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This paper explores the impact of the political hierarchies of cities in China from different perspectives. First, we examine the economic disparities between prefectural cities and municipalities. Furthermore, this paper draws upon a quasi‐ experiment to analyze the impact of upgrading Chongqing to a municipality in 1997 using the synthetic control method. The city‐upgrading policy significantly increased Chongqing's gross domestic product (GDP) in the following 4 years. Finally, we find that the policy increased GDP in treated cities within 1200 km of Chongqing by about 10%–13% relative to the control cities. [ABSTRACT FROM AUTHOR]

In this paper, we reassess the impact of inequality on growth. The majority of previous papers have employed (system) GMM estimation. However, recent simulation studies indicate that the problems of GMM when using non‐stationary data such as GDP have been grossly underestimated in applied research. Concerning predetermined regressors such as inequality, GMM is outperformed by a simple least‐squares dummy variable estimator. Additionally, new data have recently become available that not only double the sample size compared to most previous studies, but also address the substantial measurement issues that have plagued past research. Using these new data and an LSDV estimator, we provide an analysis that both accounts for the conditions where inequality is beneficial or detrimental to growth and distinguishes between market‐driven inequality and redistribution. We show that there are situations where market inequality affects growth positively while redistribution is simultaneously beneficial. [ABSTRACT FROM AUTHOR]

This paper examines the importance of good institutions in harnessing the growth effects of the bulging economically active population in sub‐Saharan Africa (SSA). The paper utilizes a panel dataset comprising 39 countries over the period 2002–13. Based on the system generalized method of moments estimator, this paper finds that an increase in the relative size of the working‐age population has no direct significant impact on growth, except through the presence of strong and high‐quality institutions. The paper also finds that control of corruption, rule of law and political stability are the specific aspects of institutions that matter the most in reaping the dividend. These results do not only highlight the primacy of strong institutions but also shed light on the key institutional pillars that need to be strengthened to rake in the positive effects of an increasing working age population on economic growth in SSA. [ABSTRACT FROM AUTHOR]

China joined the Paris Agreement, and the global 2°C and 1.5°C warming targets will be supported by China. In order to achieve these targets, China's CO2 emissions need to be cut deeply by 2050. The present paper presents studies from the integrated policy assessment model for China (IPAC) team about the impact on China's economic development of deep cuts in greenhouse gas (GHG) emissions, in order to realize the Paris climate change targets. With the requirement of deep cuts in GHG emissions in China, China's economic development will also be impacted in moving toward a low‐carbon or zero‐carbon emission‐based economy by 2050. This means the Chinese economy needs a strong transition over the next three decades, a relatively short time. All sectors in the economy need to seek ways to reduce GHG emissions, and this could change activities, industry processes and technologies in order to make the deep cuts in GHG emissions happen. This is the meaning of the economic transition toward to a low‐carbon economy. The findings of the present paper include: a significant transition in the energy supply sector; a high rate of electrification in all end‐use sectors; and a technology transition in the transport sector. Transitions will also occur in the traditional industrial sectors, including steel making, cement manufacture, and the chemical sector. The availability of low‐cost renewable energy could change the allocation of industries, which could potentially have a strong impact on regional economic development. Deep cuts in CO2 emissions in China need not be a burden for economic development, as the IPAC results show there will be a more than 1.5% increase of gross domestic product by 2050 in the deep cut scenario compared with the baseline scenario. [ABSTRACT FROM AUTHOR]

The article analyzes the benefit of using a gross domestic product (GDP)-linked sovereign paper or sukuk in stabilizing economic growth of developing Islamic countries through risk sharing macro instruments from Islamic finance. Topics discussed are impact of debt servicing on real GDP per capita for lower income countries, and the Sharpe ratio for all the countries based on investor analysis of returns in a risk-adjusted framework.

Argentina is the only country in the world that was developed in 1900 and developing in 2000. Although there is widespread consensus on the occurrence and uniqueness of this decline, an intense debate remains on its timing and underlying causes. This paper provides a first systematic investigation of the timing of the Argentine debacle. It uses an array of econometric tests for structural breaks and a range of GDP growth series covering 1886–2003. The main conclusion is the dating of two key structural breaks (in 1918 and 1948), which we argue support explanations for the debacle that highlight the slowdown of domestic financial development and trade protectionism (after 1918) and of institutional development (after 1948). [ABSTRACT FROM AUTHOR]

Copyright of Regional Science Policy & Practice is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper investigates whether the geographic characteristics of a country can explain cross-country variations in income levels through their ability to explain cross-country variations in cultural traits that enhance economic development. In other words, this paper attempts to determine whether the geographic endowment can serve as an instrument in examining the effect of culture on economic development. The paper conducts two-stage least-squares regressions. The second stage is a regression of the logarithm of real gross domestic product per capita on each of the cultural attributes that are considered in this study. In the first stage, the geographic factors that statistically explain a cultural aspect are used as instrumental variables. The results of the empirical estimation show that the cultural variables, instrumented by the geographic variables, explain cross-country variations in economic development. [ABSTRACT FROM AUTHOR]

This paper seeks to provide new empirical evidence that demonstrates the importance of digital technologies in promoting economic growth, drawing on the literature on advances in growth and leveraging a broader and more robust country-level panel dataset. In particular, this paper estimates the long-run economic impact of digital technologies using mobile phone penetration and internet usage as broad indicators. The empirical results suggest that, between 2004 and 2014, the diffusion of digital technologies significantly improved economic output in Australia and abroad, contributing to steady-state gross domestic product per capita growth of approximately 5.8 per cent on average. These findings could serve as the starting-point for predictions about the likely impact of future technologies, providing a better understanding for policy-makers in prioritising initiatives that will continue to lift living standards in the coming years. [ABSTRACT FROM AUTHOR]

Given the scanty and inadequate studies on Serbia's growth performance before the First World War, this paper presents production‐side GDP estimates for Serbia for six years between 1867 and 1910. It probes into the growth dynamics, assessing convergence with the more developed countries of north‐western Europe, as well as progress towards achieving modern economic growth. Although the economy showed some dynamism in terms of overall GDP, per capita GDP in pre‐First World War Serbia grew by only 0.28 per cent per annum, as much of the overall GDP growth was eroded by rapid population growth. Far from converging with north‐western Europe, Serbia continued to fall behind. Sluggish structural transformation and slow income per capita growth suggest that Serbia's transition to modern economic growth was in its infancy. Growth in the dominant agricultural sector was extensive, driven by expanding arable land and population growth. Land was affordable and easy to obtain; hence, peasants invested little in new technologies. Meanwhile, the modern industrial and service sectors were below a threshold that could sustain rapid growth. Nevertheless, this study also highlights the rapid expansion of a small modern sector and export diversification that reflected emergent 'green shoots' in 1905–10. [ABSTRACT FROM AUTHOR]

This paper examines the behaviour of G7 economies and decomposes their GDP into trend and cycle components using the Kalman filter. The general model of the paper encompasses a number of alternative specifications about trend growth, therefore accommodating diverse views on growth. The business cycle characteristics of G7 economies are then discussed, compared and deliberated in this framework. The empirical results overwhelmingly favor a mean-reverting stochastic process for the growth rate, the general and unrestricted specification of the paper, across G7 countries, though the restrictions are statistically rejected in less than half of the cases. Further reflection on the properties of cycles makes the specifications and the results of this study more reasonable in capturing the characteristics of GDP series, and contributes to solving the controversies in model specifications in some previous studies. [ABSTRACT FROM AUTHOR]

Abstract: Using panel data on 47 African countries from 1980–2013, this paper investigates the effects of aid on Africa's economic growth from the perspective of political stability. We find that international aid can promote economic growth in Africa, but the effectiveness of aid depends on countries’ political stability. Further, the intensity of aid affects its effectiveness. When the aid–GDP ratio is between 0 and 69 per cent, aid can promote economic growth in recipient countries, and when this ratio is 27 per cent, the marginal impact of aid on economic growth is maximized. The findings of this paper suggest that providers of aid should avoid providing a substantial amount of aid to countries at risk of political unrest, and they must determine the optimal scale of aid based on the economic development of recipient countries in order to enable aid to generate better results. Recipient countries should maintain social and political stability and ensure that they do not develop an excessive dependence on aid so that they can achieve the self‐sustainable development of their own economies. [ABSTRACT FROM AUTHOR]

Abstract: This paper aims to assess the efforts of the Saudi government in diversifying its economy. A descriptive analysis was used to evaluate the efforts the Saudi government exerted to enhance economic diversification through nine development plans covering 45 years (from 1970 to 2014). Two measures of economic diversification were applied, instability of private gross domestic product (GDP) and its relation to oil price instability, and relative contribution of private and public sectors to GDP. The research concludes that Saudi government has succeeded in moving towards economic diversification in the last two development plans compared to the previous seven development plans, although the economic diversification was a slow‐paced process. The performance of the private sector is still low which calls for a prompt intervention from the Saudi government to improve the legislative environment, competition, and attracting big international companies to enter Saudi market and raise the level of efficiency of the private sector and achieve its main goal of being less dependent on oil sector and its revenue. [ABSTRACT FROM AUTHOR]

Recent headlines frequently refer to rising inequality and its implication on economic growth and social welfare. Addressing the latter is difficult and requires more than simply looking at GDP, as Kuznets long ago pointed out. In this paper we focus on the importance of the income measure underlying the inequality measure when examining the relationship between GDP growth and inequality. We create a mapping using Census Bureau household survey data and Bureau of Labor Statistics (BLS) consumer expenditure data to create distributional measures of the Bureau of Economic Analysis (BEA) personal income. We show that for the period 2000-2012, inequality using personal income is substantively lower than inequality measured using Census Bureau money income, and the trends in both inequality and median income are different. This demonstrates the importance of using a measure a national accounts based measure of income when examining the relationships between inequality and growth. [ABSTRACT FROM AUTHOR]

This paper presents estimates of the effects that terms of trade volatility has on real gross domestic product (GDP) per capita growth. Based on 5-year nonoverlapping panel data comprising 175 countries during 1980 to 2010, the paper finds that terms of trade volatility has significant negative effects on economic growth in countries with procyclical government spending. In countries where government spending is countercyclical, terms of trade volatility has no significant effect on growth. Conditional on the mediating role of government spending cyclicality, the GDP share of domestic credit to the private sector has no significant effect on the relationship between growth and terms of trade volatility. [ABSTRACT FROM AUTHOR]

This paper uses a new methodology based on industry comovement to examine the role of financial market development in intersectoral allocation. Based on the assumption that there exist common global shocks to growth opportunities, we hypothesize that country pairs should have correlated patterns of sectoral growth if they are able to respond to these shocks. Consistent with financial markets promoting responsiveness to shocks, countries have more highly correlated growth rates across sectors when both countries have well-developed financial markets. This effect is stronger between country pairs at similar levels of economic development, which are more likely to experience similar growth shocks. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the effect of corruption on the economic development of the Latin American and Caribbean countries. Using panel data covering the period from 2000 to 2018 and leveraging on two‐way fixed‐effect and system generalized method of moments estimators, we show that a one standard deviation increase in corruption, as measured by the reversed Transparency International's corruption perception index, is associated with a decrease of 12.2% in gross domestic product per capita and a decrease of 3.05% in economic growth. This supports the view that corruption "sands the wheels" of the development of Latin American and Caribbean countries rather than "grease the wheels" perspective that corruption may help compensate for bad governance. We also assess the potential mechanisms through which corruption affects economic performance, providing evidence that corruption is associated with lower investment in physical capital and lower foreign investment flow. Finally, a panel Granger causality test indicates a bidirectional causality between higher corruption and lower economic development. [ABSTRACT FROM AUTHOR]

A Fisher's Identity model is established to study Northern Song China's (960-1126) level of velocity of money using money supply and gross domestic product ( GDP) data. Results of the exercise help rationalize what is called the 'bronze coin' puzzle, which is the massive amount of minted coins seemingly incommensurate with price levels. It is shown that the velocity of money was increasing and comparable to pre-industrial England levels. This paper argues that the driving forces of the short supply of money are greater than usual hoarding by the state treasury and coin outflows to Song's trading partners via smuggling. Since velocity of money is an indicator of economic development in ancient societies, this paper provides a realistic validation of the premise of the Needham puzzle. [ABSTRACT FROM AUTHOR]

This paper proposes a theoretical method to account for historical episodes of growth disparity. A numerical computation shows that the properties of the local dynamics of the proposed model are consistent with the facts indicated by selected episodes. [ABSTRACT FROM AUTHOR]

The paper uses various approaches: capital asset pricing, mean-variance, global minimum-variance, Bayes-Stein, Bayesian and multi-prior to develop foreign equity bias measures for Australia’s international equity holdings in 41 countries, over the period 2001 to 2012. Bayesian models allow for various degrees of mis-trust in the ICAPM model. Multi-Prior restricts the expected return for each asset to lie within specified confidence interval around its estimated value. Mean-Variance computes optimal weights by sample estimates of mean and covariance matrix of sample return. Bayes-Stein shrinks each asset’s historical mean return toward the return of the minimum variance portfolio and improves precision associated with estimating the expected return of each asset. The plausible sources of foreign equity bias are trade, GDP per capita, real GDP growth rate, exchange rate volatility, tax credit, stock market development, familiarity and institution variables. The paper finds that economic cost of the observed foreign bias is low. The paper analyses correlation effect on the foreign bias and finds that economic loss decreases with an increase in correlation. [ABSTRACT FROM AUTHOR]

The export-led growth hypothesis is tested using monthly time series data for Shanghai (one of the major exporting provinces in China) using the Granger no-causality procedure developed by Toda and Yamamoto (1995) in a vector autoregresion (VAR) model. This paper builds on the existing literature in three distinct ways. This is the first study of the export-led growth hypothesis which employs a regional dataset (Shanghai). Second, the paper follows Riezman et al . (1996) in controlling for the growth of imports to avoid a spurious causality result; and finally, the use of the methodology by Toda and Yamamoto is expected to improve the standard F -statistics in the causality test process. The research finds one-way Granger causality running from GDP to exports. [ABSTRACT FROM AUTHOR]

Copyright of Regional Science Policy & Practice is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper traces the yearly response of gross domestic product growth--both aggregated and disaggregated into its agricultural and non-agricultural components--to four types of natural disasters: droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector autoregressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger on developing than on advanced countries. Second, not all natural disasters are alike in terms of the growth response they induce, and some can even have positive effects on economic growth. Third, severe disasters often carry much worse effects than moderate effects do. Fourth, the timing of the growth response varies with both the type of natural disaster and the sector of economic activity. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The current paper seeks to examine the relationship between energy consumption and real output in the United Arab Emirates (UAE) economy. Technically, we assess the following two questions: 'does the increase in energy consumption cause more economic growth in the UAE economy?' or 'does the rapid economic growth lead to more energy consumption?' We utilise the bounds testing approach to cointegration and error correction model and Granger causality test to achieve the paper goal. The paper employs an annual data series of the UAE real gross domestic product and energy consumption over the 1973-2008 period. The findings of the paper have two levels: short-run and long-run. In the short-run, the results reveal a clear statistically significant bidirectional positive relationship between energy consumption and real output in the UAE economy. However, in the long-run the estimate illustrates only one relationship prevails from the short-run. This one is the statistically significant positive unidirectional relationship running from real output to energy consumption. [ABSTRACT FROM AUTHOR]

In this paper, the convergence clustering in 31 Chinese provinces regarding several important economic indicators over the period 1952 to 2016 was empirically investigated. Several provincial clusters were identified in the per capita (real) gross domestic product (GDP), consumption–income ratio, retail price, and consumer price inflation rates, using a club convergence and clustering procedure. The empirical findings are as follows. First, it was found that all series of the original data contain a significant nonlinear component. Second, it was observed that there are five significant clusters for the per capita income in China. Third, it was found that there are four significant clusters for the consumption–income ratio. Fourth, it was observed that there are four significant clusters for the retail inflation rates and two significant clusters for the consumer inflation rates in China. These results will enable local and central planners to implement economic growth, savings and price adjustment policies for different groups of provinces. [ABSTRACT FROM AUTHOR]

Given its size and importance for global commodity markets, the question of how fast China can grow over the medium term is an important one. Using a Cobb–Douglas production function, we decompose the growth of trend GDP into those of the capital stock, labour, human capital and total factor productivity (TFP) and then forecast trend output growth out to 2030 using a bottom‐up approach based on forecasts that we build for each one of these factors. Our paper distinguishes itself from existing work in that we construct a forecast of Chinese TFP growth based on the aggregation of forecasts of its key determinants. In addition, our analysis is based on a carefully constructed estimate of the Chinese productive capital stock and a measure of human capital (based on Chinese wage survey data) that better reflects the returns to education in China. Our results suggest that Chinese GDP growth will slow from around 7% currently to approximately 5% by 2030, consistent with a gradual rebalancing of the Chinese economy characterized by a decline in the investment rate. Moreover, our findings underscore the growing importance of TFP growth as a driver of Chinese growth. [ABSTRACT FROM AUTHOR]

This paper shows that the age structure of human capital is a relevant characteristic to take into account when analysing the role of human capital in economic growth. The effect of an increase in the education of the population aged 40–49 years is found to be an order of magnitude larger than an increase in the education attained by any other age cohort. The results are unlikely to be driven by the age structure of the population, as we find that the effects on growth of the age structure of education and the age structure of population are distinct. The findings are robust across specifications and remain unchanged when we control for long‐delayed effects in human capital or for the experience of the workforce. [ABSTRACT FROM AUTHOR]

This paper examines the impact of remittances on economic growth, using developing countries in Asia and the Pacific as a case study. Using data for the period 1993–2013, our results show that remittances only generate negative and significant impacts on economic growth if they reach 10 percent of GDP or higher. A remittances‐to‐GDP ratio of below 10 percent could still impact growth negatively, but the effect is statistically insignificant. The present study finds some degree of substitutability between remittances and financial development. Foreign direct investment (FDI), but not other types of capital inflow, contributes significantly to economic growth. Other traditional growth engines, including education, trade openness, and domestic investment, are crucial in promoting growth in developing Asian and Pacific nations. [ABSTRACT FROM AUTHOR]

This paper reconstructs China's economic development between 1840 and 1912 with an estimation of Gross Domestic Product (GDP). It provides for the first time a time series of GDP (per capita) for the late Qing Dynasty (1644–1911), based on sectoral output and value added, in current as well as in constant prices. The present estimation of per capita GDP in the late Qing period comes out higher than previous estimations, but it still suggests low average levels of Chinese living standards. The economy during the late Qing Empire was characterized by a large and growing agricultural sector and displayed only minor structural changes. Only in the beginning of the twentieth century did the economy start to show signs of growth. [ABSTRACT FROM AUTHOR]

Taking a long‐term look at U.S. economic growth over 1870–2014, this paper focuses on the spillovers from the shadow or the unofficial economy to growth in the official sector. Shadow activities might spur or retard economic growth depending on their interactions with the formal sector and impacts on the provision of public goods. Nesting the analysis in a standard neoclassical growth model, we use a relatively new time series technique to estimate the short‐run dynamics and long‐run relationship between economic growth and its determinants. Results suggest that prior to World War II (WWII) the shadow economy had a negative effect on economic growth; however, post‐WWII the shadow economy was beneficial for growth. The sanding effect of the shadow economy in the earlier period is especially robust to alternate considerations of possible endogeneity and an alternate set of growth determinants. [ABSTRACT FROM AUTHOR]

This paper introduces a model in which greater inequality reduces growth in economies with low levels of financial development but that this effect is attenuated in economies with more developed systems. The model also predicts that individuals in economies with developed financial markets have a higher tolerance to inequality. Using a panel dataset that covers a large number of countries, this paper shows empirical evidence that is consistent with the main predictions of the model. Overall, this paper's major findings highlight that some of the pernicious effects of inequality can be attenuated by improving access to credit. [ABSTRACT FROM AUTHOR]

The paper investigates the impact of Asia's demand rebalancing and supply‐side productivity changes on long‐term economic growth in Asia and worldwide. Results from a panel vector autoregression model show that a productivity–neutral demand‐rebalancing shock has no permanent effect on Asian output, whereas labour productivity shocks have significant, positive and permanent effects. Simulations using a global intertemporal multisector general equilibrium model suggest that labour productivity shocks increase the foreign GDP over time, but rebalancing shocks have a negative international spillover effect. In addition, labour productivity shocks help in rebalancing. Structural reforms promoting labour productivity growth along with rebalancing policies across Asia can achieve higher economic growth worldwide. [ABSTRACT FROM AUTHOR]

This paper examines the causal relationship between FDI and economic growth by using an innovative econometric methodology to study the direction of causality between the two variables. We apply our methodology, based on the Toda-Yamamoto test for causality, to time-series data covering the period 1969–2000 for three developing countries, namely Chile, Malaysia and Thailand, all of them major recipients of FDI with a different history of macroeconomic episodes, policy regimes and growth patterns. Our empirical findings clearly suggest that it is GDP that causes FDI in the case of Chile and not vice versa, while for both Malaysia and Thailand, there is a strong evidence of a bi-directional causality between the two variables. The robustness of the above findings is confirmed by the use of a bootstrap test employed to test the validity of our results. [ABSTRACT FROM AUTHOR]

This paper use both single period cross-section data as well as panel data for the period 1970 to 1990 (largely obtained from version 6.1 of the Penn World Tables) to identify the determinants of Africa's growth in per capita GDP, as well as to evaluate the empirical relevance of recent contributions that stresses the potential importance of geographical vs institutional factors in Africa's growth. The paper further contributes by making use of recent cross-country data on institutional quality and geographical characteristics of African countries. To address the danger of using an inappropriate estimation method, a number of estimation methods was used, namely OLS, LAD, GLS-random effects, fixed effects as well as a dynamic GMM-estimator. The results confirmed that the more efficient and dynamic GMM-estimator is superior and that controlling for unobserved heterogeneity, dynamic effects and endogeneity of the regressors is important. It is concluded that there is conditional convergence in Africa, and that literacy, investment, FDI and urban agglomeration have a significant positive effect on GDP per capita growth in Africa. Growth is negatively affected by government expenditure, settler mortality, malaria, landlockedness and landarea. These results support Acemoglu et al.'s (2001) ‘reversal of fortune’ thesis, namely that settler mortality is inversely related to economic growth. It further suggests that it is not one of either institutions or geography that are more important than the other, but rather that geography may have an important impact on institutions. The robust finding that the incidence of malaria has a particularly large impact on economic growth in Africa supports this conclusion. Copyright © 2004 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Understanding the nature of structural change and the sources of economic growth of an economy, especially the relative importance of different industries, is essential for policy-making. This paper estimates industry contribution to economic growth in both Canada and the United States. It argues that industry contribution should be evaluated on the basis of the performance of an industry in terms of creating economic value relative to other industries. In particular, it calls for the quantity and the price effects, which is consistent with real GDP in the chained-Fisher index that values the industry more when its price rises and less when its price declines. This is an important departure from the traditional methodologies that consider only quantity effect. This paper shows that the contribution from demand-driven industries is significantly more than the finding based on traditional thinking. [ABSTRACT FROM AUTHOR]

This paper examines the asymmetric non-linear relationship between insurance and economic growth in Nigeria between 1976 and 2010. Prior studies have examined the direction of causality between insurance and economic growth with mixed conclusions in the insurance-growth literature. Moreover, the majority of these studies assumed symmetric causal relationships by concentrating mainly on testing the supply-leading and demand-following hypothesis. This paper, therefore, contributes to the literature by examining the asymmetric causality test between insurance and economic growth in Nigeria. After the cointegration, the asymmetry causality and the asymmetric impulse responses show a robust significant relationship between high gross domestic product (GDP) and low insurance in the long run. [ABSTRACT FROM AUTHOR]

The aim of this paper is to examine the long-run and short-run relationship between tourism, real effective exchange rate and economic growth in Croatia. The econometric framework used for analysis is the Johansen Maximum Likelihood cointegration technique. For testing the stability of long-run equilibrium relationship vector error correction model technique has been applied on a quarterly data set covering the period 1996-2013. The main findings of the paper confirm the stability of the long-run equilibrium relationship between tourist arrivals (ARRIVAL), openness of the economy (OPEN) and real effective exchange rate as independent variable and gross domestic product (GDP) as dependent variable in Croatia. Furthermore, the results indicate short-run causality between OPEN and GDP, as well as between real effective exchange rate and GDP. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Abstract: This paper simulates the effects of China's growing government debt in a computable equilibrium model of overlapping generations. Our model assumes that the government increases debt to finance its spending in the short run, and then increases taxes or cuts spending to keep the debt–GDP ratio constant. The spending‐driven government debt increases public capital and output in the short run, but decreases private investment, total capital stock, output, and net exports in the long run, and makes the future generations worse off. Among various means of debt control, a decrease in government spending seems to be the least harmful to private investment, capital stock, and output while an increase in capital taxation is most detrimental. [ABSTRACT FROM AUTHOR]

This paper serves as an introduction to this special issue on the use of multiregional inputoutput modeling in assessments of natural resource use and resource use efficiency. Due to globalization, growth in trade has outpaced growth in global gross domestic product (GDP). As a consequence, impacts of consumption of a country increasingly take place abroad. Various methods have been developed to perform so-called footprint analyses. We argue that global multiregional input-output (GMRIO) analysis has the largest potential to provide a consistent accounting framework to calculate a variety of different footprint indicators. The state of the art in GMRIO has, however, various shortcomings, such as limited sector and regional detail and incomplete extensions. The work presented in this special issue addresses a number of such problems and how to possibly overcome them, focusing on the construction of a new GMRIO database (EXIOBASE V3). This database includes long time series in both current and constant prices, a high level of product and sector detail, a physical representation of the world economy, and allows analyzing which footprints out of the many possible indicators provide most information for policy making. Various options for empirical analyses are presented in this special issue. Finally, we analyze how GMRIOs can be further standardized and gradually moved from the scientific to the official statistical domain. [ABSTRACT FROM AUTHOR]

Abstract: This paper uses a fiscal decentralisation reform in China – namely, the province‐managing‐county (PMC) reform – to examine the effects of fiscal decentralisation on local economic growth. The PMC reform abolished the subordinate fiscal relationship between prefectures and counties and transferred much of the tax and spending authority from the prefecture to the county level. Exploiting a county‐level panel data set over 2001–11, we find that the reform has led to a significant increase in the GDP growth rate. The effect is considerably more pronounced in regions with superior initial institutional quality. We also identify channels: the PMC reform induced county governments to exert lower tax burdens on firms and increase spending on infrastructure construction. [ABSTRACT FROM AUTHOR]

Abstract: This paper analyses how the functional components of public expenditure and spending‐driven consolidations affect the economic growth, unemployment, and income inequality. A dynamic panel data least squares dummy variable estimator estimator is employed over a sample of 15 European Union countries during the period 1990–2012. The empirical results show that real GDP growth decreases when fiscal austerity measures are implemented, especially if they are spending‐driven. Cuts in public expenditure undermine economic growth, namely if they slash spending on public order, recreation, and education. Spending cuts on education, in particular, affect the investment in human capital, harming not only growth but also economic, social, and human development. The unemployment rate also proved to be significantly boosted when austerity measures restrict spending on education, whereas income inequality rises when social protection expenditures are cut. [ABSTRACT FROM AUTHOR]

Summary: Using a dataset for a panel of 118 countries, this paper shows that changes in the level of education of national populations aged 45 to 64 are positively associated with economic growth. An increase of one percentage point in the share of individuals in this age group who attended secondary education is associated with a 1.2% increase in GDP per capita. In contrast, variation in the level of education in younger cohorts is not positively associated with economic growth. These results suggest that investment in education benefits society, but only in the long‐term. Several possible explanations for this finding are discussed. [ABSTRACT FROM AUTHOR]

Aid donors are interested in understanding whether allocating aid via bilateral or multilateral channels might be more effective for achieving development goals. We review 45 papers that empirically test the associations between bilateral and multilateral aid flows and various development outcomes including gross domestic product growth, governance indicators, human development indicators and levels of nonaid investment flows. Findings suggest that differences between countries and regions, time periods, aid objectives, and individual donor organizations all may influence the effectiveness of aid delivered bilaterally and multilaterally. We find, however, no consistent evidence that either bilateral or multilateral aid is more effective overall. [ABSTRACT FROM AUTHOR]

Urban areas contribute to nearly two-thirds of India's gross domestic product, but only constitute 31% of the country's population. In this paper, I address the following questions: What are the specializations of Indian cities and towns, and how have these changed over time; and what part of the specialization identified is a result of local advantages versus industry or national economic growth? Answers to these questions are basic to sustaining the competitiveness of India's cities. I used standard Census of India data at city level to compute location quotients for India's cities and towns, and examined changes in their economic base over time. Further, I performed shift-share analyses for selected large cities to disaggregate their employment growth. On average, over 1991-2001, specialization in all sectors, with the exception of trade, decreased. I found evidence of persistence in the sectoral specialization of Indian cities during 1991-2001. Further, in all non-agricultural economic sectors, cities in states know to be backward and lagging are specialized in most sectors. Based on location quotient analyses, I find that Mumbai is the financial capital of the country, Delhi is the seat of public administration, and Bengaluru specializes in transport, storage, and communications. [ABSTRACT FROM AUTHOR]

The African continent has grown by more than 4 percent yearly on average during the past decade. However, the link between this remarkable growth rate and poverty reduction is neither obvious nor simple. This paper focuses on the elasticity of poverty with respect to GDP growth at the sectoral level and takes into account the fact that economic growth may affect poverty directly as well as indirectly through sectoral labor share intensity. It develops a methodology that sheds light on the contribution of sectoral growth to poverty reduction country-by-country in Africa, guiding policy recommendations. As the composition of growth matters at least as much as its overall intensity, it is key to identify the sectors that have the strongest impact on poverty reduction and unleash their potential; if growth happens to concentrate in sectors with scarce pro-poor potential, like commodity-driven growth, redistributive strategies are necessary to compensate the weak effect on poverty. [ABSTRACT FROM AUTHOR]

Many questions regarding local economic phenomena involve issues of spatial and temporal dependence and heterogeneity. One of the main ideas of the socialist market economic system which was set up in 1978 in China is 'those becoming rich earlier bring along other people, all achieving the common richer eventually'. However, after several decades, having performed a series of balanced development strategies and policies, is this purpose true or not? How about the outcome of regional level of planning strategies under the socialist-market system? This paper focus on the intra provincial development, and uses per capita GDP of Guangdong, one of the most developed provinces in China to analyse the economic development of prefecture-level cities from 1978 to 2013 with a new exploratory space-time method. Three conclusions can be drawn as follows: first, the degree of regional economic development is gradually deepening along with rapid economic development in Guangdong province and the per capita GDP difference is gradually widening between the Pearl River Delta region and the non-Pearl River Delta region. The core-periphery relation is clear within the provincial level's development. Second, the trend and position of space-time paths are different across regions. Third, the space-time paths have not intersected across poor and rich regions during the last 33 years. Widening uneven development is concealed by the 'fast growth' economic phenomenon. The macro-economic environment has had some effects on different regions, with the effect on fast growing areas, such as the core region of the Pearl River Delta the most obvious. There is a lag effect on other undeveloped areas. At the same time, under the socialist market economic system, the market is the main motivation behind regional discrepancies, and some policies and strategies aimed at narrowing the gap have had limited success. [ABSTRACT FROM AUTHOR]

'Informality' is a term used to describe the collection of firms, workers and activities that operate outside the legal and regulatory systems. It is widespread in the majority of developing countries - in a typical developing economy, the informal sector produces about 35 per cent of GDP and employs 70 per cent of the labour force. This paper studies informality in the context of economic development by presenting a model and projections that link informality, regulations, migration and economic growth. This analytical framework highlights the trade-offs between formality and informality, the relationship between the different types of informality, and the connection between them and the forces of labour, capital and productivity growth. The paper models the behaviour of the informal sector based on the following fundamental asymmetry: formal firms confront higher labour costs, while informal firms face higher capital costs and lower productivity. Using mandated minimum wages as the policy-induced distortion, the model first studies the static allocation of formal and informal capital and labour in a modern economy. Second, it opens the possibility of labour migration from a rudimentary economy with ample supply of labour (e.g. rural areas or less advanced neighbouring countries). Third, the model analyses the dynamic behaviour of the formal and informal sectors, considering how they affect and are affected by economic growth and labour migration. Then, the paper presents projections for the size of labour informality, in the modern and rudimentary economies, in the next two decades for a large group of countries representing all regions of the world. The projections are based on the calibration and simulation of the model and serve to discuss its usefulness and limitations. [ABSTRACT FROM AUTHOR]

This paper analyses the characteristics of the recent African economic growth. The data reveal that during the period 1995-2005, Africa caught up with East Asia in terms of economic growth and investment. However, East Asia has improved its advantage on Africa in terms of GDP per capita and growth fundamentals. African economic growth rate was 2.2 percentage points higher during the period 1995-2005 compared to the period 1975-94. However, between the two periods, only primary education, exports and urbanization have significantly increased in Africa. The other growth determinants have either slightly deteriorated or remained stagnant. The results of growth regressions over the period 1995-2005 indicate that investment, private sector access to credit, government effectiveness, exports and the share of agriculture value added in GDP are significantly linked with economic growth. Thus, compared to the statistical analysis, growth regressions suggest that most of the variables which have significantly contributed to growth recovery are not those variables which have positively evolved in Africa. The good news is that African economies have grown recently without changing many growth fundamentals. The bad news is that the recent African growth recovery may not be sustainable if efforts are not focused on right growth fundamentals. [ABSTRACT FROM AUTHOR]

This paper studies the patterns of government expenditure stimuli among Organisation for Economic Co-operation and Development ( OECD) countries during the Great Recession (2007-2009). Overall, we find that the USA net fiscal stimulus was modest relative to peers, despite it being the epicenter of the crisis, and having access to relatively cheap funding of its twin deficits. Of the 28 countries in the sample, the USA is ranked among the bottom third in terms of the rate of expansion of consolidated government consumption and investment expenditures. Contrary to historical experience, emerging markets had strongly countercyclical policy during the period immediately preceding the Great Recession and the Great Recession itself. Federal unions, emerging markets and countries with very high gross domestic product ( GDP) growth during the pre-recession period saw larger net fiscal stimulus on average than their counterparts. We also find that greater net fiscal stimulus was associated with lower flow costs of general government debt in the same or subsequent period. [ABSTRACT FROM AUTHOR]

As a result of the shrinking working age population (aged 15 to 59 years), all factors that have driven China's rapid economic growth over the past 30 years tend to diminish from 2010. The present paper estimates the average annual growth rate of potential output to be 7.2 percent over the 12th Five-year Plan period and 6.1 percent over the 13th Five-year Plan period. Future sustainable growth requires furthering economic reform in related areas to enhance potential growth. This paper simulates two scenarios in which both an increase in labor force participation and improvement in total factor productivity can significantly enhance the potential GDP growth rate. Relevant policy implications are discussed. [ABSTRACT FROM AUTHOR]