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Historically, women's contributions to the economic, political, and social well-being of a society have been dramatically devalued. It is only in the last fifty years that the thinking towards the role of women has shifted. Today, there is general global consensus that female empowerment is "smart economics" and that gender equality has a positive effect on economic growth and human development. The inverse relationship, that economic growth has a positive effect on advancing gender equality is more controversial and understudied. To gain a broader picture of the role of women in economic development, as well as a more nuanced understanding of the relationship between economic growth and gender equality, this paper situates women within the human development paradigm and first explores the notion of economic empowerment. A discussion of the importance of women's empowerment to economic development follows. With this framework laid, the context of economic development and gender equity in East Africa is explored, followed by two specific case studies of Ethiopia and Uganda. This paper draws several conclusions about the role of women in the economic development trajectories of Ethiopia and Uganda, namely that discrimination and marginalization of women in Ethiopia and Uganda has limited both women's roles economic development and impeded their human development. In the Ethiopian and Ugandan economies, women do not participate in high growth sectors and a majority of women, if employed, work in the agriculture sector with substantially unequal access and control over productive resources. In both nations, girls are expected to attend less school than boys, resulting in lower literacy compared with their male counterparts. In health, life expectancy has improved substantially in both Ethiopia and Uganda and girls have a higher life expectancy than boys at birth. Despite said advances, fertility rates remain astronomically high in both Ethiopia and Uganda, which curbs (sustained) economic growth potential and women's empowerment. This evidence suggests that if Ethiopia and Uganda significantly increase economic and educational opportunities for women, while maintaining gains in healthcare, fertility rates will decrease and more sustained economic growth can occur, which will ultimately have positive gains for women's empowerment and for development. [ABSTRACT FROM AUTHOR]

This paper examines the effect of a visit by a country's leader to the U.S. on the ability to attract foreign loans. The difficulty is the issue of endogeneity. As the leader's visit may attract foreign loans, leaders may also be tempted to visit countries known to be major creditors. To deal with potential endogeneity, we introduce a novel instrumental variable for the number of leader's trips. The instrument is urban distance defined as the gap between the level of urban development in the country of the leader relative to that in the United States. We conduct a Two-Stage-Least-Squares estimation (2SLS) and the Limited Information Maximum Likelihood (LIML) estimation where the urban distance serves as a source of exogenous variation in leader's trips. The data for leader's trips is derived from the historical archives of the U.S. State Department. The estimation provides evidence of a statistically significant positive coefficient of leader's trips. This result implies that these trips by the leaders signal to the creditors their commitment to use the borrowed funds properly and to repay these funds in due time. Our results are robust even after the inclusion of other control variable, using alternative samples, and accounting for the potential of instrument weakness. Borrowers ought to consider the beneficial effect of a visit by their leaders to their creditors. These trips allow the leaders to present to foreign creditors the projects that need to be financed in their countries, to persuade them to extend a loan to their country with concessionary terms, to highlight the future benefits of the loan, and to reassure them of the abilityof the borrower to repay the principal and interest in due time. JEL Classifications : H63, H11 Keywords : External Debt, Executive, INTRODUCTION This paper examines the effect of the number of visits by the leader of the country or the head of the government to the United States on external debt. [...]

This study proposes an incremental perspective concerning the channel through which countries gain from strengthening patent rights (PRs). We hypothesize that the patent rights influence the technological effort of a country that further stimulates its exports. It is not evident in previous studies how the changes in innovativeness translate into economic growth. In this paper, we study the impact of PRs on the technology efforts of a country and their contribution to high-technology exports. We combine the technology efforts made by countries and their contribution to high-technology exports in order to explain a mechanism through which strong PRs contribute to economic growth, as such a channel remains unexplored in the current literature. This study adds to the literature by computing a technology effort index via principal components analysis to quantify the technological efforts made by a country, which we then use to measure its contribution on exports. Using panel data analysis on 67 countries from 1996-2014, this paper finds that patent rights influence the technological effort of a country that further stimulates its exports. This finding has implications for the role of the patent system in technological development and export orientation, both of which are important factors in economic growth. We also examined the interaction between source countries' technology efforts and the destination countries' patent rights environment. The interaction effect has a negative influence on exports in high income countries, suggesting that stronger destination patent rights enable source country firms to better exploit market power if they possess greater levels of technology. The results also demonstrate a positive relationship between a destination country's patent protection and export flows, which may be reduced if the technological efforts of a source country enable exporters to exercise market power. This result indicates that patent rights help attract exports from other countries - that the expansion and enforcement of global PRs play a significant role in the economic development of economies by helping to draw high technology products to both high-income and middle-income countries. [ABSTRACT FROM AUTHOR]

This paper reviews contemporary literature on theoretical modelling of fiscal policy in India, and highlights the inadequacy of studies focusing on fiscal issues through the lens of Dynamic Stochastic General Equilibrium (DSGE) modelling. Next, in order to stimulate further discussion, the paper proposes a 'primer' DSGE model calibrated for the Indian economy with focus on exploring fiscal policy transmission, and the economy-wide impact of shocks in various fiscal instruments is evaluated and compared. Finally, drawing from this primer model, the paper discusses areas of future research in context of recent developments in India's fiscal policy framework. This includes rethinking the modelling of the fiscal rule, and honing the estimation methodology. The paper proposes a small open economy New Keynesian DSGE framework, with the building blocs of households, producing, assembling, and investment firms, government and the central bank. The government has a number of fiscal instruments at its disposal - government consumption, government investment, transfers, public employment, consumption tax, and labor income tax - governed by a fiscal rule for fiscal deficit. The parameters are calibrated from data, past studies on the Indian economy, and formulation from steady state relationships and the model is simulated with the motivation of examining the impact of fiscal shocks. The study finds that while output and employment increases in response to positive spending shocks, the impact on consumption is mixed, while private investment stimuli uniquely leads to increase in private investment. The impact of tax stimuli differ - a negative consumption tax shock is disinflationary and positively impacts consumption, while the study observes asymmetric impact of negative shock in labor income tax cut, given its limited tax coverage. From the perspective of policy relevance, these results highlight the pros and cons of various forms of fiscal intervention based on the nuances of their policy transmission. Within spending shocks, public investment stimulus avoids crowding out of private investment, while a cut in consumption tax offers a more direct impact on household consumption. Finally, while the model herein offers an intuitive framework for assessing Indian fiscal policy transmission using DSGE modelling, the paper concludes by outlining areas of further research. [ABSTRACT FROM AUTHOR]

It has been widely accepted that the structure of population of a country can have significant contribution towards its growth effort. With the proportional increase of relatively older group of people in developed countries alongside the proportional rise of the youth population in the developing part of the world, it is of paramount importance to understand the long term economic consequences of this changed structure of population. Despite having a favorable demographic composition, depending on public investment and policy strategy adopted, economies differ in terms of their ability to attain demographic dividend. The issue is therefore an empirical one which requires appropriate quantitative analysis. Against this backdrop, with the help of a 37-year long panel of 15 Asian countries, this study has made an attempt to understand the long run effect of changing demographic pattern on economic growth of Asian countries. Despite increased importance of demographic composition on labor supply, asset accumulation, savings, hence on the overall growth process, there is no literature focusing on the relationship from a cross-country perspective and while applying suitable methodological tools. Thus, this paper utilized econometric methods of panel data constructed using World Development Indicators (WDI) and Health Nutrition and Population Statistics (HNPS) from World Bank database to understand the linkage between dependency ratio and per capita GDP growth. Following cross section dependence test stationarity property of the variables has been diagnosed employing appropriate panel unit root tests. The short run and long run parameters have estimated with the help of Mean Group (MG), Pooled Mean Group (PMG) and Dynamic Fixed Effect (DFE) estimators. PMG estimates have been preferred over the DFE and MG. It revealed the fact that for the Asian countries Dependency Ratio (DR) does not have any short run impact on Per Capita GDP Growth (PCGDPG) but it has significant long run impact therefore with an increase in working age population in comparison to the non-working group, there is a resulting increase in per capita GDP growth of Asian countries. Since changed demographic composition can only result in higher economic growth, if complemented by effective public policies, this paper provides empirical evidences in favor of such policies of human resource development. Besides, in order to reap the maximum benefit from working age population while increasing investment, it is important to engage them in productive, growth enhancing activities and that requires investment in employment generation. [ABSTRACT FROM AUTHOR]

Energy plays a dynamic role in an economy. To understand the different events taking place in the energy market and the importance of the energy sector in the national economy, energy demand has to be understood thoroughly. To the best of our knowledge, no studies have been conducted for modelling energy demand in Bangladesh. The aim of this paper is to create an energy demand model for Bangladesh on the basis of annual data covering from 1980-2015. In this paper, we employed Augmented Dickey Fuller (ADF) unit root test to check stationarity of the variables. Johansen's Cointegration test is carried out to check the long run association ship among the variables. Granger Causality test and Vector Error Correction Model (VECM) are used to investigate the causalities among the variables of interest both in the long run and short run. Dynamic Ordinary Least Square (DOLS) method is used for estimating the long run price and income elasticities. All the variables are found to be stationary at their first differences. Cointegration test confirms the existence of cointegrating relationship among the variables. In the long run, there is no causal relationship between energy price and energy demand. Moreover, four more unidirectional relationships (energy demand to real income, household expenditure to energy demand, population to energy demand and energy demand to carbon emission) are observed. In the short run, there is a unidirectional causality running from energy price to energy demand and a bidirectional causality between energy demand and population. Estimation result reveals that the long run price and income elasticities are inelastic and income elasticity is smaller than price elasticity in absolute terms. Long run price and income elasticity are -0.75 and 0.45 respectively. As Bangladesh wishes to become upper middle income country by 2021, these findings might be useful for the policy makers to come up with appropriate combinations of policies so that demand for energy can be fulfilled optimally. Besides, policies ensuring cost reflective pricing scheme are encouraged to restructure the market. These will ensure energy security as well as can help the nation to achieve the desired goals effectively. [ABSTRACT FROM AUTHOR]

Decades after the publication of his seminal paper, "Economic Development with Unlimited Supplies of Labor," W. Arthur Lewis' contributions remain revered, relevant and contentious. Much of the discussion in the literature on Lewis' work focuses on the transfer of labor from the subsistence sector to the capitalist sector, and the attendant arrival at what has become known as the Lewis Turning Point. As a result, the deeper thrust of Lewis' paper is ignored and incorrect conclusions drawn about the Lewis model and its implications, especially as regards the subsistence sector, the importance of technology, and economic growth and development. This paper argues that the Lewis model supports the advancement of the subsistence sector for economic development, through technological advancement. Lewis' seminal paper is clear on this. This important aspect of the Lewis model is not well ventilated in the literature and undermines the broader importance of the model. In fact, technological advancement has been seen by some as a shortcoming of the model as it could stall the transfer of labor from the subsistence sector to the capitalist sector, and in turn hinder the process of reaching the turning point. Using the Cobb-Douglas framework this paper argues against this view and examines technological advancement in all sectors, with specific emphasis on the subsistence sector. In the process, the superficial importance attached to the possible stalling of the labor transfer process is debunked. Indeed, the analytical framework provided by the Cobb-Douglas framework, in addition to Lewis' description of his model, clearly shows how economic growth, and by extension development, continues in both sectors of the economy as a result of technological advancement. Surely, Lewis was more concerned with increasing the rate of savings, economic growth and development, and income distribution, as opposed to simply the transfer of labor. And what's more, Lewis clearly did not view the transfer of labor as the sine qua non of economic growth and development. Finally, as regards policy implications, this paper supports the view of the importance of technological advancement in the subsistence sector as essential to sustainable economic growth and development. [ABSTRACT FROM AUTHOR]

Monetary policy over the data period is aimed at sustaining the growth in the money supply achieved through a tight monetary policy stance, thereby ensuring price and exchange rate stability. This paper aims to empirically examine the share of exchange rate pass-through and local monetary targets in explaining inflation dynamics in Ghana. Annual data is obtained from International Financial Statistics, Organization for Economic Cooperation and Development, and Bank of Ghana's Annual Reports. The aggregate time series used in the estimation are money (broad money supply, M2, defined as currency plus demand, time and savings deposits held by the public), real income per capita, and the real effective exchange rate. The UK consumer Price index is used as a proxy for the foreign price level since the UK has been Ghana's largest trading partner over much of the data period. The Treasury bill rate is used as the domestic nominal rate of interest. The Consumer Price Index measures the domestic price level. Using Pesaran, Shin and Smith's bounds testing approach to cointegration and an error correction model, the paper finds empirical evidence for both short and long run inflationary consequences from changes in monetary factors. The results indicate that changes in money supply, real effective exchange rate, nominal interest rate, real income per capita and foreign prices have a significant influence on the behavior and path of inflation in the long run. However, the short-run dynamics based on an error correction model shows that money supply has no significant impact on the rate of inflation. While real effective exchange rate and nominal interest rate have significant effects, the main driving force behind domestic inflation in the short-run appears to be import prices and real income per capita. The findings highlight the need for an alternative operational target such as the monetary conditions index or an explicit inflation-targeting framework to improve policy credibility. [ABSTRACT FROM AUTHOR]

The exposure and vulnerability of financial markets in developing countries have been at center stage of empirical debates in recent time. The crux of the debate is not whether the financial system is isolated or not but the extent of such exposure. As an attempt to investigate the Nigerian exposure to external shock, this paper investigates the impact of foreign portfolio investment on the stock market between the study period of 1980 and 2014. Data for the study were sourced from the statistical bulletins published by the Central Bank of Nigeria. A model that captures the fundamental drivers of stock market development was built while the time series properties of the variables were examined using Augmented Dickey Fuller and Johansen co-integration tests. In view of the results of the pre-estimation tests, the Error Correction Modeling approach was used to estimate and examine the relationship between foreign portfolio investment, stock market development and other variables such as economic growth, exchange rate and inflation rate. The results show that there was a significant positive long run relationship between foreign portfolio investment and stock market development. It was also found that the level of domestic economic activities, exchange rate and inflation rate were other key fundamentals dictating the momentum of investment flow and direction of stock market development in Nigeria. The lagged error correction term (ECMt-1) is -0.012 indicating that the speed and time to full adjustment from short run shock to long run stability is low. The paper concludes that portfolio investment is a major driver of stock market development and more importantly, the main channel through which external financial instability is transmitted into the Nigerian economy. The policy implication is that increase in the foreign portfolio investment increases the domestic stock market performance. This could however lead to a great instability and financial distress if the enabling domestic macroeconomic conditions and policy framework to insulate the stock market against the vagaries of external shocks are not properly coordinated. [ABSTRACT FROM AUTHOR]

This paper explored the determinants of banking sector development in Southern African Development Community (SADC) countries using the dynamic generalised methods of moments (GMM) estimation technique with panel balanced data ranging from 1994 to 2014. The major advantage of the GMM approach is its ability to capture the dynamic characteristic of banking sector development data and address the endogeneity problem. The impact of banking sector on economic growth has been investigated by several researchers and their findings show consensus with regard to the direction of causality between the two variables. What is still unclear or not yet agreeable is what determines banking sector development. Although few studies attempted to address that question, they overlooked the SADC region, a grouping of countries which over the last two decades relied on savings mobilization and allocative efficiency ability of the banking sector to influence economic growth. The current study contributes to literature because no similar study has been done on SADC countries to the best of the author's knowledge. Few similar studies as shown by literature have used a single country as a unit of analysis, which is not very useful to SADC for regional banking sector policy formulation. Apart from not having focused on SADC countries, previous studies on banking sector development determinants ignored the dynamic aspect of banking sector development data and the endogeneity problem. This paper addressed all the shortcomings. The findings of this study are: (1) The lag of banking sector development and GDP positively and significantly influenced banking sector development in line with theoretical predictions. Trade openness negatively and significantly impacted on banking sector development whilst inflation had a marginal positive impact on banking sector development in SADC countries. Government consumption and unemployment had a negative but insignificant effect on banking sector development. These results are supported by literature. The implication of the study is that SADC countries should implement economic growth enhancement policies in order to increase the development of their banking sectors. They are also urged to reduce government final consumption expenditure, trade openness and unemployment levels in order to enhance banking sector development. [ABSTRACT FROM AUTHOR]

Economic growth and poverty reduction now take the centre stage in most global policy discourse. This is coming at a time that the Sustainable Development Goals (SDGs) are fast gaining global relevance. Africa has witnessed the highest but non-inclusive level of growth in the last decade because the continent still grapples with high unemployment rate especially among the youths. This paper therefore examines some drivers of and constraints to growth and poverty reduction in Africa. The paper focused on Africa by using secondary data sourced from different such as the United Nations Development Programme (UNDP), Transparency International (TI), Institute of Economics and Peace (IEP) and National Bureau of Statistics (NBS) reports and Annual Abstract of Statistics. Analytical methods employed were mainly descriptive statistics and comparative statistics. Findings showed that economic growth recorded in the continent is a 'jobless' one advancing inequality and poverty. More so, 75 percent of countries with low human development are in Africa with the continent's consistent economic growth imparting insignificantly on the livelihoods of the people. In fact, 27 out of 54 African countries were reported to have GDP of less than $USD 2000 per capita. GDP growth in sub-Saharan Africa was estimated at 4.9 percent in 2013 and this increased to 5.3 percent in 2014 and further estimated to rise to 5.5 percent in 2015. The fight against inequality, poverty and unemployment is tantamount to aiming a moving target. Youth unemployment remains a component of Africa's growth owing to persistent low productivity and underemployment in the informal sector. The resultant implication of this is manifested through persistent inequality, poverty, armed conflict and unchecked migration of young people to industrialised nations in search of the non-existing livelihood opportunities. This paper therefore recommends increased and monitored investments in critical infrastructural facilities. There is a need for multilevel and multinational partnership in the fight against corruption and social conflict to attract foreign direct investment. Investment in social security programmes will also assist the poor and vulnerable people in the continent. [ABSTRACT FROM AUTHOR]

Non-banking deposit taking institutions play a vital role in the economic development of Mauritius and it is thus central to ascertain the determinants that commonly effect on the overall profitability of these institutions. This paper investigates empirically the elements that conclude the profitability of Mauritian Non-Banking Deposit Taking Institutions (NBDTIs) for the period of 2007-2015 based on the set of information acquired from the annual reports and financial accounts of NBDTIs while bearing in mind internal and external variables. The empirical examination uses the accounting measure Return on Assets (ROA) and Return on Equity (ROE) to represent NBDTIs' indicators. The outcomes obtained by employing multiple linear regression model and Generalised Least Square on panel data to the sample show that internal variables explain largely the variation in profitability. The research discovers that with ROE, capitalisation, and size, deposits and real interest rate are substantial to influence the profitability of the NBDTIs while GDP is not conclusive. On the other hand, with ROA it was found that size, capitalisation, deposits and macro-economic variables such as real GDP growth rates and real interest rate have significant impact on NBDTIs' profitability. Conversely, it is to be noted that these institutions listed on the Stock Exchange of Mauritius have no effect on the profitability. The implication of this paper is that profitability of NBDTIs is influenced by size, capitalisation, deposits as well as the macroeconomic surroundings such as GDP and real interest rate prevalent in the nation. The verdicts of the paper clinched that the variable used in investigating the profitability of Mauritian NBDTIs lead to a significant increase in their profitability. For this reason, executives of NBFIs must take into matter these features in their administration strategies since they have the capability to considerably effect on profitability. Forthcoming research might also need to contemplate other measures of risks so as to broaden the understanding on the concerns established in this paper. [ABSTRACT FROM AUTHOR]

Considerable debate exists on how stock exchanges affect economic growth. One line of research argues that stock (equity) market development is a positive and significant contributor to growth. On the other hand, other studies show that stock markets negatively affect growth or that they are not relevant contributors to economic growth. This paper seeks to identify the long-run impact of stock market development on the economic growth of Nigeria. The data is sourced from the statistical bulletin of the Central Bank of Nigeria (CBN) from 1981 to 2017. The Augmented Dickey-Fuller unit root test shows that all the variables are integrated of order 1, I(1). However, the Johansen cointegration test provides evidence of a long-run, or equilibrium, relationship among the variables. The vector error correction model is used to determine the short-run and long-run relationships between the variables. Empirical results suggest that stock market development, as proxied by market capitalization to GDP ratio, does not contribute significantly to long-run economic growth in Nigeria. This finding implies that the Nigerian economy has not gotten to the development stage where the stock market can play critical economic development roles and the institutions that ensure the proper functioning of stock markets are non-existent. I recommend that efforts must be made to grow and diversify the Nigerian economy because higher national income stimulates the demand and supply of equity market services and facilities from both individuals and firms, and ultimately promotes a more developed equity market that can further accelerate growth. In addition, robust institutions that protect investor rights and guarantee transparency in the market must be established to build confidence in the equity market and to encourage domestic and foreign participation in the stock market. These conditions are critical if the country wants to benefit from its stock exchange. [ABSTRACT FROM AUTHOR]

A well-developed financial system has been widely understood as a stimulant in accelerating economic growth by easing frictions, mobilizing savings and facilitating investment in an efficient manner (Levine 1997, Rahman 2003). The financial sector reform and its follow-up developments in Bangladesh is an ongoing process. Given the current status of the financial development, this study is intended to frame a testable hypothesis such that inter-group comparisons of marginal productivity of labor and capital of banks in Bangladesh could be tested that would allow us to see if banks in Bangladesh are employing labor and capital efficiently in their profit maximizing behavior. A panel data model - seemingly unrelated regression (SUR) is used based on yearly data covering 2006-2015 for four groups of banks, namely state-owned commercial banks (SCBs), private commercial banks (PCBs), foreign commercial banks (FCBs) and specialized banks (SBs) operating in Bangladesh. The market shares (based on 2006-2015 average figure) in deposits, advances, operating income and total manpower are dominated by the PCBs, while SCBs enjoy the second position followed by FCBs and SBs. Currently 56 scheduled banks are operating in Bangladesh, among them 6 are state-owned commercial banks (SCBs), 2 are specialized banks (SBs), 9 are foreign private banks (FCBs) and 39 are domestic private banks (PCBs) of which 8 are full-pledged Islamic banks. As of end February 2016, the total number of reported bank branches including Head Offices, Islamic Windows and SME service centers stood at 9,410 with 4,072 urban and 5,338 rural branches. Although the central bank of Bangladesh has been monitoring day-to-day development of the banking activities, there is no formal assessment of banking system's profit maximizing behavior has so far been made. This paper also examines if there is any productivity - remuneration gap in labor and capital employment to know if banks in Bangladesh are operating in a competitive environment. The estimated results from Zellner's Seemingly Unrelated Regressions (SUR) procedure indicate that none of the bank groups is employing labor and capital efficiently. Operating earnings elasticities of labor are not significantly different from zero for all groups, while the same are positive for capital. The higher capital intensive banks are making more money than those with lower capital intensity. All of the banks are operating at non-optimal level in a non-competitive environment. They are over-employing labor and under-employing capital relative to the longrun profit maximizing level. The findings of the paper also confirm that there are significant gaps between productivity - remuneration for both the inputs i.e., labor and capital employment in banks of Bangladesh. Therefore, proper policy interventions are needed to enhance competitive environment among banks to ensure efficient and optimal uses of labor and capital. Appropriate policy initiatives to improve managerial efficiency and good governance for the state owned commercial and specialized banks are also recommended. [ABSTRACT FROM AUTHOR]

Interest rate uncertainty has adverse effects on stock market performance. Despite the considerable studies on the relationship between interest rate and stock market return, the relationship between interest rate volatility and stock market development still is enigma. This paper investigates the effect of interest rate uncertainty on stock market development. We examine the long-run and short-run relationship between these variables using Pesaran et al (2001) bounds testing approach to cointegration and error-correction modeling for 12 emerging economies over the period 1980-2011. This methodology has two main advantages over other cointegration methods which have made it unique: first there is no need to do pre-unit root resting, which is an essential requirement in other methods, and second, we are able to distinguish short -run effects from its long- run effect. Diagnostic statistics applied in this study indicate that our models are stable, well specified and normally distributed residual free of autocorrelation. The estimated results here show a significant short-run effect of interest rate uncertainty on stock market developing in all of 12 emerging economies under study. Furthermore, our results indicate that in 9 out of 12 countries the short-run effects have been seen in the long-run as well, and the cointegration relationship is confirmed in almost all of the models by either the F-test results or negative sign of error correction term. Also, the long run real income estimated elasticity is significantly positive in all countries (except for Brazil, Chile and Thailand) which would be a major long-run factor affecting stock market development in most of emerging economies in this study. Moreover, we found a mixed long- run effect of interest rate on stock market development. The results obtained in this paper suggest that emerging economies need to be cautious in implementing financial market and interest rate policies. A well-developed financial system improves capital formation and the efficiency of resource allocation, enhancing investment, and therefore economic growth. Interest rate uncertainty significantly affects stock market development. Therefore, a sound monetary policy creates a safer investment environment and stock market development. The role of stock market development towards achieving economic growth is crucial. [ABSTRACT FROM AUTHOR]

The main thesis of this paper is that low, stable inflation, implying price stability, is important for promoting and sustaining economic growth in the midst of shocks of both domestic and foreign origin. The paper makes an overview of inflation, inflation volatility and monetary policy in Malaysia since the late 1950s and provides some evidence for a link between inflation volatility and economic growth. As part of determining the appropriate strategy of monetary policy for price stability, the paper investigates some monetary relations—namely the stability of the money-demand function and the linkages among money, output and prices—which form the foundation of a money-based monetary policy strategy under a flexible exchange rate system. The empirical results suggest that the narrow money-demand function in Malaysia remained stable over the period 1971–2012 and that cointegral-causal linkages existed in this country among money, output and prices throughout this period. These results give credence to deployment of monetary aggregates as an instrument of monetary policy, especially when the flexibility, effectiveness of a zero-bound interest rate remains doubtful as an instrument of monetary policy in a low-inflation environment. Nevertheless, Malaysia has apparently taken the stance that money does not matter insofar as inflation and its volatility are concerned. The money growth rate has remained volatile in this country and contributed to high and volatile inflation for most of the time over the study period. Some empirical results suggest that despite the impression of rule-based monetary strategy, Malaysia did not conduct a rule-based monetary policy—within either monetary targeting or inflation targeting—to keep inflation low and stable. Instead, the Bank Negara Malaysia (central bank of Malaysia) used discretionary monetary policy to achieve multiple objectives, including rapid economic growth. An outcome of this policy was elevated inflation volatility, which affected real interest and exchange rates and raised output volatility. The paper concludes that improved monetary policy transparency and elevated monetary policy credibility are expected to make a rule-based monetary policy more effective and keep inflation low and stable. [ABSTRACT FROM AUTHOR]

The paper empirically investigates the relationship between bank, stock market and economic growth in Bangladesh. In investigating empirical relationship , GDP at the current price, private sector credit given by banks and market capitalization are considered as indicators of economic growth, banks’ development and stock market development, respectively. Three possible regression models are estimated to know the relationship between economic growth and financial sector development. The paper shows that bank’s credit to the private sector is both positively and robustly contributing to the economic development of the country when bank credit to private sector entered alone in regression as an independent variable. Besides long-term relationship, contemporaneous change in bank’s credit to the private sector has profound positive short-run feedback effects to the economic growth. In assessing impact of stock market development on economic growth, no significant long-run relationship is found between stock market development and economic growth in Bangladesh. However, net positive subdued short-term effect of stock market development is evident. But when both bank and equity market jointly enter the model to find out the relationship of both variables with economic growth, a long-run relationship has been evident without statistical significance. It indicates that Bangladeshi financial system comprising both banking sector and stock market jointly is not still a strong promoter of its economic growth, although banking development alone is robustly associated with economic development. Bangladesh therefore needs to enhance the efficiency of banks for increasing credit to the private sector. An immediate initiative is also required to make both equity and debt market as regular sources of finance for the economy. In this perspective, ensuring smooth operation of primary and secondary market, increasing financial literacy among investors, minimizing volatility of the market, expanding issuer base, creating both individual and institutional investors, enhancing efficiency of the brokerage house, adding innovative financial services, initiating knowledge based trading, introducing shelf registration system, creating more professional trustee and ensuring authenticate credit rating from the rating agencies are required to be ensured. [ABSTRACT FROM AUTHOR]

Africa is a continent with huge resource endowments and prospects for growth. However, the continent battles with myriads of problems such as poverty, food insecurity and dwindling commodity prices among others. This is because Africa's export is dominated by primary products that are majorly climate-dependent and vulnerable to price volatility. This paper therefore examined the economic situations of Africa considering the dwindling commodity prices in the face of the threat posed by climate change. Climate change remains one of the greatest environmental problems with economic, social, health, security and environmental implications. The paper employed a combination of both secondary and historical information obtained from different sources (UNDP, UNECA, NBS, Trade reviews etc). Analytical method used include descriptive statistics such as tables, averages and percentages. Despite the declining Africa's contribution to global market, commodity prices have been plummeting with very devastating impact on the livelihood of households and general wellbeing of the inhabitants of many of these countries. Countries relying on mineral resources such as oil, copper, gold and platinum to mention just a few have been the worst hit. Therefore, African countries' local currencies and trade balance have weakened against the dollar leading to high inflation in the continent. The terms of trade is declining as Africa continues to import commodities it should be producing because of the weak productive base, decaying infrastructure and the worsening climate conditions. This implies that households' welfare in these countries is likely to be compromised because of more job losses emanating from declining profits accruing to the solid mineral sector in the affected countries. The paper recommends increased investment in infrastructure facilities and human capital development for skills enhancement in Africa. Also, climate change adaptation policies should be formulated and implemented by African governments at all tiers and encouragement of value addition in exportable commodities to enhance favourable trade balance. [ABSTRACT FROM AUTHOR]

Crime and corruption are ubiquitous worldwide. They have long been both cause and consequence of poverty and various other societal problems around the world, especially in underdeveloped countries. Crime and corruption take different forms, existing at all levels of society and deeply affecting people's lives, from underground exchanges inside or between businesses, to judiciary or police functions and municipal or national government departments. Undermining both political and economic development, crime and corruption can worsen income polarities and harm the poorest most. Currently there are quite many studies focusing on why firms pay for briberies; however, very few studies have considered how firms deal with crime. This paper empirically studies how firms in developing economies cope with both crime and corruption. To be specific, I look into the potential determinants on why and how much worldwide firms spend on protection payments. Using a unique firm-level dataset extracted from the World Bank's Enterprise Surveys from 2006 to 2014, this paper focuses on two types of protection payments made by firms operating in developing economies: (1) open security payments, intended to avoid criminal losses exoterically, and (2) underground bribery payments, intended to meet corrupt government officials' needs secretly. Overall data on 120 developing countries were extracted, and 105,282 observations became available. I start with ordinary least squares (OLS) to estimate the determinants of how much a firm decides to pay for protection. Furthermore, to alleviate the potential simultaneity problem embedded in the OLS method, I also use probit estimation for the firms' decisions to pay. Results obtained through multiple statistical and econometric examinations suggest that firm-level characteristics such as employment size, international business connections, labor quality, and expansion experience exert profound and differentiated influence on firms' payments. Meanwhile, bureaucratic inefficiency and social instability significantly raise firms' incentive to pay. Firms that are smaller with fewer foreign business connections, lower labor quality, and defective infrastructure tend to pay, and pay more, for protection, as do those firms that have grown faster and longer. Besides, fast expansion makes firms more vulnerable to extortion, and more likely to encounter with crime and corruption. Various tests confirmed the robustness of these findings. There are several important policy implications based on these findings. First of all, governments need to enhance the quality of the society's infrastructure. This will effectively decrease firms' extra security expenditures. Also, the government must endeavor to control corruption, especially among those small and less productive firms. Enhanced supervision and auditing procedures must be developed, and create a better growth atmosphere for all firms. [ABSTRACT FROM AUTHOR]

African economies count among the fastest-growing economies in the world. In particular, West African economies have grown by an average of 5.7% in 2013 and 6% in 2014, despite the battle with the Ebola virus. Ghana has been at the forefront of this growth with an average economic growth of 8% in the period 2001-2014 (AfDB 2015). The challenge faced by African countries, such as Ghana, is to maintain this high economic growth rate in order to finance a number of developmental projects and curb the rampant poverty prevalent in a number of African countries. The sustainability of Ghana's growth path and the economic policy that ensued necessitates a sound knowledge of the drivers and determinants of its economic growth. This paper contribute to the literature on economic growth in Ghana, as a case study of a fast-growing economy in Africa, by applying the BMA analysis in determining the drivers of the country's economic growth. To the best of our knowledge, there is no study that identifies the drivers of economic growth in Ghana by using the BMA approach. The BMA technique provides the advantage over single-model techniques by combining and averaging different existing models and theories to determine the driver of economic growth. Yearly data ranging from 1970 to 2012 was collected from the World Bank Development Indicators (WDI 2012) and International Monetary Fund (IMF) statistics. There are 22 variables used in the model estimation, including the GDP per capita as the dependent variable. Explanatory variables are selected by taking into account their likelihood of determining economic growth in Ghana. Moreover, these variables are selected by accounting for the particularities of the Ghanaian economies, such as the existence of the dual economy and its reliance on natural resources for export revenues. Using the 50% threshold, as suggested by Raftery (1995), for the selection of relevant variables that drive economic growth in Ghana, the empirical results show that variables such as population density, crop production, inflation rate, labor force, current account balance and population growth are the important drivers of economic growth in Ghana. The paper suggests the following recommendation in the light of these results. Firstly, inflation targeting should remain the anchor of monetary policy in Ghana. Secondly, this paper recommends that the government of Ghana develops policies and strategies that enable the crowding-in of the private sector. Finally, this paper recommends that the government of Ghana promotes crop production in both commercial and subsistence sectors. [ABSTRACT FROM AUTHOR]

The paper had two main objectives. Firstly, to investigate the impact of economic growth on poverty reduction in emerging markets. Secondly, to explore the effect of complementarity between economic growth and human capital development on poverty reduction efforts in emerging markets. In the available literature, it is no longer contestable that economic growth is necessary for poverty reduction to take place. However, what is still not yet conclusive in the literature is whether economic growth itself directly translates to poverty alleviation. Emerging literature argues that certain absorption capacities needs to be in place if economic growth is to contribute towards poverty reduction. It is against this backdrop that the current study is also investigating whether human capital development is a necessary precondition that must be considered for economic growth to translate into poverty alleviation in emerging markets. The study used panel data analysis methods, namely fixed effects, random effects, pooled ordinary least squares and dynamic generalized methods of moments (GMM) econometric estimation methods with secondary data ranging from 2000 to 2018. All the four econometric methods were used for results comparison purposes. The advantage of using GMM approach for robustness test purposes is that it considers the dynamic features of the poverty data (vicious cycle of poverty) and addresses the endogeneity problem. The panel data was easily downloadable in World Development Indicators database and was easy to use because it was denominated in a similar currency. To a larger extent, economic growth was found to have reduced poverty levels in emerging markets. The complementarity between economic growth and human capital development was also generally found to have had a deleterious effect on poverty in emerging markets. In other words, human capital development was found to be a channel through economic growth reduced poverty in emerging markets. All these results are in line with theoretical predictions. Emerging markets are therefore urged to implement economic growth policies to reduce poverty levels. They are also encouraged to accelerate the implementation of human capital development programmes so that the people can easily benefit (get out of poverty) or manage to benefit from economic growth of their countries. [ABSTRACT FROM AUTHOR]

The Kuznets curve initiated many economists to examine the deeper and further relationship between growth and inequality over the past sixty-five years. However, the results yet converge into one generalized growth-inequality relationship. As consequences, these disparities have derived into a complex debate for the relationship and have challenged researchers and policymakers as the broadening income inequality gap is the utmost difficulties the world economy is facing. This study re-examines the existence of an inverted U-shaped relationship between economic growth and income inequality. Our paper employs the idea of the order of summability formalized by Berenguer-Rico and Gonzalo (2013 and 2014) to deal with nonlinear transformations of heterogeneous and persistent processes on a sample of 55 countries from 1980 to 2010. The co-integration technique can be generalized by defining balancedness and co-summability. Balancedness is achieved when the order of summability of a dependent variable in a postulated hypothesis equals the persistent and heterogeneous explanatory variables, possibly nonlinear. A co-summable relationship describes a long-run equilibrium that can be nonlinear when the errors have a lower order of summability (Nasr et al. 2019). The analysis of our study is focused on whether there exists nonlinearity in the long-run growth-inequality nexus. Suppose there is no evidence supporting nonlinear long-run relations between economic growth and income inequality. In that case, standard empirical specifications, which apply polynomial or threshold functions, can be seen as misspecified (Eberhardt 2019). The mean- and median-based subsampling summability results reject the null hypothesis of summability of order zero. Based on the summability results, we tested for balancedness, which is confirmed only for specifications with a constant term. For specifications where the balancedness is achieved, we tested co-summability and the results show that co-summability is rejected for all considered specifications. Our finding presents no evidence supporting the Kuznets inverted U-shape and challenges some of the previous results, which implies that conventional empirical specifications in the existing literature adopting polynomial or threshold functions are misspecified. Consequently, such policy implications based on misspecification should be taken with cautiousness. [ABSTRACT FROM AUTHOR]

The effectiveness of foreign aid in promoting growth has been a subject of intense debate among donors, policy makers and researchers. On the one hand, foreign aid can promote growth and investment by filling the savings gap and the foreign exchange gap. On the other hand, foreign aid may have an adverse effect on growth and investment due to disincentives and moral hazard issues associated with the strategic interactions among donors and recipients and its negative effect on the tradable sector and the competitiveness of the economy through the Dutch Disease. In this paper, we examine long-run effects of foreign aid on output and prices of tradable and non-tradable sectors in twenty-two sub-Saharan African (SSA) countries using cointegrated vector autoregressive (CVAR) analysis. The SSA countries have been major recipients of foreign aid. The CVAR methodology has a number of advantages over single equation estimation and panel data estimation method used in current studies. Unlike these methods, it allows for the dynamics of aid and its effect to differ across countries. For each country, we estimate 5X5 CVAR model using annual data. Our variables comprise of foreign aid, tradable output, non-tradable output, price of tradable goods, and price of non-tradable goods. We find that aid has a heterogeneous effect on sectoral output and prices. It has a significant negative effect on tradable output in fifteen countries, but has a significant positive effect on the tradable output in four countries. Similarly, aid has a significant positive effect on non-tradable output in five countries, but a significant negative effect in six countries. Only in four countries foreign aid has both a negative effect on tradable output and a positive effect on non-tradable output. We also find that aid has an inflationary effect in six countries, while it has a deflationary effect in five countries. We do not find evidence of Dutch disease. Aid does not lead to deterioration in the terms of trade for tradable goods. [ABSTRACT FROM AUTHOR]

Obesity is a debilitating health condition that increases the risk of premature deaths and the onset of certain diseases, all of which result in extensive medical costs and impede both well-being and the quality of life. Obesity not only poses a threat to health, but it may also become a burden to individuals and society, in particular resulting in indirect economic losses in the labor market. The negative health, economic, and social consequences of obesity have attracted considerable attention by researchers and public health policy makers. While most of the existing literature is for the US and European countries, there is relatively limited evidence on the impact of higher weight on earnings in Asian countries. Given the fact that approximately one-third of the adult population is classified as overweight or obese and its leading position in obesity prevalence among Asian countries, Taiwan is an economy for the Asian area of particular interest in which to investigate the consequences of the trend of increasing obesity rates for the labor market. The purpose of this paper is to examine the relationship between obesity and wages in Taiwan. This paper uses a two-stage instrumental variable approach to estimate the relationship between the BMI and wages. The data used in this study are obtained from the 2008 Panel Study of Family Dynamics in Taiwan. The total sample used in this empirical analysis consists of 1,241 individuals whose ages ranged from 33 to 65 in 2008. The results of this study show that excess bodyweight has a harmful effect on an individual's wages. The most important finding of this empirical study is to provide evidence that individuals with excess bodyweight are paid much less than their normal weight counterparts, in particular for female workers and those who are aged 50 and above. Being overweight and obese also penalizes the wages of those who are engaged in the managerial, sales, and services occupations. The public policy implications from the findings of this study are that efforts should be made not only to promote the importance of appropriate healthy diet habits to the public and encourage regular exercise, thereby helping reduce the negative impacts of obesity on physical and mental health, while concomitantly considering the impacts of obesity on the labour market and overall economic development. This empirical analysis provides evidence of the effect of bodyweight on wages in an Asian country, which can fill the gap with those prior studies that are mostly based on data from developed western countries. [ABSTRACT FROM AUTHOR]

Poverty eradication will remain United Nations highest priority after the Millennium Development Goals-2015 deadline. Moreover, although impressive achievements in poverty cutting have been reached in the last decade, progress has been uneven, as inequality has been increasing. Hence, future poverty reduction strategies should be designed taking into account the nexus between economic development, inequality and the so-called "pro-poor factors", which represent the set of policies able to make economic growth beneficial for the poor. The aim of this paper is to provide a quantitative answer to the following questions: Does economic growth reduce poverty? If so, by how much? How economic inequality affects poverty? Does the responsiveness of poverty to growth and inequality depend on initial poverty and inequality? How do pro-poor policies influence the poverty-growth-inequality nexus? Although these questions have received a great deal of attention along the years, this paper makes use of the most complete and up-to-date comparable data on growth, poverty and inequality, as compiled by the World Bank PovcalNet. Moreover, it originally employs the System Generalised Method of Moments estimator. In particular, the present empirical exercise is built on an original unbalanced panel dataset, which comprises 109 developing countries observed between 1981 and 2008, in 8 different three-year growth spells. As for the econometric technique, System GMM has been proved to be the most efficient and best suited in the context of dynamic unbalanced panels. Our main results are in line with the existing literature. First, we find that the poverty elasticity to growth and inequality is, respectively, around -2% and 2%. Second, the poverty elasticity to growth is higher the more favorable the initial conditions (i.e. -0.89% and -2.5% for, respectively, high and low initial poverty and inequality). Third, the poverty elasticity to inequality is higher in relatively richer and more equal countries (i.e. 2.6%) than in poorer and more unequal countries (i.e. 0.39%). And, finally, we show that human capital, as measured as health and education, facilitates the effect of economic growth on poverty reduction (i.e. poverty elasticity of -0.89% and -2.5% for, respectively, high and low infant mortality). Our analysis suggests that, in designing policy reduction strategies, policy makers should carefully take into considerations initial poverty and the initial income distribution. Moreover, as for the fundamental importance of pro-poor policies, and human capital in particular, economic policies should go beyond the mere growth stimulus., economic policies should go beyond the mere growth stimulus. [ABSTRACT FROM AUTHOR]

In the late 1990s, the World Bank and the International Monetary Fund (IMF) initiated a series of debt relief programs for highly indebted poor countries (HIPCs) based on the idea that high levels of indebtedness impede growth by discouraging domestic and foreign investment. This paper examines the relationship between external debt and growth with a focus on the effects of multilateral debt relief. In particular, we use a sample of 33 least developed countries (LDCs) over the period 1970- 2010 to explore the impact of indebtedness on growth before and after participating in the debt relief initiatives. In contrast to previous studies, we employ a combination of parametric and nonparametric methods to investigate the linear and nonlinear aspects of the debt-growth relationship. In the non-parametric analysis, we model growth as a discreet-time Markov process and estimate the transition probabilities for HIPCs. The results show that lower debt levels stimulate economic growth. The average impact of debt on growth in HIPCs becomes negative at about 64 -78% of GDP depending on the initial growth conditions. In the period after joining the debt relief initiatives, HIPCs generally exhibited a higher chance of moving towards or persisting in the positive range of growth. However, this process was related to lower debt levels mostly in countries that had initially exhibited moderate to rapid growth, while debt relief seems to have been less relevant for future growth in countries that started off in a state of moderate economic decline. Furthermore, the results of the regression analysis show that the marginal effect of public and publicly guaranteed (PPG) debt on growth is negative and significant. Debt relief programs were found to mitigate the negative impact of debt, both after their initiation in 1996 and after the HIPCs reached their decision point. Generally, the overarching policy that can be drawn from this paper is that LDCs, and HIPCs in particular, should strive to reduce their PPG debt levels to at least below 64%-78% of GDP in order to experience and maintain positive growth rates, ceteris paribus. Notwithstanding, our findings also suggest that if HIPCs, and LDCs in general, want to reduce or maintain their debt to sustainable levels, they should adopt some of the conditions imposed by the international financial institutions on HIPCs as part of their macroeconomic policy framework, such as developing and implementing a poverty reduction strategy through a broad based participatory process. [ABSTRACT FROM AUTHOR]

The role of knowledge accumulation and technological progress is well recognised in the growth literature. However, the developing countries have limited capacity for innovation and they mostly benefit from imitation and knowledge spill-over from the developed countries. Studies emphasized on the role of human capital in imitation and technological catch-up process of the developing countries. For empirical analysis of the catch-up hypothesis, existing literature generally considered USA as the technological leader to which other countries tend to catch up. However, it remains an open question whether USA is the only candidate to be the technology leader. The paper re-examines the human capital based technological catch-up hypothesis exclusively for the developing countries with alternative possibilities of technological leader. Our study investigates for the potential technology leader by estimating a structural growth equation suggested by Benhabib and Spiegel (1994) using panel data from 75 developing countries. Considering the possibility of endogenetiy problem of capital accumulation, the paper used an instrumental variable technique for estimation. Our results show that when USA is used as global technological leader, or different single countries are used as technological leader of the developing countries in different regions, the estimated structural equations fail to find any positive role of technological catch up in economic growth of the developing countries. However, when OECD countries collectively, or major trading partner of developing countries with higher income are considered as technological leader, we find a strong evidence of technological catch up. The findings have few policy implications for developing countries. As group of developed countries can serve better as a technological leader in the catch-up process of the developing countries, the latter should extend economic relations with many developed countries instead of relying on economic ties with one or few countries. Moreover, trading with developed countries may be more beneficial for developing countries in terms of potential dynamic gains of trade as it exposes the country to higher level of technology and creates a scope for imitation. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between defence burden and real gross domestic products in Nigeria, using annual time series data. This study uses Johansen's Cointegration approach to investigate the relationship between government's military expenditure (defence burden) and real gross domestic products, among other variables. In light of the lingering controversy on military expenditure and growth nexus, this paper contributes to the existing literature using time-series data from Nigeria, a country with high military spending over the years to re-investigate the impact of military expenditures on economic growth and the direction of causality between military spending and economic growth. Specifically, this study discusses the long run relationship between military expenditure and economic growth using Johansen cointegration approach. The key variables used in the study include: military burden (military expenditure), real GDP, real education expenditure, real health expenditure. The nature of the relationship that exists between military expenditure and economic growth as well as the cointegrating vector, taking into cognizance all other variables is focus of this paper. The results of the study show that increased defence burden is harmful to the Nigerian economy, and there exists a negative long-run relationship between defence burden and increase in the growth of real gross domestic products, the impact of defence burden remains negative both in the short-run and long-run respectively. It is not sufficient to have cuts in military expenditure, but such reallocation from defence should be directed towards productive investment in other sectors of the economy in order to generate economic prosperity and enhance the welfare of the citizens. Implications of having a negative effect of defence burden on growth rate of real Gross Domestic Products result in crowding-out of private sector investment, retards economic progress or growth rate of real gross domestic products, and therefore, is an ineffective tool to stimulate the growth of the economy in Nigeria. Military expenditure cannot be an effective tool of fiscal policy (government revenue and expenditure to regulate the economy), from the results of the study both short-run and long-run impact are negative, hence, the role of military sector should be limited to the maintenance of internal law and order as well as the defence of the country against any form of external aggression. This study will be of immense significance towards shaping policies that relate to military spending in Nigeria. [ABSTRACT FROM AUTHOR]

The role of national and external savings on economic growth in developing countries has received considerable attention in Economics. Recent research has investigated the roles of human capital and institutions in promoting economic growth, with results that show that human development and solid institutions exert important impacts on growth during the process of socio-economic development in developing countries. The question that arises is which variable is of more significance, be it savings, human capital or institutional strength, and whether these variables complement each other. To shed light on this matter this paper presents the results of a Vector Auto-regressive Model, VAR, consisting of the variables: the human development index, a governance indicator, rule of law, net development assistance, national savings, and public and private investment. The VAR is estimated with panel data from a sample of 24 Sub-Saharan African countries, with data from the 2003-2006 period. The results indicate that the human development index and the governance indicator are the main determinants of savings and investment, and both exert negative impacts on external assistance. As well, external savings exert negative impacts on human development and rule of law. These two variables are complementary and both support public and private investment. It is argued that by virtue of its positive impact on the mobilization of savings, human development can decrease developing countries' external vulnerability. It is postulated that the attention to early childhood education and health can result in a more dynamic economy, one that generates larger tax revenues, such that the additional tax revenues can offset the initial expenditures incurred in promoting social development. The paper ends with a series of considerations on the need to expand the financing of human development as a means to attain social and economic stability and promote dynamic economic growth. [ABSTRACT FROM AUTHOR]

The quest to continuously attain economic development without surpassing the cycle of global warming limit of 1.5°C has necessitated the need to explore more sustainable ways of living on the human planet. This has equally placed the sustainable development agenda high on the priority list of many international, regional and national governments. Sustainable development (SD) has been viewed as a pattern of development that avails an economy the basic economic, social and environmental needs without endangering the natural, built and social systems. Therefore, the calls to resolve the developmental and environmental conflicts have received global attention. In this paper, the authors examine the nexus between renewable energy and sustainable development in Africa over the period, 1990-2015. The number of countries considered are 51 African countries. The coverage period is constrained by data availability. All the data employed were sourced from the World Development Indicators, 2017 except the data on human development index (HDI) which was sourced from the HDI report of the United Nations Development Program, 2018. Analysis are predicated on fixed effects panel model based on the Hausman test and the system generalized method of moments (SYS-GMM). The SYS-GMM is considered in order to control for shortcomings associated with OLS estimation technique which include among others, endogeneity, simultaneity bias, and measurement error. Prior to these approaches, the panel cross-section dependence test was used to test if a shock in a country in the panel can have effect on other countries in the panel. The analysis shows that renewable energy positively impacts on both the economic dimension and aggregate SD index. It also reduces carbon (iv) oxide emission thereby promoting environmental quality. However, it impedes the HDI which represents the social dimensions of SD. The impact of renewable energy on environmental quality or environmental dimension of SD is further corroborated through the conduit of hydro and natural gas sources. Regarding other control variables, nonrenewable energy negates SD but financial deepening, gross fixed capital and population serve as propellants while FDI exerts univariate impact. The findings support a shift from a monolithic fossil-fuel economy to one driven by a growing share of renewable in the energy mix. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of foreign direct investment on domestic investment and the role of local conditions. Local conditions determine the extent to which host countries can absorb and hence benefit from FDI. We assess conditions under which FDI is likely to be beneficial or inimical to development in Africa. We apply the fixed effects and the two-step system GMM estimation techniques for 48 African economies from 1980 to 2016. We use gross fixed capital formation (GFCF) as a percentage of GDP as a proxy for domestic investment (DI) as our dependent variable. We use the following control variables: growth rate in real GDP (RGDP); savings as a percentage of GDP; and inflation. We also control for openness, financial sector development and institutional quality. We use annual data from the World Bank's World Development Indicators (WDI), the International Monetary Fund's (IMF) International Financial Statistics, the UNCTAD database and the Freedom House database. We find that there is a negative relationship between FDI and domestic investment, suggesting that FDI has a crowding-out effect. The negative association may also imply that countries with lower domestic investment attract more FDI because there are more domestically unsatisfied opportunities for foreign investors. However, the negative relationship between FDI and domestic investment does not necessarily imply that FDI has no benefits. It could as well be that the positive benefits from FDI in Africa may be as a result of an increase in total factor productivity (TFP) which more than compensates for the decline in domestic investment. The study also finds that improved institutions and trade openness mitigate the negative effect of FDI on domestic investment while financial market development exacerbates the negative effect. Policy efforts aimed at attracting FDI should be balanced with the imperative of strengthening institutions and domestic firms. A number of scholars have shown that that even in those countries where FDI has been more productive, domestic investment is more effective than FDI in promoting growth. Investment incentives should therefore not discriminate against domestic investors. Market regulations to dismantle the monopolistic tendencies of some foreign investors must be strengthened. [ABSTRACT FROM AUTHOR]

Remittances are a critical source of foreign exchange for developing countries. As the volume of remittance transfers to many countries surpasses that of foreign private capital and official development assistance (ODA), there is a consensus that remittances have been a key stimulant of economic growth in many developing nations. With data from 1970q1 to 2017q4, this paper analyzes the impact of remittances on Nigeria's economic growth. Remittances from Nigerians are estimated to reach $24.3 billion in 2018, ranking second only to oil exports as a source of foreign exchange. To determine the responsiveness of output growth to remittances (REM), the empirical model draws on Giuliano and Ruiz-Arranz (2009) and other studies which use gross fixed capital formation as a proxy for investment in physical and human capital, external sources of capital represented by foreign aid, FDI, and openness of the economy as measured by the ratio of the sum of imports and exports to GDP. For this study, the model is modified to include a vector of other control variables that affect real GDP [used as proxy for economic growth]. These variables include domestic investment (INV); openness (OPN), measured as the ratio of exports plus imports to GDP; FDI; and exchange rate (EXCH). Unit root tests were conducted on all the variables of interest and showed that the variables were nonstationary in their levels but stationary after their first difference at the 5% level of significance. Next, the appropriate lag length was determined, and an error correction model was estimated to account for the dynamics of the model. The variables included were four lags each of ΔGDPt, ΔREMt, ΔFDIt, ΔINVt, ΔEXCHt, and ΔOPNt. The study finds that worker remittances have a positive impact on economic growth in Nigeria, with a 1% increase in REM increasing RGDP by 0.0238%. Remittances in the short and long run are statistically significant and cointegrated with economic growth, but with low elasticities of 0.02 and 0.03, respectively. To fully harness the benefits of remittance inflows, the Nigerian government should reduce the costs of receiving funds sent by Nigerian emigrants overseas and also provide an environment conducive to investment. [ABSTRACT FROM AUTHOR]

Savings and investment play a major role in any countries to fostering long term growth. It shows the amount of saving being converted into investment in the domestic economies which is related with capital mobility in the countries. Ever since seminal paper by Feldstein Horioka (1980), the issue regarding the relationship between saving and investment become one of the popular issues among economist researchers. They found that it has a strong relationship between saving and investment where about 85 percent to 95 percent approximately of the domestic saving are converted into domestic investment and at the same time capital mobility is relatively low. It means that saving and investment were circling around in the domestic countries rather than mobile to other countries. Many researchers relate this issue with capital immobility as domestic saving is easily transferred to the other countries and vice versa. As such, the aim of the present paper is to reinvestigate the nexus between saving and investment for the three-Asian economies namely China, India and Malaysia by employing the recent Autoregressive Distributed Lag (ARDL) co-integration modelling approach. Three emerging Asian countries have been chosen in this research which have its own economic strength and weaknesses. In which, the GDP growth prospect for China, India and Malaysia is 7%, 6% and 5% approximately in 2015. This study covers the annual sample from 1970 to 2013.The present paper employs ARDL bound procedure to test the presence of a co-integrated relationship which involves the standard F-test. One of the advantages of ARDL test is that it is more robust and performs better for small sample size of data which suitable for this research. The sample size is 43 years for each country. The annual time series data of saving and investment ratio as percentage of GDP in each country were utilized in this study. The result shows that the null hypothesis of the unit roots for the saving and investment series is rejected in first difference. It reveals that all the variables are co-integrated at first different. The ARDL F-test yields evidence a positive long run relationship between savings and investment for the three emerging Asian countries namely, Malaysia, China and India which is consistent with many past researches. It shows that the estimated ECTt-1 coefficient is found to be negative and statistically significant at 1% confidence level for China and India. Meanwhile, the estimated ECTt-1 is negative and statistically significant at 5% confidence level for Malaysia. As such, this results confirm the existence of long run relationship between savings and investment in the three countries concurrently. In the short run, it has a positive significant relationship between saving and investment in China and India. Furthermore, the estimated model has passes the diagnostic test and the stability test. Based on the finding, the speed of adjustment for Malaysia, India and China are 31%, 23% and 15% respectively. It indicates moderate speed of adjustment back to equilibrium. From this research paper, It shows that there is relationship between saving and invest in the three Asian countries. Thus, it is recommended that the three-Asian countries should not neglect its savings if the countries wish to spur its investments of which, will consequently generate economic growth. [ABSTRACT FROM AUTHOR]

The improved performance of the financial sector through its process of financial intermediation between savers and investors and between lenders and borrowers as well as the guidance of the funds those are available to the optimal investments lead to achieve the desired stable economic growth. Economists generally believe that high rates of inflation cause problems to some individuals and as well as for the whole economic performance. In general, low inflation rate with financial sector development plays a crucial and essential role in achieving sustained and stable economic growth. Therefore, maintaining inflation rate at low level and improving the financial sector performance are considering themain targets for policy makers to promote sustained and stable economic growth. So, the main purpose of this paper was to investigate empirically the relationship between inflation and financial sector development in Saudi Arabia for the period of 1982-2013.This paper used the autoregressive distributed lag (ARDL) bound testing approach suggested by Perasan et al. (2001) to examine the existence of the long-run relationship between the inflation rate and financial sector development. The advantage of the bounds testing approach is in its applicability irrespective of whether the underlying variables are purely I (0), purely I (1) or mutually co-integrated. All data were tested for stationarity using Augmented Dickey-Fuller (ADF) test and the Phillip-Perron (PP) test to determine the order of integration. The variables included in this study are: The credit to the private sector as percentage of GDP was used as a proxy of financial development and inflation rate measured by the consumer price index. The study also included two more control variables: trade openness and real gross domestic product. The main findings are as follows. First, tests results of the Augmented Dickey-Fuller (ADF) and Phillips - Perron (PP) showed that consumer price index (LCPI), real gross domestic product (LGDP) and trade openness (LOPEN) did not seem to be stationary at their level but they were at first difference. Accordingly, they were integrated of order one I (1). On the other side, both tests results of financial development (LFD) seemed to be stationary at its level. Accordingly, it was integrated of order zero I (0). Second, results showed that there was a statistically significant long-and-short run negative relationship between inflation and financial development. Third, there was statistically significant positive impact of previous financial sector's policies on financial sector development. Forth, results indicated that there was statistically significant positive impact of economic growth on financial development. Fifth, there was a statistically significant negative impact of trade openness on financial development. Accordingly, inflation and trade liberalization policy are the main obstacles facing financial sector performance. Therefore, the policy makers can reduce inflation through the use of appropriate fiscal and monetary policies. [ABSTRACT FROM AUTHOR]

In the recent past, with the phenomenal growth of equity markets, a burgeoning number of policy makers and researchers began to query about the possible impact that equity market development might have on economic growth. Indeed, an overwhelming number of studies have been carried out worldwide to investigate the links which might exist between stock market development and economic growth. As a result, this has strengthened the view that stock markets around the world play a key role in fueling a powerful and resilient economy. However, most of these studies have focused solely on developed countries and not on developing countries or small island developing economies like Mauritius. As such, since studies analyzing this link in the African region are rather scant, this paper endeavors to scrutinize the relationship between equity market development and economic growth in Mauritius. To this end, this paper analyzes the relationship between stock market development, banking development and economic growth in a unified framework using semi-annual data for the period 1988-2011, through a dynamic Vector Error Correction Model (VECM). The VECM is used extensively to determine the link between stock market development and economic growth while simultaneously allowing identification of any bi-directional and/or uni-directional causality between the variables of interest. Moreover, this model divulges both the direct and the indirect impacts, if any, which stock market development might have on economic growth. Possible determinants of stock market development and the effect of stock market development on the control variables are also analyzed through the VECM. The results suggest that stock market development does play an important role in generating gains in terms of economic growth in the long run in the island. In the short run however, stock market development fails to significantly boost economic growth in Mauritius. Moreover, stock market development is also seen to indirectly stimulate economic growth in the short run, through banking development. Interestingly, banking development is seen to have a positive impact on economic growth, both in the short run and in the long run. This indicates that banking development and stock market development both complement each other. As such, it is believed that further steps have to be taken to promote stock market development in the island, with the aim of boosting both the economy and the banking sector in the long run. [ABSTRACT FROM AUTHOR]

The main purpose of this paper is to assess the impact of financial market development on Foreign Direct Investment (FDI) in Latin American countries. Financial market development and FDI are two important sources of efficient economic resource allocation in the region. We use banking sector and stock market indicators to capture financial market development. By giving greater consideration to the short-run and long-run effects of financial market development on FDI, this paper presents empirical results from a time series model of 14 Latin American countries. We find financial market development link is both short-run and long-run phenomena in majority of countries. Furthermore, our result of the causality test shows that link between FDI and banking sector development is uni-directional and the link between FDI and stock market development is bi-directional. [ABSTRACT FROM AUTHOR]

In the backdrop of India's jobless economic growth since the macroeconomic reforms of the 1990's, this study goes into the inter-relations among growth of productivity, employment and trade. Most of the studies on productivity in Indian manufacturing indicate a surge in the post reforms period though the individual manufacturing groups achieve varying growth. In the recent period, TFP growth in the sector is attributed to technology-based intermediate imports. Changing patterns of trade, especially export composition, have contributed to low employment generation. Growth in productivity and lack of growth in employment are thus explained by changing composition of trade. This paper starts by defining alternative measures of labor productivity growth, namely 'industry' labor productivity and 'system' labor productivity drawing on World Input-Output Database (WIOD). KLEMS database for India is also used for employment data. The time period for the study is from 1995 to 2014. Trend growth rates are estimated for alternative productivity measures, employment and output. The growth estimates show rapid productivity growth while the rates vary according to the labor intensity in production. It is found that productivity growth, particularly in labor intensive sectors, has been slow. India's share in world trade has been low and rising slowly. Additionally, the share in world trade of leather and textiles is very small. The composition of trade in India is biased towards the manufacturing sector as a whole while the labor-intensive sectors are neglected. Another emerging pattern of India's trade is escalating import of intermediate inputs. To establish the nexus between trade and productivity growth, a vertical specialization index has been estimated by using Hummel's formulation. The estimated result from panel regression with fixed effects establishes positive nexus between vertical specialization and productivity growth. It is argued that India needs to circumvent jobless growth by a balanced approach to job creation and productivity growth. A conscious policy of vertical specialization in products that draw on the country's vast reserve of un-skilled and semiskilled labor can go a long way in this direction. [ABSTRACT FROM AUTHOR]

The quests for aid arise when developing economies lack inadequate fund to embark on long-term development projects that will promote growth. Generally, aid inflow is expected to lead to capital formation and growth in the sub-Saharan African countries (SSA). The high unemployment rate, poverty rate, and weak growth still witnessed in the region, questioned the exact role of aid. This paper investigates the effect of aid on inflation and exchange rate in 35 sub-Saharan African countries (SSA) between the periods 2000 to 2016 by employing the panel vector error correction model (PVECM) approach following the co-integration properties of the variables. The variables used in the study are aid (official development assistance), inflation rate (INF), and real effective exchange rate (REXR). Control variables such as import as a percentage of GDP (IMPORT), investment as a percentage of GDP (INV) and export as a percentage of GDP (EXPORT) was also employed in the study. Findings from the study revealed that the variables are cointegrated i.e. has a long-run relationship. The outcome of the study also revealed that aid flow is associated with the depreciation of the real exchange rate in the region (SSA). In addition, the study showed that a shock in aid flows would cause a rise in the inflation rate in the region. The study also revealed that a rise in aid would lead to an increase in investment and export in the region (SSA). Furthermore, the study revealed that a shock in aid would cause a rise in import. Based on the result of the study, the study recommends the need for government in the region to determine the optimal aid that will ensure growth and eradicate/reduce poverty in the SSA region. Also, the development partners should assess the monetary conditions of the recipient's economy before the disbursement of aid. Furthermore, the governments in the region are encouraged to utilize the inflow of aid in the importation of capital goods so as to increase the competitiveness of their export in a bid to improve the standard of living of the populace, eradicate poverty and foster growth in the region. [ABSTRACT FROM AUTHOR]

In this paper, we have explored the relationship between three key indicators of the health of any economy, namely, human development index (HDI), foreign direct investment (FDI) and gross domestic product (GDP). Three alternative models were assessed in the study to investigate the dynamics of the cause and effect relationship between the three variables. Thirty countries were selected for the purpose of the study on the basis of a positive change in their HDI ranks from 2012 to 2017. Further, the countries were categorized into countries with very high, high, medium and low HDI ranks. Annual FDI, HDI and GDP data for the period from 1990 through 2016 were used to investigate the nature of the relationship among the selected variables. The proposed models testing the outcome-explanatory variable relationship between FDI, HDI, and GDP were tested using cointegrating regression with panel dynamic least square model (DOLS) and panel fully modified least square model (FMOLS). The findings of the study show that HDI and FDI are the statistically significant variables that positively impact the changes in GDP. Further, the impact of HDI is of larger magnitude than FDI. However, GDP and FDI were not found to exert any statistically significant impact on HDI for the period under the study. Similarly, HDI and GDP were also not found to exert any significant impact on FDI. Before applying DOLS and FMOLS, stationarity was confirmed using five panel unit root tests, namely, LLC, IPS, Fisher-type tests using ADF and PP and Hadri. Thereafter, Pedroni residual cointegration test and Kao residual cointegration test were used to confirm the existence of cointegration among the variables, which is a necessary condition for applying DOLS and FMOLS. The study has key implications for the policymakers in search of models and plans to boost GDPs of their respective countries. Since HDI exerts more than proportionate positive impact on GDP, governments can focus on improving the three components of HDI, namely, life expectancy, adult literacy and education enrolment to promote economic growth. Further, since FDI exerts a positive impact on GDP, policymakers can strategize to make more friendly policies to attract foreign investors. [ABSTRACT FROM AUTHOR]

It has become well-known now that stock markets play a key role in stimulating economic growth process. As economists and politicians alike, battle in finding ways of growing economies, it becomes imperative to establish the drivers of stock market development as they have an ultimate bearing on the stimulants of economic growth. In recent years, studies on the stock market determinants have sprung up, however, with results far from being conclusive. What turned out to be determinants in one study may not be in another study. Therefore, in this paper, we examine the key determinants of stock market development in Brazil using annual time-series data spanning from 1980 to 2016. The study was motivated by the growing important role of stock market development in economic development, on the one hand, and the conflicting findings on the determinants of stock market development, on the other hand; coupled with little to no study coverage of the topic on Brazil. Unlike some previous studies that used cross-sectional data, the current study has used time-series techniques that take into consideration the Brazilian country-specific issues. Furthermore, the current study has also employed the ARDL bounds testing procedure to determine the determinants of stock market development in Brazil. This procedure is well known for its superior small sample properties; hence it is considered more suitable for this study. The results of the study reveal that the stock market development in Brazil is positively determined by trade openness, banking sector development and exchange rate, irrespective of whether the analysis is done in the long run or in the short run. Contrary to the results of some previous studies, investment and stock market liquidity are found to have a negative influence on the development of stock market in Brazil - both in the long run and in the short run. The study, therefore, recommends that policies that favour international trade, bank-based financial sector development and exchange rate stability should be pursued in Brazil, as this would translate into further stock market development. [ABSTRACT FROM AUTHOR]

Existing evidence from the literature on financial intermediaries and economic development suggests that resource-constrained firms can growth faster in the presence of more financial services. With the new macroeconomic environment after 1994 and the institutional reforms in the Brazilian financial sector, there was an important expansion in the availability of bank resources. The process of financial deepening occurred simultaneously to sustained growth in formal employment. This paper studies the relationship between bank credit growth and formal employment growth from 1995 to 2015. The article combines two sets of administrative data: i) private and public banks's balance sheets collected by the Brazilian Central Bank, and; ii) employment in formal establishments recorded by the Ministry of Labor. The empirical model exploits the large cross-sectional and timeseries variation in financial resources to build a Bartik-instrument for credit growth that interacts the country-wide increase in credit and the participation of different banks in local economies. The identification strategy relies on an auxiliary regression separating supply and demand of credit at the local level. This strategy bypasses some of the concerns with simultaneity bias in articles using aggregate data, and measurement issues of cross-country studies. Regression results indicate that a one percentage point increase in credit growth rates is associated with a 0.12 percentage point increase in employment growth rates. In areas with a prevalence of private banks, an acceleration in credit growth is also associated with a reduced number of establishments and higher average establishment size. The results are consistent with external financing incentivizing establishments to expand, displace other businesses without funds, and increase their size. This study employs aggregated data at the micro-region level, which limits a more detailed characterization of credit shocks effects at the individual establishment level. We have found that the relationship between credit and employment growth is weaker in micro-regions with smaller establishments, suggesting to policy-makers that further reforming the financial system can unleash the potential for more formal jobs in small firms in Brazil. Some microeconomic reforms such as the creation of nation-wide credit score records are already taking place and should possibly bear fruits in the future. [ABSTRACT FROM AUTHOR]

This paper empirically examines the relationship between services trade liberalization and economic growth. Services trade currently comprises approximately 20 percent of total world trade, with more than half of the world's labor force employed in service sectors. The possibility that reducing barriers can enhance global production is increasingly receiving attention. The impact of liberalization on growth is empirically assessed by including services trade restrictiveness as the key variable of interest in cross-sectional estimations of a global production function. Income dummies were interacted with levels of services trade restrictiveness to discern variations of influence across countries at different income levels. Services trade restrictiveness is captured using a World Bank index for a pooled cross-section of countries. Robustness of results are evaluated using a similar services trade restrictiveness index recently constructed by the OECD for member countries. The results suggest that services trade liberalization has a positive impact on a country's per capita GDP. This benefit of service liberalization is larger in countries with greater services export values. In addition, service liberalization in low income countries has a greater impact on per capita income levels than does service liberalization in high income countries. While positive and statistically significant, the scale of the effect appears small. The robustness of the results were tested using an alternate measure of services trade restrictiveness for OECD countries. These robustness results validated the benchmark results and also suggested, for high income countries, the liberalization of services trade may have a non-linear influence on per capita income growth. These findings underscore the importance of including service trade liberalization as a part of trade policy discussions and development agendas, as liberalization of services restrictions may stimulate growth in per capita income and highlights that removing the barriers to services trade can positively impact income levels, especially in low-income countries. Currently, policies surrounding services trade liberalization largely occur at the bilateral agreement level. However, as knowledge grows about the possible benefits of services trade liberalization, movement towards multilateral recommendations may be optimal. [ABSTRACT FROM AUTHOR]

This paper attempted to address two questions: (1) Does foreign direct investment (FDI) influence economic growth in emerging markets? and (2) Are there preconditions that must be available in emerging markets before FDI influence economic growth? The second question was triggered by literature which says that certain conditions must exist in the host country before economic growth triggered by FDI occurs (Azam and Ahmed. 2014; Pegkas. 2015). Literature shows that FDI led growth nexus has been extensively researched on and is now a settled matter. What is still unclear is which ones are the preconditions that must exist in the host countries to allow significant FDI impact on economic growth. Few empirical studies on the subject matter shows that there is no consensus yet on the list of conditions which must be available in the host countries before FDI triggered economic growth advantages are felt (refer to Table 1). Such empirical studies shied away from emerging markets despite the fact that emerging markets were major recipients of FDI in the last two decades as confirmed by Cavusgil et al (2013). It is against this background that the author investigated whether financial development, trade openness and infrastructural development are preconditions that are necessary for emerging markets to enjoy FDI triggered economic growth benefits. Panel data analysis methods, namely pooled ordinary least squares (OLS), fixed and random effects with data ranging from 1996 to 2014 were used for the current study. Fixed and random effects found out that financial development and infrastructure development are absorption capacities which should be available in the emerging markets if economic growth is to be significantly influenced by FDI. Pooled OLS observed that only trade openness and infrastructural development must be available in emerging markets before FDI significantly influence growth. The policy implication of the study is that emerging markets should implement policies that increase financial development, trade openness and infrastructural development in order to enhance FDI's ability to influence economic growth. Future studies should investigate all factors raised by literature to find out if they are absorption capacities in the FDI-growth nexus in emerging markets. [ABSTRACT FROM AUTHOR]

The inflows of foreign direct investment, foreign aid and foreign trade have been on the increase in Nigeria in the past three decades. However, the relationship between these variables and economic growth has not been thoroughly explored in Nigeria. But theoretical literature posits that foreign direct investment, foreign aid and foreign trade have the capacities to accelerate economic growth. Hence, this paper examines the impact of foreign direct investment, foreign aid and foreign trade on economic growth in Nigeria. It also determines the short-run and long-run causal relationships between these variables and economic growth. It employs the Autoregressive Distributed Lag (ARDL) model-bounds test to examine the cointegration relationship as well as the short-run and long-run impacts. It also utilizes the Error Correction Model (ECM) procedure to investigate both the short-run and long-run causal relationships between the variables. It uses annual time series data covering the 1980-2015 period. Evidence from the study indicates that the variables are cointegrated. It also reveals that foreign direct investment, foreign aid and foreign trade have positive long-run impacts on economic growth in Nigeria. In the short-run, only foreign aid has positive impact on economic growth. The Granger causality results provide evidence of both short-run and long-run causality running from foreign aid and foreign trade to economic growth. We also show that shortrun causality runs from foreign direct investment to economic growth. The possible channels through which these variables enhance economic growth include improvement in the stock of physical, human and institutional capital, technological and knowledge transfers, improved competitiveness and creation of jobs in the recipient country which are capable of boosting the productive capacity of the economy. The economic implication of this study is that foreign direct investment, foreign aid and foreign trade are important determinants of economic growth in Nigeria. Hence, an increase in these variables will boost the Nigerian economy. Therefore, to accelerate economic growth, the government should strengthen policies that are capable of accelerating foreign direct investment, foreign aid and foreign trade. Further opening-up of the economy and the promotion of greater cooperation with development partners will enhance economic growth in Nigeria. [ABSTRACT FROM AUTHOR]

This paper examines causalities among foreign direct investment (FDI), economic growth (GTH), and financial development proxied by both equity market size (EQM) and bank credit to private sectors (BANK). We use a structural cointegration model with a vector error correction (VEC) mechanism to test for the short-term dynamics of the model. The results show that there is a reinforcing causal relationship between FDI and EQM, and between EQM and GTH in the short term, and that these variables cointegrate in the long term. As far as practical implications are concerned, the results reinforce that developed financial markets are an essential precondition for the positive impact of FDI on economic growth, reflecting host countries' ability to exploit FDI more efficiently. Moreover, the paper provides further substance for the notion that a country with a well-developed financial market gains significantly from FDI inflow. [ABSTRACT FROM AUTHOR]

This paper investigates the role of economic transformation in the form of increased manufacturing share in aggregate output in accelerating growth and reducing growth volatility in Africa. Using cross-section time series data from 50 African countries, the paper examines the key determinants of growth in the share of manufacturing output in aggregate output and its relationship with real GDP growth and growth volatility. Results of system GMM estimation indicate that real GDP growth and domestic investment are among the key drivers of growth in the share of manufacturing output in total output and that growth in the latter has, in turn, the potential to raise GDP growth and reduce growth volatility. It is therefore argued that African countries should pursue effective strategies, including industrial policies and institutional reforms, to promote manufacturing and other innovative activities as a means to accelerate economic growth and diversification, and enhance employment creation. [ABSTRACT FROM AUTHOR]

This paper quantifies the interdependence in national labor markets in Central America, a topic that has not received attention in the economic integration literature. Two sets of panel data are constructed: one formed by the aggregation of annual time series data from Costa Rica and El Salvador, and another with data from Honduras and Nicaragua. These two sets of data are used to estimate a Var model that includes the variables economic growth, investment, and unemployment rates; another Var is estimated including the change in export ratios in place of the investment rates. The results indicate that there are strong cross border effects in the sense that national unemployment rates drop in response to shocks to economic growth, investment and export ratios in other countries, and in some cases the induced fall in unemployment is larger than the one resulting from domestic variables. The paper ends with a series of considerations on the design of regional stabilization policies. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between government expenditure and economic growth in Ethiopia to test Wagner's Law which postulates that as real income increases there is a tendency for the share of public expenditure to increase relative to national income. Using the bounds test approach to cointegration, the paper finds robust evidence of a long-run relationship between government expenditure and GDP. Using four long-run estimators, we obtained elasticities ranging from 1.73 to 1.79, implying that a 1% increase in income leads to a 1.73-1.79% increase in government expenditure. Applying a modified version of the Granger causality test, we also found a unidirectional causality running only from GDP to government expenditure thus supporting the Wagnerian hypothesis of an expanding public sector. Since there was no causality running from government expenditure to income, the evidence suggests that the Keynesian view that government expenditure can be an effective policy instrument for promoting economic growth in Ethiopia was not supported. Therefore, there is a need for making fiscal policy as a stabilizer to enhance economic growth. [ABSTRACT FROM AUTHOR]

The Fiscal Responsibility and Budget Management (FRBM) Act 2003 was introduced in India in order to reduce revenue deficit by curtailing revenue expenditure. This paper examines the impact of public expenditure by type and nature on the income by constructing new data on combined capital expenditure and combined revenue expenditure of Centre and State governments of 15 major States during the period 1993-94 to 2004-05. This paper finds that, though public expenditure crowds-out private investment, public expenditure of all types and nature positively contributes to state income due to the inclusion of some productive expenditure in the revenue account. All revenue expenditures are not growth retarding, and specifically, infrastructure investment may be used as an instrument by the Central and State governments directly for equitable allocation of private investment to achieve balanced income across states and higher economic growth as a whole. [ABSTRACT FROM AUTHOR]

This paper analyzes the determinants of participation in the labor supply in a sample of ten Latin American countries. To this end, a VAR model is estimated with the variables economic growth, wages, unemployment and participation rate. A first section discusses the evolution and determining variables of participation rates in the Latin American countries, under the light of recent theories. This is followed by a review of recent literature on participation in Latin American countries. Next, impulse response functions are analyzed which permits to appreciate the role of economic growth, the real wage and the unemployment rate on participation. Further analysis is carried to appreciate the role of governance in the labor market. The paper ends with a discussion of the social policies related to labor markets. [ABSTRACT FROM AUTHOR]