Public debt and economic growth – economic systems matter

Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We –in accordance with recent literature– challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.     

J. G. Büsch's economic theory and his influence on the Danish economic and social debate

Abstract

In the economic debate that took place in Germany towards the close of the eighteenth century, Johann Georg Büsch is a key figure. He occupies this posi tion by virtue of a profound knowledge of economic theory and a mass of writings which achieved a wide distribution not only in Germany but also in the Nordic countries, the Netherlands, France and Russia, a number of his works being translated into the languages of these countries.     

Agriculture in India’s economic reform program

The reform and liberalization process in India has revived the issue of relative sectoral weights in emerging development policy that will best promote the objectives of higher growth rates, widely distributed benefits, and a substantial and progressive reduction of poverty. This study considers the nature and direction of the linkages between the agricultural and nonagricultural sectors and provides some estimates of their magnitudes. The particular question posed here is what priority agricultural reforms should be given in India’s emerging economic development strategy of reform and liberalization.     

Does inequality in health impede economic growth?

This paper investigates the effects of inequality in health on economic growth in low and middle income countries. The empirical part of the paper uses an original cross-national panel data set covering 62 low and middle income countries over the period 1985 to 2007. I find a substantial and relatively robust negative effect of health inequality on income levels and income growth controlling for life expectancy, country and time fixed-effects and a large number of other effects that have been shown to matter for growth. The effect also holds if health inequality is instrumented to circumvent a potential problem of reverse causality. Hence, reducing inequality in the access to health care and to health-related information can make a substantial contribution to economic growth.     

Does uncertainty affect economic growth? An empirical analysis

Does Uncertainty Affect Economic Growth? An Empirical Analysis. — This paper investigates the effect of uncertainty on economic growth. We construct measures of export uncertainty, government policy uncertainty and price uncertainty to augment a growth model, and using econometric techniques we test for robustness of the effects of these measures on economic growth in a cross-section of 138 developing and developed economies during the 1970–1995 period. The result clearly shows a robust and negative effect of uncertainty on economic growth. These results underline the importance of export stability and policy credibility.     

Welfare and economic growth in Kenya, 1914–76

In this paper we present estimates of per capita income, income distribution, and poverty in Kenya for the period between 1914 and 1976. The estimates indicate that per capita incomes mostly increased up to 1974; inequality increased most of the time until 1950, then fell and increased again until 1971 and then finally fell; poverty declined until 1964 but has since then increased slightly. A decomposition analysis shows that modern sector enrichment contributed more to growth than modern sector enlargement, and that traditional sector enrichment was of greater importance to the poor than modern sector enlargement.     

Government activity and economic growth – one size fits All?

This study investigates the role of government activity in economic growth, arguing that economic systems are important and that, therefore, one size of government does not fit all countries. Taking a panel of 111 countries over the years from 1971 to 2010, we consider clusters of economic systems as predicted by an extended Varieties of Capitalism (VoC) approach. The empirical growth impact of government activity is positive but u-shaped and depends on both the quality of institutions and the institutional setting. For the polar cases of liberal economies and Scandinavian coordinated market economies, the potential growth impact is quite similar and superior to other clusters of countries. However, the maximum growth effect is realized for above-average levels of government activity in the Scandinavian countries, while this would be detrimental to growth in liberal countries. Hence, high levels of government activity are consistent with growth but only in economic systems consistently rooted in a high level of government activity.     

Is SAARC a viable economic block? evidence from gravity model

Intra-South Asian Association for Regional Cooperation (SAARC) trade appears to be very small compared to other existing regional blocks. This might be because of normal outcome or because of unexplored trade opportunity. If the latter is the case, then increased trade within this region might be welfare improving. This study attempts to make a formal analysis of these issues, and estimates a gravity model of international trade to examine whether intra-SAARC is lower or higher than what is predicted by an economic model. This gives an idea about the structure of comparative advantage in the SAARC countries that helps to explain why intra-SAARC trade is low and how trade among them can be increased. It also helps us to understand the possibility of trade creation and trade diversion effect resulting from South Asian Preferential Trading Arrangements among SAARC countries. Whereas the gravity model has been extensively used to measure bilateral trade among countries, they have, to the best of my knowledge, never been used to measure intra-SAARC trade. Our gravity model results suggest that SAARC member countries are yet to achieve trade-creating benefits. Appropriate policies need to be formulated for more regional integration. Liberalization of trade in SAARC countries offers significant gains for all the economies in the region. Efforts should be made to liberalize border trade and strengthen bilateral trade relations through the removal of tariff and nontariff barriers in the general framework of South Asian Preferential Trading Arrangements.     

Structural change,industrial upgrading and China’s economic transformation*

Abstract

After more than three decades of opening up and reforms, China has moved from a low to an emerging middle-income country. The main challenge facing the country is how to sustain this momentum and develop into a high-income country and avoid the middle-income trap. In order to achieve this, industrial upgrading and structural change is crucial. This is not an easy process given that very few countries in the world achieved this in the past 50 years. What are the challenges for this transformation? How can the innovation and technological capabilities be developed to upgrade Chinese industries into one of the world’s innovation leaders? These are important questions to address for policy-makers and academics, and are the main theme of an International Conference on Transition and Economic Development (TED), held at Fudan University in 2015.     

The empirics of economic geography: how to draw policy implications?

Using both reduced-form and structural approaches, the spectrum of policy recommendations that can be drawn from empirical economic geography is pretty large. Reduced-form approaches allow the researchers to consider many variables that impact on regional disparities, as long as they are careful about interpretation and endogeneity issues. Structural approaches have the opposite advantages. Less issues can be simultaneously addressed, but one can be more precise in terms of which intuitions are considered and the underlying mechanisms and effects at work. Many regional policy issues remain unanswered, opening some interesting future lines of research.     

Basic socio‐economic elements of a development theory for traditional societies

Notwithstanding the existence of various ‘development paradigms’, little has been done to analyse the fundamental economic determinants of development.

Most important is the basic functioning of supply and demand which, in the traditional society, is determined by religion, customs and rules, resulting in a limited choice and volume of consumption, as well as limited production.

Stimulation of the economy can according to community development principles, be brought about by an increase in demand (needs) to serve as motivation for increased production.

Higher production though, necessitates a change in traditional values and the development of abilities and skills. This is primarily the field of community development.     

China's economic development: does exchange rate and FDI nexus matter?

This study aims to investigate the relationship between China's exchange rate, foreign direct investment (FDI) inflows, and economic development. We applied the bound testing approach on aggregate level data from 1981 to 2013. The results showed that the Chinese economy benefitted from a lower exchange rate over this period, and that there was a direct link between FDI inflows and economic development on an aggregate level both in the long and short run. The results of the Granger causality test identified a long‐ and short‐run association among these variables. The GMM estimations with dummies for financial crises and RMB exchange rate policy fluctuations also confirmed the growth enhancing impact of the exchange rate and FDI inflows. To promote sustainable economic development in the future, China should focus on improving the levels of domestic investment and human capital, as well as supervising the level of openness and capital controls.     

Analysis on economic growth variances and convergences of county economy in China

In this paper, the economic structure of county development in China is reflected in seven terms： capital input, labor input, geographical position, industrial structure, and level of agricultural development, level of urbanization and public expenditure with the method of cluster analysis, which categorizes Chinese counties into three different area classifications according to the economic characteristics. The first classification of county economic variance covers not only the α-divergence, but also the club convergence apparently. The second classification covers the α-divergence, but not the club convergence. The third classification apparently covers the α -divergence, yet the club convergence as well.     

Effect of pension replacement rate on economic growth： A theoretical model

In social pension system, the pension replacement rate is one of the key parameters. It not only determines the welfare of retirees and the finance balance of social pension system, but also has an effect on economic growth. This paper analyzes the effect of the pension replacement rate on economic growth with the standard overlapping generations＇ model, and suggests that the pension replacement rate should keep an appropriate level for economic growth and the development of the pension system.     

The Post‐Mao economic reform in China: A Korean view

Abstract

Previous studies that were concerned with the impact of depreciation of the ringgit on the Malaysian trade balance employed data either between Malaysia and rest of the world or between Malaysia and each of her major trading partners. Specifically, the bilateral trade balance between Malaysia and the US is shown to be insensitive to the real bilateral ringgit–dollar rate. In this article we wonder if disaggregating trade flows between Malaysia and the US by commodity could help us to discover any significant effects that the real exchange rate could have. We consider 101 industries that export from US to Malaysia and 17 industries that import from Malaysia. While majority of the industries showed short-run sensitivity to the real bilateral exchange rate, short-run effects lasted into the long run almost in half of the industries in both group.