Does trade openness affect long run growth? Cointegration,causality and forecast error variance decomposition tests for Pakistan

The study investigates the impact of trade openness on economic growth in the long run. We apply the ARDL bounds testing approach to test for a long run relationship and the augmented production function by incorporating financial development as an additional determinant of economic growth using the framework of Mankiw et al. (1992). The results confirm cointegration among the series. In the long run, trade openness promotes economic growth. The growth-led-trade hypothesis is vindicated by VECM Granger causality test. The causality is also checked by using the innovative accounting approach (IAA).     

Is energy consumption effective to spur economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests

The present study investigates the relationship between energy (renewable and nonrenewable) consumption and economic growth using Cobb–Douglas production function in case of Pakistan over the period of 1972–2011. We have used the ARDL bounds testing and Gregory and Hansen (1990) structural break cointegration approaches for long run while stationarity properties of the variables have been tested applying Clemente-Montanes-Reyes (1998) structural break unit root test.Our results confirm cointegration between renewable energy consumption, nonrenewable energy consumption, economic growth, capital and labor in case of Pakistan. The findings show that both renewable and nonrenewable energy consumption add in economic growth. Capital and labor are also important determinants of economic growth. The VECM Granger causality analysis validates the existence of feedback hypotheses between renewable energy consumption and economic growth, nonrenewable energy consumption and economic growth, economic growth and capital.     

Population dividend and economic growth in China, 1978–2018

ABSTRACT

China witnessed important demographic transitions during the past 40 years. The significant decline in fertility rate, as a result of both policy change and economic factors, generated the so-called population dividends – rising proportion of working age population – during the past several decades. This paper demonstrates important channels through which broadly defined population dividends contribute to economic growth in China, by magnifying roles of capital, by improving labor quality, alongside increases in labor supply, and by strengthening labor mobility. As population aging now takes over from population dividends as the main demographic trend, it is possible for China to continue its strong growth by focusing on both the traditional growth factors, such as further reducing the proportion of agricultural workers, and new growth factors, such as further improving productivity by strengthening human capital and weakening institutional obstacles.     

How important are human capital, physical capital and total factor productivity for determining state economic growth in the United States, 1840–2000?

This paper introduces new data on state-level physical capital by sector and land in the farm sector for the states of the United States from 1840 to 2000. These data are incorporated into aggregate accounting exercises with the aim of comparing cross-state results to those found in cross-country samples. Our aggregate results agree closely with the cross-country literature: input accumulation accounts for most of output growth, between three-fifths and three-quarters, but variation in the growth of TFP accounts for about three-quarters of the variation in the growth rate of output per worker. In convergence accounting, convergence of log TFP accounts for about seventy percent of the observed convergence in log output per worker.     

China–US economic and trade relations,trade news,and short-term fluctuation of the RMB exchange rate

The trade war between the US and China affects the fluctuation of RMB exchange rate. We collect news on China–US trade policies and talks from January 2017 to July 2020. Results show that China–US dialogue and tariff imposition have the greatest impact on the percentage of RMB appreciation and depreciation. Additionally, tariff relaxation and increasing enterprise restrictions can cause a sharp appreciation and depreciation. “Policies” events and trade news from the US influence RMB fluctuations the most significantly. Finally, positive events cannot significantly cause RMB appreciation, but negative events can significantly cause RMB devaluation.     

Regional distribution and dynamics of human capital in China 1985–2014

This study investigates the regional distribution and dynamics of human capital in China. We develop a new comprehensive human capital measure based on the Jorgenson-Fraumeni (J-F) lifetime income framework, in addition to using the traditional education-based human capital measures. We find that the new J-F human capital measure reflects more closely the regional economic disparity than the education-based measures. We also conduct a Divisia decomposition analysis to investigate the contributions of different factors to the quantity and quality growth of human capital and to regional disparity. Our results show that the regional human capital gaps in China are enlarging in general. Education and urbanization contribute most to human capital growth, while population aging shows a strong negative effect. Our estimates create a new provincial level human capital panel dataset from 1985 to 2014, which is useful for empirical work and policy analysis.     

Structural change in exports and economic growth: cointegration and causality analysis for Spain (1961–2000)

The Spanish export-led growth hypothesis is re-examined from the trade liberalization process initiated four decades ago. For this purpose both the export expansion and the progression from ‘traditional’ exports to manufactured and semimanufactured exports are taken into consideration. A new evidence is reported for the above period. Alongside a feedback between aggregate exports and real output, it has been proved that the structural transformation in export composition has also become a key factor for Spain's economic development.     

Environmental and economic impacts of trade barriers: The example of China–US trade friction

The new age of trade wars could simultaneously affect the worldwide distribution pattern of the economy and environmental emissions. However, previous studies have focused on economic impacts, and on trade liberalization, while little is known about the equilibrium effects of trade barriers on the environment. Using a global computable general equilibrium model and taking the recent anti-trade policies of the Trump administration as an example, this study investigates the possible socio-economic and environmental effects of trade friction. Specifically, this study explores how the implemented six rounds of China–US trade friction and its different long-term development trends affect regional economic output, GHG and air pollutant emissions. Results show that trade barriers harm both countries’ economies and such losses have a certain permanence, while non-participants can benefit indirectly. Trade friction decreases participants’ GHG emissions, modifies global GHG emission distribution patterns, and leads to improved air quality in most countries. If governments continue to impose tariffs, global GHG emissions could counterfactually decrease by up to 5%. However, the change in trade patterns is not conducive to clean energy development in the less-developed regions, including the Middle East, Africa, and Latin America, and emission reductions from trade friction are insufficient to avoid catastrophic climate change.     

Resource constraint,sustainable economic growth pattern and transformation of economic system in China

Over the past 20 years, China has made spectacular achievements in economic growth as well as in thetransformation of economic growth pattern. Industrial structure is being updated, and technology is playing a more andmore important role in economic development. The energy and resource consumption in many industries and enterprisesare reducing. However, we should realize that there are still many problems in changing the economic growth pattern,such as high input, high consumption, high discharge, inharmony, recycling difficulty, and low efficiency, which havegreatly impaired and restrict Chinese economic development. Therefore, the fundamental change of the economic growthpattern is inevitable. Based on the analysis on the status quo and the exploit of resources, this paper suggests that thetransformation from unsustainable to sustainable growth is the only choice in changing the economic growth pattern. Inaddition, the transformation should not completely rely on the fundamental effects of market mechanism. We should makefull use of the power of governments to speed up the transformation of economic system.     

Impact of openness, economic policy reform and regional shocks on trade and growth of Thailand： An econometric study

Thailand has currently enhanced and promoted intensive trade and investment liberalization and implemented long-term growth policy according with current regional economic integration, WTO obligations and globalization. Nevertheless, several recent internal and external factors e.g. the massive SARS and avian flu outbreaks, the Indian Ocean tsunami devastation, the Asia financial crisis and domestic policy reforms （ICSEAD, 2006） have also impeded this policy. While the issues are important for Thailand and developing countries in Asia, only limited research has been undertaken to investigate them. The paper conducts a substantive quantitative study to contribute to these trade and development policy issues. A new econometric modelling policy method, namely the generalized gravity theory （Tran Van Hoa, 2004） is used to develop a simple flexible simultaneous-equation econometric model of Thailand＇s openness model with its seven major trade partners （ASEAN-4, Australia, the USA, the EU, China, Japan and India）. Using data from the ICSEAD, the World Development Indicators and the Bank of Thailand databases, the paper reveals efficient and reliable empirical findings on trade-growth causality, trade determination including the impact of shocks and policy reform on trade and growth between Thailand and its major trade partners over the past two decades. The paper also provides evidence on the linkages between trade in goods, FDI and services and regional economic integration for more credible policy implications.     

Stochastic accumulation of human capital and welfare in the Uzawa–Lucas model: an analytical characterization

Stochastic growth models are often solved numerically, because they are not tractable in general. However, recent several studies find the closed-form solution to the stochastic Uzawa–Lucas model in which technological progress or population dynamics follow a Brownian motion process with one or two parameter restriction(s). However, they assume that the return on the accumulation of human capital is deterministic, which is inconsistent with empirical evidence. Therefore, I develop the Uzawa–Lucas model in which the accumulation of human capital follows a mixture of a Brownian motion process and many Poisson jump processes, and obtain the closed-form solution. Moreover, I use it to examine the nexus between human capital uncertainty, technological progress, expected growth rate of human capital, and welfare.     

Upgrading in China’s apparel industry: international trade,local clusters and institutional contexts

This article focuses on the concept of upgrading, and seeks to move away from a firm-centred approach of industrial upgrading towards a framework that recognises not only a firm’s integration into global value chains, but also its embeddedness within local networks and the context of wider institutional arrangements. Based on one firm-level database, this article measures upgrading in China’s apparel industry at the firm level, which allows us not only to evaluate the extent of upgrading in the industry as a whole and to compare its extent among individual firms and selected groups of firms, but also to differentiate and measure different types of upgrading. Empirical results confirm that the heterogeneity of firms, global and local linkages and the wider historical, political, institutional and economic context have all played a critical role in the process of upgrading, suggesting that a focus on dynamics of firm upgrading alone is insufficient.     

Post-materialism and economic growth: Cultural backlash, 1981–2019

In recent decades it seems that various factors have led to a cultural background change, which although mainly characterized as incremental, in some cases can be sudden. A question therefore arises as to whether the way in which the cultural background has evolved during last decades affects the growth rate of economies. We use an unbalanced panel dataset comprised from 34 OECD countries from 1981 to 2019, and a Least Squares Dummy Variable Correction (LSDVC) method as well as a series of robustness tests including different methods of analysis, adding control variables and breaking the overall period into subperiods. We conclude that the cultural background during the overall period under consideration is characterized as post-materialistic and harms economic growth. Moreover, we highlight both theoretically and empirically the cultural backlash hypothesis since the cultural background of the countries under analysis presents a shift from traditional/materialistic (from 1981 up to 1998) to post-materialist values (from 1999 up to 2019). Doing so, we conclude on a positive effect of cultural background on economic growth when traditional / materialistic values prevail, and a negative effect when post-materialistic values prevail. These results highlight culture as a crucial factor for economic growth and indicate that economic policy makers should take it seriously into account before designing economic policy and in order to explain the effectiveness of economic policies implemented.     

The relationship between population growth and standard-of-living growth over 1870–2013: evidence from a bootstrapped panel Granger causality test

This paper examines the linkages between population growth and standard-of-living growth in 21 countries over the period of 1870–2013. We apply the bootstrap panel causality test proposed by Kónya (Econ Model 23:978–992, 2006), which accounts for both dependency and heterogeneity across countries. We find one-way Granger causality running from population growth to standard-of-living growth for Finland, France, Portugal, and Sweden, one-way Granger causality running from standard-of-living growth to population growth for Canada, Germany, Japan, Norway and Switzerland, two-way causality for Austria and Italy, and no causal relationship for Belgium, Brazil, Denmark, Netherlands, New Zealand, Spain, Sri Lanka, the UK, the USA, and Uruguay. Dividing the sample into two subsamples due to a structural break yields different results over the two periods of 1871–1951 and 1952–2013. Our empirical results suggest important policy implications for these 21 countries as the directions of causality differ across countries and time period.     

Dynamics of the growth–inequality nexus in China: roles of surplus labor,openness, education,and technical change in province-panel analysis†

The paper examines the complex interrelationship between economic growth and the urban–rural income inequality in China by estimating a simultaneous equation system. This study uses a panel data-set that covers 29 provinces from 1988 to 2007, and compares the earlier period with the later period. It finds a robust and positive impact of the rural surplus labor on urban–rural inequality, which is consistent with Lewis’ dual economy theory. Economic growth is found to aggravate the urban–rural inequality in the earlier period, but there is no hard evidence in the later period. This implies that China has not yet, or at least by 2007, entered the second stage of the Kuznets curve. We also find no robust evidence on the impact of the inequality on growth in either period, but find robust evidence on the impact of both foreign direct investment and exports on the increasing inequality during the earlier period, whereas no significant impact in the later period is found. Finally, the spread of education reduced the inequality in the earlier period, but no such impact is robust in the later period.     

Microeconomic analysis on the growth of trade volume in China: 1978–2007

The gravity equation is usually employed by researchers in the field of international trade to explain the growth of a country’s imports and exports volume, especially the manufactured goods. But in China, variables in the model, such as exchange rate, tariff, transportation cost, and spatial distance etc., are not sufficient to explain the riddle of China’s growth in trade volume. In fact, this growth in China’s trade volume is owing to the disintegration of production in the process of economic globalization, to the multinational corporations’ (MNC) vertical outsourcing of their manufacturing processes and procedures, and to the timely readjustment of Chinese enterprises on their strategies of participating in the international intra-product specialization. In this paper we establish an equilibrium model of intra-product specialization dominated by MNCs, and do some empirical tests on the growth in trade volume in China by using the variables including technological conditions of trade, similarity of economies, policy conditions of trade, disintegration of production and level of per capita capital equipment. The empirical results support our basic judgments.     

Does human capital constrain the impact of foreign direct investment and remittances on economic growth in Ghana?

This article empirically investigates whether human capital constrains the impact of Foreign Direct Investment (FDI) and remittances on economic growth in Ghana. An economic growth model for Ghana is specified and estimated using Fully Modified Ordinary Least Squares (FMOLS) estimator and employing annual data spanning the period 1965 to 2008. Empirical results indicate that FDI and remittances are key determinants of economic growth in Ghana. Results indicate that human capital enhances the impact of FDI and remittances on economic growth. Although both government expenditure and trade openness are growth-enhancing, government expenditure appears to crowd-out private investment. Empirical results also indicate that domestic inflationary pressures, unstable political environment and volatile global economy exert a negative impact on economic growth in Ghana.     

Balance of payments,the Harrod foreign trade multiplier and economic growth: the European and North American experience, 1970–85

This paper examines the assoication between Canadian unions and their member' attitudes. Data on job satisfaction indicate that unionized workers in Canada are less happy with the quality of their jobs than non-union workers. The former, however, are more satisfied with their financial compensation and job security than non-members.     

Energy and capital inputs: cornerstones of productivity growth in Mexico: 1965–2004

Gross domestic product per remunerated labor (GDP/L), known as the Mexican average productivity, grew very rapidly from 1965 to 1979; it increased at an average annual rate of 3.7%. But from 1979 through 2004, productivity stagnated with an average annual growth rate of only 0.19%. The hypothesis is that from 1965 through 1979, productivity increased rapidly because of concomitant growth in the utilized capital and energy per worker and the improvements in technology. After 1979, the productivity growth came to a standstill because of a slowdown in investment and stagnation in the utilized capital and energy per worker due to the sharply rising energy prices. The tool chosen to test this hypothesis is an aggregate Cobb-Douglas production function characterized by technical change embodied in the gross investment in new machinery and equipment. The estimation of this model shows energy as a cornerstone of productivity growth independent of capital and new technology.