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.     

Inside Europe: human capital and economic growth revisited

This paper investigates the impact of human capital on the process of innovation and technology catch-up in European Union countries. Based on the framework proposed by Benhabib and Spiegel (in: Aghion and Durlauf (eds) Handbook of economic growth, 1A, North-Holland, Amsterdam, 2005), a panel data model is estimated from 1950 to 2011 using the improved total factor productivity and human capital variables included in PWT 8.0. Following Vandenbussche et al. (J Econ Growth 11(2):97–127, 2006) we also analyse the differential impact of skilled and unskilled human capital on growth. The empirical analysis applies instrumental variables panel data methods which resolve the endogeneity bias. Our results show robust evidence of the significant direct and indirect effects of human capital on the process of total factor productivity (TFP henceforth) growth in euro area countries. When we analyse the impact of different kinds of human capital on different ways of increasing TFP we conclude that, regardless of academic level, the quantity of unskilled human capital boosts imitation in EU countries while, by contrast, highly qualified human capital is essential for growth through innovation.     

On the optimality of public capital for long-run economic growth: evidence from panel data

The role of public capital in economic growth is examined using data from the Penn World Tables and other sources on a large number of countries. Drawing on intertemporal optimization, the theoretical framework nests the exogenous (Solow) and endogenous types of growth and is data-consistent. It is found that public capital makes a significant contribution to growth. The actual level of investment on public capital is suboptimal. Growth in recent decades can be characterized as ‘endogenous’ with little sign of convergence. There is evidence of a growth slow-down between the 1970s and 1980s. Human capital also significantly enhances growth.     

Economic complexity,human capital and economic growth: empirical research based on cross-country panel data

Economic complexity reflects a country’s production capabilities and plays an important role in economic growth. This article measures the economic complexity of 210 countries using the method of reflections, and investigates the impact of economic complexity and human capital on economic growth. The measurement results show that there are significant differences regarding the level of complexity among countries. High-income economies have higher complexity than low- and middle-income economies. The empirical findings demonstrate that economic complexity and different levels of human capital have positive effects on long- and short-term growth. A positive interaction effect on economic growth exists between economic complexity and human capital. In addition, secondary education as a proxy for human capital has a relatively greater positive direct effect and a much stronger interactive effect with complexity on economic growth. In addition, the magnitude of the interaction effect between economic complexity and human capital on long- and short-term growth increases as the revealed comparative advantage threshold grows.     

Human capital and economic growth: A macroeconomic model for Pakistan

The paper presents a small macro model for Pakistan economy focusing the impact of investment in human capital on the key macroeconomic variables. The demand side is modeled along the Keynesian lines while the supply side is modeled as per neoclassical theory of production. This framework allows analyzing the effects of investment in human capital on supply side variables (like labor, physical and human capital) and demand side variables (like consumption and investment) at the same time.The model has small forecasting horizon in which three alternative scenarios regarding government spending on education are evaluated from 2012 to 2016. The model shows that the link between human capital and labor market is weak however a change in education spending affects output through enhancing productivity and through multiplier-accelerator principle. Though the model is small in size and forecasting horizon, it can help in evaluating the future paths of key macroeconomic variables associated with education spending.     

Firm size and capital structure: evidence using dynamic panel data

This article suggests that the validity of the Trade-Off Theory (TOT) and Pecking-Order Theory (POT) to explain financing decisions varies among small, medium-sized and large firms. Using dynamic panel data tests on a sample of 3439 Spanish firms over the period 1995–2003, results are partially consistent with both explanations but suggest a greater validity of pecking-order predictions for small firms. In small firms, the negative influence of profitability and the positive influence of investment opportunities and of intangible assets on firm debt predicted by the POT are heightened. However, no differences are observed between small and large firms in their speed of adjustment to the target leverage as suggested by the TOT.     

FDI, domestic capital and economic growth: Evidence from panel data at China’s provincial level

Based on panel data at the provincial level in China, this paper found that direct effects foreign direct investment (FDI) had on economic growth were of insignificance. However, through improving technical efficiency and “crowding” in domestic investment, FDI produced positive effects on China’s economy. The state sector still played a major part in the total fixed investment, therefore, direct effects on growth were significant. Although private sector was increasingly important for the whole economy, it had no direct influences on economic growth. Meanwhile, neither the state sector nor private sector made contribution to the improvement on technical efficiency. __________ Translated from Shijie Jingji Wenhui 世界经济文汇 (World Economic Papers), 2006, (4): 27–43     

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.     

Military expenditure and economic growth across different groups: A dynamic panel Granger-causality approach

Applying GMM (Arellano and Bond, 1991) to panel data of 90 countries spanning over 1992–2006, this paper explores possible relationships between military expenditure and economic growth. Based on the definitions of income levels by the World Bank – high, middle and low – our results indicate military spending leads negatively economic growth for the panels of low income countries with a marginally significance level of 10%. Of four different regional panels (Africa, Europe, the Middle East–South Asia and Pacific Rim), a negative but stronger (5% significance level) causal relationship from military expenditure to economic growth is found for the Europe and Middle East–South Asia regions.     

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.     

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.     

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.     

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.     

AIDS and economic growth: A human capital approach

Using a model that combines growth and health capital equations this study analyses the impact of HIV/AIDS on economic growth. The econometric results indicate that the epidemic's effects have been substantial; in Africa the marginal impact on income per capita of a 1% increase in HIV prevalence rate is minus 0.59%. Even in countries with lower HIV prevalence rates the marginal impacts are non-trivial. Hence while the human and social costs of the HIV/AIDS epidemic are major causes for concern, these results indicate that the macroeconomic affects of the HIV/AIDS epidemic are important.     

Human capital and economic growth in an overlapping generations model

The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.     

The growth of university spin-offs: a dynamic panel data approach

Evidence suggests that a significant percentage of the university spin-offs (USOs) have a low growth capacity, putting in question the use of public funds to promote this kind of entrepreneurship. In addition, previous studies of the USOs’ growth have not dealt with the dynamic nature of firm growth, which might have led to questionable results. This paper analyses whether the university origin of a firm conditions its growth by applying a methodology which captures this dynamic nature of growth. Using a sample of 469 Spanish USOs and an equivalently matched group of 469 Spanish non-USOs over the period 2001–2010, we find that USOs have more growth than non-USOs, both in terms of sales and employment. In addition, the USOs’ growth is influenced by a set of determinants that differ from those of non-USOs. On the basis of the results, we propose some policies to foster the USOs.     

Human capital and economic development

This paper develops a general equilibrium model of fertility and human capital investment with young adult mortality. Because young adult mortality is negatively related to average young adult human capital, human capital accumulation lowers mortality, inducing demographic transition and industrial revolution. Data confirm that young adult mortality is related negatively to schooling, and the rate of return to schooling, and positively to fertility. The data indicate a negative relationship between TFP growth and schooling accumulation. The model fits the data on country populations, per capita incomes, human capital, total fertility rates, infant mortality, life expectancy and conditional life expectancy.     

Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data

This paper applies the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971–2002 period. It employs the production side model (aggregate production function). The empirical results fully support a positive long-run cointegrated relationship between real GDP and energy consumption when the heterogeneous country effect is taken into account. It is found that although economic growth and energy consumption lack short-run causality, there is long-run unidirectional causality running from energy consumption to economic growth. This means that reducing energy consumption does not adversely affect GDP in the short-run but would in the long-run; thus, these countries should adopt a more vigorous energy policy. Furthermore, we broaden the investigation by dividing the sample countries into two cross-regional groups, namely the APEC and ASEAN groups, and even more important results and implications emerge.     

Financial openness and capital mobility: a dynamic panel analysis

Does unrestricted control on the movement of capital increase capital mobility? Theoretically, the answer is yes. This paper uses the Feldstein–Horioka savings–investment methodology to examine the impact of financial openness on the degree of capital mobility in 104 countries. Our estimates suggest that financial openness has increased capital mobility in developing countries, while its effect is statistically insignificant in OECD countries. This also implies that a developing country with more financial openness can have more access to external capital markets for borrowings. Foreign aid also appears to supplement domestic savings for investment in developing countries. In line with the previous findings, our study also confirms that capital is more mobile for developing countries.