, January 27–28, 2000. The authors would like to thank participants in both conferences and, in particular, Nick Apergis for his comments and useful suggestions on earlier drafts. The authors remain responsible for any shortcomings of the paper.     

CO2 emissions,economic growth,energy consumption,trade and urbanization in new EU member and candidate countries: A panel data analysis

This paper investigates the causal relationship between energy consumption, carbon dioxide emissions, economic growth, trade openness and urbanization for a panel of new EU member and candidate countries over the period 1992–2010. Panel unit root tests, panel cointegration methods and panel causality tests are used to investigate this relationship. The main results provide evidence supporting the Environmental Kuznets Curve hypothesis. Hence, there is an inverted U-shaped relationship between environment and income for the sampled countries. The results also indicate that there is a short-run unidirectional panel causality running from energy consumption, trade openness and urbanization to carbon emissions, from GDP to energy consumption, from GDP, energy consumption and urbanization to trade openness, from urbanization to GDP, and from urbanization to trade openness. As for the long-run causal relationship, the results indicate that estimated coefficients of lagged error correction term in the carbon dioxide emissions, energy consumption, GDP, and trade openness equations are statistically significant, implying that these four variables could play an important role in adjustment process as the system departs from the long-run equilibrium.     

Relationship between trade openness and economic growth in Latin America: A causality analysis with heterogeneous panel data

We empirically analyze the causality relationship between economic growth and international trade using new advancements in the econometric methodology for heterogeneous panel data applied to Latin American countries. First, we test for dependencies between the units of cross‐section (countries) and then we test for cointegration between growth and openness. Finally, we test for Granger causality using a heterogeneous panel data test. The results reject the hypothesis of general, unidirectional, and homogeneous relationship between trade openness and economic growth in Latin American countries as a group. However, considering heterogeneity, we found significant evidence of causality from trade liberalization to economic growth in Chile, Peru, Nicaragua, and Uruguay; we have found bidirectional causality in Mexico and Honduras; and a causal relationship from economic growth to trade liberalization in Colombia, Costa Rica, Guatemala, and the Dominican Republic.     

Energy consumption and economic growth in the United States

We study the relationship between energy consumption and real GDP in the USA using a multivariate time-varying model [1973Q1–2014Q1]. We show that the combination of disaggregation into specific fuels and time variation gives more nuanced results than the alternatives for the USA. Specifically, we find that the Granger causal relationship between total energy and real US GDP is bi-directional through much of the 1990s, but unidirectional running from real US GDP to energy consumption in the 2000s. As for each fuel, similar patterns of change were observed in the causal relationship between coal consumption and real US GDP. Oil consumption largely shows a bi-directional relationship between consumption and US GDP, especially after 2009. And natural gas consumption shows a brief period in the early-to-mid 2000s where US GDP predicts energy consumption, but primarily shows that natural gas consumption and economic growth are independent.     

Democracy and economic growth in Sub-Saharan Africa: a panel data approach

This paper studies the link between democracy and economic development for 28 countries of Sub-Saharan Africa for the period 1980–2005 in a panel data framework. A democracy index constructed from the Freedom House indices. A variety of panel data unit root and cointegration tests are applied. The variables are found to be integrated of order one and cointegrated. The Blundell–Bond system generalized methods-of-moments is employed to conduct a panel error-correction mechanism based causality test within a vector autoregressive structure. Economic growth is found to cause democracy in the short-run, while bidirectionality is uncovered in the long-run. In addition, the long-run coefficients are estimated through the panel fully modified ordinary least squares and dynamic ordinary least squares methods. Democracy has a positive impact on GDP and vice versa. These results lend support to the virtuous cycle hypothesis.     

Oil consumption and economic efficiency: A comparative analysis of advanced, developing and emerging economies

This paper investigates the economic efficiency-oil consumption relationship in 42 countries during the period 1986-2006. In a first stage by using DEA window analysis countries' economic efficiencies are obtained. In a second stage an econometric analysis based on robust GMM estimators reveals an inverted ‘U’-shape relationship between oil consumption and economic efficiency. In order to capture heterogeneities among countries' development stages the analysis has been separated into two groups (advanced economies and developing/emerging economies). The results show that advanced economies have much higher turning points compared to emerging and developing economies. It appears that oil consumption increases countries' economic efficiency. In addition the consumption patterns of oil products and its derivatives have changed through years and among countries. The different turning points from the econometric analysis indicate the dependence of oil consumption in advanced economies (higher turning points) is driven mainly by household purchasing activities and their standards of living (transport, housing and water, food, etc.). Finally, it appears that oil consumption is the main driver behind the progress of industrialization and urbanization regardless of the country's development stage.     

The hydroelectricity consumption and economic growth in Asian countries - evidence using an asymmetric cointegration approach

ABSTRACT

This study examines the four commonly tested hypotheses in hydroelectricity consumption – economic growth literature for 12 Asian countries. Our results from a recently developed hidden cointegration technique uncover rich and significant relationships between negative and positive components of the variables under consideration. In particular, we find evidence to support the neutrality hypothesis in five countries (Bangladesh, Indonesia, Pakistan, Philippines, and Thailand), the growth hypothesis in four countries (India, Japan, South Korea and Taiwan), and both growth and conservation hypotheses in three countries (China, Malaysia, and New Zealand). These findings suggest that appropriate economic policies should be elaborated on the basis of the country’s specific hydroelectricity consumption–growth nexus. Finally, our new evidence suggests that the lack of stable relationship between hydroelectricity consumption and economic growth documented in previous studies for some of these countries could be due to the failure to properly account for the nonlinearity property in the data.     

Broadband penetration and economic growth nexus: evidence from cross-country panel data

This article investigates whether there are Granger causal relationships between broadband penetration, degree of urbanization, foreign direct investment and economic growth using a panel data set covering the G-20 countries for the period 1998–2011. Using our multivariate framework, we first find that all of the variables are cointegrated. Our findings further reveal a network of causal connections between the variables including short-run bidirectional causality between broadband penetration and economic growth among the more developed countries within the G-20. On the other hand, for the developing countries within the G-20, there is evidence of unidirectional causality from economic growth to broadband penetration.     

Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach

This paper uses the panel data of energy consumption and GDP for 82 countries from 1972 to 2002. Based on the income levels defined by the World Bank, the data are divided into four categories: low income group, lower middle income group, upper middle income group, and high income group. We employ the GMM-SYS approach for the estimation of the panel VAR model in each of the four groups. Afterwards, the causal relationship between energy consumption and economic growth is tested and ascertained. We discover: (a) in the low income group, there exists no causal relationship between energy consumption and economic growth; (b) in the middle income groups (lower and upper middle income groups), economic growth leads energy consumption positively; (c) in the high income group countries, economic growth leads energy consumption negatively. After further in-depth analysis of energy related data, the results indicate that, in the high income group, there is a great environmental improvement as a result of more efficient energy use and reduction in the release of CO₂. However, in the upper middle income group countries, after the energy crisis, the energy efficiency declines and the release of CO₂ rises. Since there is no evidence indicating that energy consumption leads economic growth in any of the four income groups, a stronger energy conservation policy should be pursued in all countries.     

Economic growth and financial development in Asian countries: A bootstrap panel Granger causality analysis

This study using Kónya (2006) [Kónya, L. (2006). Exports and growth: Granger causality analysis on OECD countries with a panel data approach. Economic Modelling 23, 978–992.] method of bootstrap panel Granger causality analysis, which considers the issues of cross-sectional dependency and slope heterogeneity among countries investigated simultaneously, analyzes the causality between financial development and economic growth among ten Asian countries surveyed during period 1980 to 2007. We find that the direction of causality between financial development and economic growth is sensitive to the financial development variables used in the ten Asian countries examined in this work. Moreover, our findings support the supply-leading hypothesis, as many financial development variables lead economic growth in some of the ten Asian countries surveyed, especially in China.     

Energy consumption, carbon emissions, and economic growth in China

This paper investigates the existence and direction of Granger causality between economic growth, energy consumption, and carbon emissions in China, applying a multivariate model of economic growth, energy use, carbon emissions, capital and urban population. Empirical results for China over the period 1960-2007 suggest a unidirectional Granger causality running from GDP to energy consumption, and a unidirectional Granger causality running from energy consumption to carbon emissions in the long run. Evidence shows that neither carbon emissions nor energy consumption leads economic growth. Therefore, the government of China can purse conservative energy policy and carbon emissions reduction policy in the long run without impeding economic growth.     

Energy consumption,economic growth and environmental degradation in OECD countries

The interdependence among energy consumption, economic growth and environmental degradation has become an important public policy priority among OECD countries. Yet, the related literature provides conflicting results when describing the dynamic nature of such a relationship and the way it affects countries' development path. Using a sample of 35 OECD countries over the period 2000–2014, we find that economic growth and energy consumption patterns contribute to the enhancement of countries' environmental performance levels. In contrast to a large stream of empirical research, our findings highlight that countries' economic development path and their energy consumption patterns have started to align with their environmental policies. The results are robust since we utilize different aspects of countries' environmental degradation such as carbon dioxide emissions, ecological footprints and countries' environmental performance levels. Finally, the analysis of the dynamic interrelations among countries' energy consumption, economic growth and environmental degradation levels, reveals the necessity to promote sustainable development through a coexistence rather than through a trade-off mechanism.     

Government accountability and fiscal discipline: A panel analysis using Swiss data

Government accountability through electoral engagement, involvement and participation in the political debate can affect government performance. Using data for the full sample of Swiss cantons over the 1981–2001 period, this paper provides empirical evidence that government accountability is crucial for fiscal discipline. Specifically, in cantons with high levels of government accountability, the level of indebtedness is significantly lower, indicating that accountability supports fiscal discipline. To obtain a useful approximation for government accountability between citizens and their representatives, we use information from direct voter participation in political decisions (initiatives and public referenda) in Swiss state (cantonal) governments. Electoral support of government proposals reveals an important aspect of accountability in a real world setting.     

A panel data analysis of the growth effects of remittances

Many development economists believe that remittances by the migrant workers are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects remittances in the recipient countries but reached different conclusions. This paper analyses the strength of these effects with a common data set with alternative specifications and estimation methods. Our results show that the direct growth effects of remittances are insignificant. However, remittances may have small indirect growth effects.     

Output growth and investment dynamics in Finland: a panel data analysis

This study analyzes the relationship between output growth and investment in a panel of 20 regions of Finland over the period 1975–2007. This regional study uses Granger non-causality and error-correction models. The most important finding of this study is a unidirectional causality which runs from investment to output growth. The study also verifies the existence of a positive association between growth and investment for the panel of 20 regions of Finland. These findings reconcile with the capital fundamentalists.     

The effect of the Internet on economic growth: Evidence from cross-country panel data

Using cross-country panel data, we found evidence that the Internet plays a positive and significant role in economic growth after investment ratio, government consumption ratio, and inflation were used as control variables in the growth equation.     

International trade,economic growth and intellectual property rights: A panel data study of developed and developing countries

This paper examines the role of high-technology trade, IPRs and FDI in determining a country's rate of innovation and economic growth. The empirical analysis is conducted using a unique panel data set of 47 developed and developing countries from 1970 to 1990. The results suggest that: (1) high-technology imports are relevant in explaining domestic innovation both in developed and developing countries; (2) foreign technology has a stronger impact on per capita GDP growth than domestic technology; (3) IPRs affect the innovation rate, but this impact is more significant for developed countries; (4) the results regarding FDI are inconclusive.