23 results
Search Results
2. FDI and Growth: What Causes What?
- Author
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Chowdhury, Abdur and Mavrotas, George
- Subjects
FOREIGN investments ,ECONOMIC development ,ECONOMETRICS ,GROSS domestic product ,DEVELOPING countries - Abstract
This paper examines the causal relationship between FDI and economic growth by using an innovative econometric methodology to study the direction of causality between the two variables. We apply our methodology, based on the Toda-Yamamoto test for causality, to time-series data covering the period 1969–2000 for three developing countries, namely Chile, Malaysia and Thailand, all of them major recipients of FDI with a different history of macroeconomic episodes, policy regimes and growth patterns. Our empirical findings clearly suggest that it is GDP that causes FDI in the case of Chile and not vice versa, while for both Malaysia and Thailand, there is a strong evidence of a bi-directional causality between the two variables. The robustness of the above findings is confirmed by the use of a bootstrap test employed to test the validity of our results. [ABSTRACT FROM AUTHOR]
- Published
- 2006
- Full Text
- View/download PDF
3. Asia's rebalancing and growth.
- Author
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Kim, Soyoung, Lee, Jong‐Wha, and McKibbin, Warwick J.
- Subjects
INTERNATIONAL trade ,ECONOMIC development ,GROSS domestic product ,EMERGING markets ,ECONOMIC policy - Abstract
The paper investigates the impact of Asia's demand rebalancing and supply‐side productivity changes on long‐term economic growth in Asia and worldwide. Results from a panel vector autoregression model show that a productivity–neutral demand‐rebalancing shock has no permanent effect on Asian output, whereas labour productivity shocks have significant, positive and permanent effects. Simulations using a global intertemporal multisector general equilibrium model suggest that labour productivity shocks increase the foreign GDP over time, but rebalancing shocks have a negative international spillover effect. In addition, labour productivity shocks help in rebalancing. Structural reforms promoting labour productivity growth along with rebalancing policies across Asia can achieve higher economic growth worldwide. [ABSTRACT FROM AUTHOR]
- Published
- 2018
- Full Text
- View/download PDF
4. Informality in the Process of Development and Growth.
- Author
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Loayza, Norman V.
- Subjects
ECONOMIC development ,ECONOMIC impact of emigration & immigration ,GROSS domestic product ,LABOR supply ,CAPITAL ,LABOR costs - Abstract
'Informality' is a term used to describe the collection of firms, workers and activities that operate outside the legal and regulatory systems. It is widespread in the majority of developing countries - in a typical developing economy, the informal sector produces about 35 per cent of GDP and employs 70 per cent of the labour force. This paper studies informality in the context of economic development by presenting a model and projections that link informality, regulations, migration and economic growth. This analytical framework highlights the trade-offs between formality and informality, the relationship between the different types of informality, and the connection between them and the forces of labour, capital and productivity growth. The paper models the behaviour of the informal sector based on the following fundamental asymmetry: formal firms confront higher labour costs, while informal firms face higher capital costs and lower productivity. Using mandated minimum wages as the policy-induced distortion, the model first studies the static allocation of formal and informal capital and labour in a modern economy. Second, it opens the possibility of labour migration from a rudimentary economy with ample supply of labour (e.g. rural areas or less advanced neighbouring countries). Third, the model analyses the dynamic behaviour of the formal and informal sectors, considering how they affect and are affected by economic growth and labour migration. Then, the paper presents projections for the size of labour informality, in the modern and rudimentary economies, in the next two decades for a large group of countries representing all regions of the world. The projections are based on the calibration and simulation of the model and serve to discuss its usefulness and limitations. [ABSTRACT FROM AUTHOR]
- Published
- 2016
- Full Text
- View/download PDF
5. Nowcasting global economic growth: A factor‐augmented mixed‐frequency approach.
- Author
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Ferrara, Laurent and Marsilli, Clément
- Subjects
ECONOMIC development ,GROSS domestic product ,INTERNATIONAL economic relations ,ECONOMIC indicators - Abstract
Assessing accurately global economic conditions is a great challenge for economists. The International Monetary Fund proposes within its periodic World Economic Outlook report a measure of the global GDP annual growth, that is generally considered as the benchmark nowcast by macroeconomists. In this paper, we put forward an alternative approach to provide monthly nowcasts of the annual global growth rate. Our approach builds on a Factor‐Augmented MIxed DAta Sampling (FA‐MIDAS) model that enables: (i) to account for a large monthly database including various countries and sectors of the global economy and (ii) to nowcast a low‐frequency macroeconomic variable using higher frequency information. Pseudo‐real‐time results over the period 2010–16 show that this approach provides reliable and timely nowcasts of the world GDP annual growth on a monthly basis. [ABSTRACT FROM AUTHOR]
- Published
- 2019
- Full Text
- View/download PDF
6. An Overview of Developments in the Irish Economy over the Last Ten Years.
- Author
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McHale, John
- Subjects
IRISH economy, 1949- ,ECONOMIC development ,GROSS domestic product - Abstract
At the time of the first Lehigh University conference on the Irish economy in 2001, Irish real GDP was still growing at an annual rate of almost 6 per cent, following a decade where growth had averaged over 7 per cent. The 'Celtic Tiger' economy was showing signs of ageing - notably with inflation eroding competitiveness and with it Ireland's attractiveness as a destination for FDI - but there was little sense of the 'bubble economy' that would fundamentally alter Irish economic fortunes over the following decade. The succeeding property-driven economy did sustain high growth for another half decade or so, if not at the spectacular rates of the preceding half decade. But it also sowed the seeds for the financial and economic crisis that has so rocked the economy over the last three years. This paper sets the scene for the papers in the symposium with a review of the property boom, bubble and eventual bust. It also reviews the prospects for crisis resolution and export-driven recovery. [ABSTRACT FROM AUTHOR]
- Published
- 2012
- Full Text
- View/download PDF
7. Protectionist Responses to the Crisis: Global Trends and Implications.
- Author
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Bussière, Matthieu, Pérez-Barreiro, Emilia, Straub, Roland, and Taglioni, Daria
- Subjects
PROTECTIONISM ,ECONOMIC development ,ECONOMIC trends ,TARIFF ,GLOBAL Financial Crisis, 2008-2009 ,ECONOMIC recovery ,TRADE regulation ,INTERNATIONAL competition ,GROSS domestic product - Abstract
In this paper, we take a systematic look at recent trends in global protectionism and at the potential implications of a protectionist backlash for economic growth, using results from the recent economic literature and new model simulations. We find that so far the increase in actual protectionist measures to restrict trade through tariff and non-tariff barriers has been moderate. None of the World Trade Organization (WTO) members has retreated into widespread trade restrictions or protectionism to date. At the same time, however, evidence from surveys shows that public pressure for more economic protection has been mounting since the mid-2000s and has possibly intensified since the start of the financial crisis. Meanwhile, our model-based simulations suggest that the impairment of the global flow of trade would hamper the recovery process from the crisis as well as the long-term growth of the global economy. At the same time, it is unlikely that protectionism would help correct existing current account imbalances. Moreover, the countries implementing protectionist measures should expect a deterioration of their international competitiveness, which would further affect the potential for longer-term real GDP growth. [ABSTRACT FROM AUTHOR]
- Published
- 2011
- Full Text
- View/download PDF
8. External Linkages and Economic Growth in Colombia: Insights from a Bayesian VAR Model.
- Author
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Abrego, Lisandro and Österholm, Pär
- Subjects
ECONOMIC development ,GROSS domestic product ,MACROECONOMICS ,BAYESIAN analysis ,FINANCIAL deepening ,ECONOMIC policy ,ECONOMIC expansion ,ECONOMIC activity - Abstract
This paper investigates the sensitivity of Colombian GDP growth to the surrounding macroeconomic environment. We estimate a Bayesian VAR model with informative steady-state priors for the Colombian economy using quarterly data from 1995 to 2007. A variance decomposition shows that world GDP growth and government spending are the most important factors, explaining roughly 17 and 16 per cent of the variance in Colombian GDP growth respectively. The model, which is shown to forecast well out-of-sample, can also be used to analyse alternative scenarios. Generating both endogenous and conditional forecasts, we show that the impact on Colombian GDP growth of a substantial downturn in world GDP growth would be non-negligible but that the decline still would be mild by historical standards. [ABSTRACT FROM AUTHOR]
- Published
- 2010
- Full Text
- View/download PDF
9. Determinants of Bilateral Trade Flows in OECD Countries: Evidence from Gravity Panel Data Models.
- Author
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Wang, Chengang, Wei, Yingqi, and Liu, Xiaming
- Subjects
FOREIGN investments ,INTERNATIONAL trade ,ECONOMIC development ,BUSINESS & economics ,STOCKS (Finance) ,INDUSTRIAL organization (Economic theory) ,GROSS domestic product ,INTERNATIONAL economic relations ,MARKETING ,ECONOMIC history - Abstract
This paper aims to identify the main causes of bilateral trade flows in OECD countries. The specific features of the study include the explicit introduction of R&D and FDI as the two important explanatory variables, conduct of unit root tests in the panel data framework and careful consideration of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to bilateral trade, while the distance, measured by both geographical distance and relative factor endowment, between trade partner countries has a negative impact. These findings lend support to new trade, FDI and new growth theories. [ABSTRACT FROM AUTHOR]
- Published
- 2010
- Full Text
- View/download PDF
10. Singapore and the New Regionalism: Bilateral Trade Linkages with Japan and the US..
- Author
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Rajan, Ramkishen S., Sen, Rahul, and Siregar, Reza
- Subjects
ECONOMIC development ,GROSS domestic product ,INVESTMENTS - Abstract
Free Trade Areas (FTAs) have recently become an integral part of Singapore trade policy. This paper discusses the reasons behind Singapore's recent embracement of ‘new regionalism’ with particular reference to the proposals to form FTAs with Japan and the US. The paper goes on to examine various aspects of Singapore's trade linkages with the two economic superpowers in some detail. Popular discussion of FTAs gives one the appearance that such a trade policy is entirely benign. The paper sounds a cautionary note, highlighting some reasons to be concerned with Singapore's recent embracement of the ‘new regionalism’. [ABSTRACT FROM AUTHOR]
- Published
- 2003
- Full Text
- View/download PDF
11. Dangerous Interactions: Problems in Interpreting Tests of Conditional Aid Effectiveness.
- Author
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Fielding, David and Knowles, Stephen
- Subjects
ECONOMIC development ,REGRESSION analysis ,GROSS domestic product ,PER capita ,POLICY analysis ,HYPOTHESIS ,BUDGET deficits ,INTERNATIONAL trade ,FOREIGN investments ,ECONOMICS - Abstract
There is now a substantial empirical literature examining the determinants of aid effectiveness. A large part of this makes inferences based on a regression incorporating aid (as a share of recipient GDP) interacted with some institutional or policy variable. Recently, some authors have questioned the statistical robustness of such regressions, pointing out that results vary according to the way aid is measured and the estimator applied to the data. Moreover, the regression equations used to test hypotheses about the determinants of aid effectiveness are often introduced without any corresponding formal theory. We explore aid-policy interaction terms in the context of a simple theoretical model, showing how different nonlinearities may be conflated. The resulting difficulties in the interpretation of aid-growth regressions are illustrated in the context of a seminal paper in the conditional aid effectiveness literature. One simple change in the way that aid is measured - in per capita terms rather than as a fraction of GDP - completely changes the regression results. This indicates that adding interaction terms to otherwise linear regression equations is an inadequate way of capturing the nonlinearities in the growth process. Our aim is to re-emphasise the importance of grounding. [ABSTRACT FROM AUTHOR]
- Published
- 2011
- Full Text
- View/download PDF
12. Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots?
- Author
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Brau, Rinaldo, Di Liberto, Adriana, and Pigliaru, Francesco
- Subjects
TOURISM ,GROSS domestic product ,INDUSTRIALIZATION ,ECONOMIC development ,DATABASES ,ECONOMETRICS ,TOURISTS ,VOYAGES & travels ,DEVELOPED countries - Abstract
Is tourism an opportunity for lagging countries in the elusive quest for growth ()? Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialisation is likely to be associated with higher per capita GDP growth rates than those observed in industrialised countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth () and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth-enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth. [ABSTRACT FROM AUTHOR]
- Published
- 2011
- Full Text
- View/download PDF
13. Trade Liberalisation and Poverty Reduction in Vietnam.
- Author
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Heo, Yoon and Doanh, Nguyen Khanh
- Subjects
FREE trade ,ECONOMIC development ,GROSS domestic product ,POOR people ,MINORITIES - Abstract
This paper investigates the impacts of trade liberalisation on poverty reduction in Vietnam during the period of economic reform. Using a combined approach dealing with four transmitting channels from trade to poverty, the major findings are summarised as follows. First, Vietnam's trade liberalisation has fostered economic growth, which has helped to raise per capita GDP and reduce poverty. Second, trade liberalisation has directly benefited the poor through creating pro-poor employment and raising wages. Third, another impact of trade liberalisation on poverty is income and substitution effects associated with reduced domestic prices of importables and increased domestic prices of exportables such as coffee and rice. Fourth, trade liberalisation has indirectly benefited the poor because it raises government revenue, which enhances the government's ability to subsidise the poor. Finally, although the poverty rate in Vietnam has been reduced impressively, there is an increasing disparity between urban and rural areas and, among the latter, concern does exist regarding ethnic minorities. [ABSTRACT FROM AUTHOR]
- Published
- 2009
- Full Text
- View/download PDF
14. New Evidence on the Export-led Growth Nexus: A Case Study of Malaysia.
- Author
-
Mahadevan, Renuka
- Subjects
EXPORTS ,GROSS domestic product ,LABOR productivity ,NATIONAL income ,ECONOMIC policy ,COMMERCIAL policy ,ECONOMIC development ,ECONOMIC indicators ,INTERNATIONAL trade - Abstract
This paper revisits the highly debated export-led growth hypothesis in a number of different ways using Malaysia as a case study. First, the hypothesis is tested in terms of labour and total factor productivity growth as a potential channel via which exports can affect or be affected by GDP growth. Considering the impact of imports on GDP and productivity growth serves a similar purpose. In addition, GDP is trade-adjusted to avoid the double-counting problem arising from the national income identity. Second, the relationships are examined using the relatively recent Toda and Yamamoto (1995 ) causality tests. These results have major implications and are necessary to reassess the effectiveness of trade policy as a strategy for economic development. [ABSTRACT FROM AUTHOR]
- Published
- 2007
- Full Text
- View/download PDF
15. On the exposure of the BRIC countries to global economic shocks.
- Author
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Belke, Ansgar, Dreger, Christian, and Dubova, Irina
- Subjects
ECONOMIC shock ,GROSS domestic product ,VECTOR autoregression model ,ECONOMIC conditions in China, 1949- ,ECONOMIC development ,PETROLEUM sales & prices - Abstract
The financial crisis led to a deep recession in many industrial countries. While large emerging countries recovered relatively quickly, their performance deteriorated in recent years, despite the modest recovery in advanced economies. The higher divergence of business cycles is closely linked to the Chinese economy. During the crisis, the Chinese fiscal stimulus prevented an abrupt decline in GDP growth not only in that country, but also in resource‐rich economies. Due to lower commodity demand, the environment became more challenging for many emerging markets in recent years. This view is supported by Bayesian structural VARs specified for the individual BRIC (Brazil, Russia, India and China) countries. The results reveal a strong impact of the international economy on GDP growth. However, in contrast to the other countries, China plays a crucial role in determining global trade and oil prices. Therefore, the Chinese economy exerts significant spillovers to the other countries under analysis. The change in the Chinese growth strategy puts additional reform pressure especially in countries with abundant natural resources. [ABSTRACT FROM AUTHOR]
- Published
- 2019
- Full Text
- View/download PDF
16. China's economic growth and convergence.
- Author
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Lee, Jong‐Wha
- Subjects
ECONOMIC development ,ECONOMIC conditions in China, 2000- ,ECONOMIC convergence ,LABOR productivity ,GROSS domestic product - Abstract
Using cross-country panel data, this study identifies and discusses major factors contributing to China's strong growth in the past four decades. China's low initial per capita income relative to its own long-run potential, combined with sound policy factors including a high investment rate, strong human capital, high trade openness and improved institutions, enabled the economy to converge with advanced economies in terms of income level. The shift-share analysis with industry-level data shows that strong labour productivity growth in the manufacturing sector largely contributed to China's overall labour productivity growth. Although labour reallocation from agriculture to the services sector made a positive contribution to aggregate labour productivity growth, labour productivity growth in the services sector itself was negative over the 1980-2010 period. China's average potential GDP growth is predicted to decline significantly in the coming decade, to 5%-6% and fall further to 3%-4%-due to the convergence effect and structural problems-unless China substantially upgrades its institutions and policy factors and improves productivity, particularly in its services sector. [ABSTRACT FROM AUTHOR]
- Published
- 2017
- Full Text
- View/download PDF
17. China's Macroeconomic Imbalances: Causes and Consequences.
- Author
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Knight, John and Wang, Wei
- Subjects
ECONOMIC conditions in China, 2000- ,MACROECONOMICS ,PRODUCTION (Economic theory) ,SURPLUS (Economics) ,GROSS domestic product ,FOREIGN exchange reserves ,ECONOMIC development - Abstract
In recent years, China has experienced two forms of extreme macroeconomic imbalance: an expenditure imbalance in the sense of very high investment and very low consumption, giving rise to rapid capital accumulation; and an imbalance between expenditure and production, producing external imbalance, i.e. a huge surplus on the current account of the balance of payments. Both imbalances imply a low rate of time discount by both government and society: consumption in the present is forgone in favour of consumption in the future. The paper examines how these imbalances came about and goes on to consider whether they can be sustained and how they might be redressed. There is no evidence that the rapid capital accumulation has reduced the rate of profit on capital and thus the incentive to invest. However, persistent external imbalance poses a threat to investment if it generates excess liquidity and asset bubbles. The current account surplus rose remarkably in the years 2004-07. This was associated with exogenous increases in competiveness and in saving, both attributable to the economic reform policies. On current policies, the surplus is likely to rise again once the world economy recovers from its recession. This poses three sorts of problems, each of which is examined in turn: difficulties for macroeconomic stabilisation policies; risk of capital loss on the foreign exchange holdings; and the threat of retaliation by China's trading partners. A combination of internal and external policies will be required to redress the imbalance. [ABSTRACT FROM AUTHOR]
- Published
- 2011
- Full Text
- View/download PDF
18. Thresholds of financial development in the Euro area.
- Author
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Swamy, Vighneswara and Dharani, Munusamy
- Subjects
EUROZONE ,ECONOMIC expansion ,GRANGER causality test ,ECONOMIC development ,GROSS domestic product - Abstract
We analyse the dynamics of financial development and economic growth in the Euro area as these countries went through considerably higher levels of financial development. Using a balanced panel data of 38 years from 1980 to 2018, we offer new evidence on the finance–growth nexus. We show the presence of non‐linearity as there is an inverted U‐shaped relationship between finance and growth in the long run. Estimating the thresholds in the finance–growth nexus, we notice a threshold effect at 74%–86% of GDP for domestic credit; 51% of GDP for stock turnover ratio; and 65% of GDP for stock market capitalisation. We notice that exceeding the threshold causes deceleration in economic growth as too much finance results in crowding out effect for productive economic activities. The panel Granger causality test results show that financial development should be associated with optimal growth performance. These findings in the Euro area provide some useful policy implications to the emerging and developing economies in designing their financial development strategies. [ABSTRACT FROM AUTHOR]
- Published
- 2020
- Full Text
- View/download PDF
19. Export product range and economic growth in the EU countries.
- Author
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Kaitila, Ville
- Subjects
EXPORTS ,ECONOMIC development ,GROSS domestic product ,DIVERSIFICATION in industry ,ECONOMIC history - Abstract
We analyse the number of different HS8 products in the EU countries' exports in 1995–2015. We review what share, or coverage, of the total possible number of these products the countries have exported each year. The EU15 countries have typically witnessed a slow rise in this coverage rate, that is, a widening of their extensive margins. The exception is Finland where the share has declined considerably. On the other hand, Ireland, Greece, Portugal and the new member countries have seen a dramatic increase in their export product coverage. We analyse how the development in the coverage rate and, as a comparison, the diversification of exports as measured by the Herfindahl–Hirschman index are associated with GDP per capita growth. We find that changes in the former measure are positively associated with economic growth after we have controlled for GDP per capita catching‐up as well as investment and export activity. We also find that smaller EU economies do not specialise more than large ones in their exports as could perhaps be assumed. [ABSTRACT FROM AUTHOR]
- Published
- 2019
- Full Text
- View/download PDF
20. Cambodia: Rapid Growth in an Open, Post-conflict Economy.
- Author
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Hill, Hal and Menon, Jayant
- Subjects
TRADE negotiation ,FREE trade ,ECONOMIC development ,GROSS domestic product ,ECONOMIC history - Abstract
This study provides an analytical review of World Trade Organization, Trade Policy Review: Cambodia, the first such report undertaken for the country. The report highlights Cambodia's rapid economic growth after one of the world's worst cases of genocide in the second half of the twentieth century. This growth has been underpinned by open trade and investment policies, in the context of dynamic neighbourhood growth effects. The trade regime is mainly tariff-based, with modest intersectoral variations in rates. Cambodia has limited trade policy space. It is a signatory to the 10-nation ASEAN Free Trade Agreement, soon to become the ASEAN Economic Community. Moreover, given its long and porous borders with the much larger, dynamic economies of Thailand and Vietnam, any major cross-border price differences will quickly result in informal trade with these economies, and nearby China. Most of the country's trade policy challenges are to do with 'behind-the-border' issues, a legacy of its generation of civil war and conflict. These include weak bureaucratic capacity, high levels of corruption, poor infrastructure and limited human capital. [ABSTRACT FROM AUTHOR]
- Published
- 2014
- Full Text
- View/download PDF
21. The Irish Economy Today: Albatross or Phoenix?
- Author
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FitzGerald, John
- Subjects
IRISH economy ,GROSS domestic product ,BANKING policy ,BALANCE of payments ,ECONOMIC development - Abstract
Within EMU, the state of the balance of payments is a crucial signal of possible dangers in an economy. In the case of Ireland, this signal was ignored, and a failure of banking regulation together with wholly inappropriate fiscal policy allowed the current crisis to happen. In the aftermath of the recession, domestic costs have been cut, producing a substantial increase in tradable sector output. This output response will play a crucial role in eventually returning the economy to growth. Tackling the huge government deficit will be necessarily painful and, until completed, will weigh heavily on domestic demand, delaying a full recovery. It will be important that the fiscal adjustment is undertaken in an 'employment-friendly' manner. [ABSTRACT FROM AUTHOR]
- Published
- 2012
- Full Text
- View/download PDF
22. A New Measure of Trade Openness.
- Author
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Squalli, Jay and Wilson, Kenneth
- Subjects
INTERNATIONAL economic relations ,GROSS domestic product ,ECONOMIC development ,ENVIRONMENTAL economics - Abstract
Trade openness, popularly measured as ( X + M)/ GDP in the hundreds of studies published to date, consistently considers the world's biggest trading countries such as the USA, the UK, Japan and Germany to be closed economies, irrespective of the data set used. This study suggests a composite trade share measure that more completely reflects reality by combining two important dimensions of trade openness: trade share and the relative importance of a country's trade level to total world trade. Robustness tests support the new proposed measure in lieu of the conventional measure of openness and suggest that the latter may not only be incomplete but may also overstate the impact of trade on such things as income and the environment. [ABSTRACT FROM AUTHOR]
- Published
- 2011
- Full Text
- View/download PDF
23. On the Causal Links Between FDI and Growth in Developing Countries.
- Author
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Hansen, Henrik and Rand, John
- Subjects
FOREIGN investments ,ECONOMIC development ,DEVELOPED countries ,GROSS domestic product ,SAVINGS ,TECHNOLOGY - Abstract
We analyse the Granger causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering 31 years. Using estimators for heterogeneous panel data we find bi-directional causality between the FDI-to-GDP ratio and the level of GDP. FDI has a lasting impact on GDP, while GDP has no long-run impact on the FDI-to-GDP ratio. In that sense FDI causes growth. Furthermore, in a model for GDP and FDI as a fraction of gross capital formation (GCF) we also find long-run effects from FDI to GDP. This finding may be interpreted as evidence in favour of the hypotheses that FDI has an impact on GDP via knowledge transfers and adoption of new technology. [ABSTRACT FROM AUTHOR]
- Published
- 2006
- Full Text
- View/download PDF
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