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Digital finance is reshaping trade credit. This study investigates the influence of digital finance on trade credit among A-share listed companies in China from 2011 to 2020. The paper matches this data with city-level digital finance index (DFI) data. Empirical results indicate that digital finance significantly benefits trade credit. This impact occurs through bank competition, regulatory penalties, and disclosure quality channels. Different levels of digital finance development and financing constraints of companies have a varying impact on trade credit. This paper provides a new perspective on trade credit in the firm's supply chain that enriches theoretical research on digital finance. The research results can help the country to implement digital finance development strategy better and offer relevant guidance and reference. [ABSTRACT FROM AUTHOR]

The paper analyzes the optimal lockdown policy using the SQAIRD model over a network with three population groups (young, adult, and old). We show that different lockdown policies may be justified by different socioeconomic structures (objective cost functions that are either convex or concave). We also show that a lockdown policy is always better than a laissez-faire policy, and a targeted policy specific to each group outperforms a uniform policy. In our benchmark example, we consider the case of Italy. Our simulations show that: (a) a lockdown policy is always better than the laissez-faire policy because it limits the costs generated by the pandemic in an uncontrolled situation; (b) a group-specific targeted lockout policy is more effective than a uniform policy to the extent that the groups differ. The latter is a less expensive targeted policy (as it optimally minimizes direct, indirect, and vaccination costs), and it is equally effective in controlling the pandemic. One finding of particular interest is that the optimal lockdown rate should be higher for the young and elderly than for adults. This is motivated by the fact that younger individuals are more likely to spread the virus in question asymptomatically. [ABSTRACT FROM AUTHOR]

The literature on the impact of financial inclusion on the instability of household consumption remains controversial. In this article, we considered the possibility that countries follow different regimes of household consumption instability and tested the hypothesis of whether financial inclusion is countercyclical or procyclical to a country's regime of consumption instability. Thus, relying on recent works that used the finite mixture regression method, we identify the different regimes of household consumption instability. Drawing on a sample of 28 developing countries over the period 2011–2020, the paper highlights that the impact of financial inclusion on consumption instability differs across classes and a three-class model best describes the sample. Specifically, we show that financial inclusion is positively associated with consumption instability in the first class, while financial inclusion significantly reduces consumption instability in the second class. Financial inclusion does not have a significant impact on the third class. Furthermore, exploring the potential role of democracy in determining class affiliation, the results emphasize that developing countries would fully benefit from financial inclusion by undertaking strong reforms to improve democracy. [ABSTRACT FROM AUTHOR]

The nature of the causal relationship between economic growth and technological progress has been open to debate. The conventional view following Solow’s 1957 seminal discussion is that growth is supply-constrained and determined by exogenous technological progress. An alternative view preceding Solow is referred to as the Kaldor-Verdoorn Law, and emphasizes the importance of demand-side factors in determining technological progress and productivity growth. This paper looks at the evidence for the Kaldor-Verdoorn Law in China and India, two fast-growing Asian countries that have been central in the process of globalization. It also estimates the influence of short-term cyclical fluctuations associated with changes in the unemployment rate, or the Okun effect on their productivity growth. The results appear to provide support for the Kaldor-Verdoorn Law or the notion that technical change is the result, and not the fundamental cause of economic growth. The estimated Okun effects are small and insignificant in both countries, suggesting that cyclical influences on productivity growth may be less significant in developing countries that are growing rapidly and do not (at least till the recent pandemic) experience the conventional recessions of mature economies, but only slowdowns in rapid economic growth. The results therefore provide some support for the importance of demand-led regimes in rapidly growing developing countries. [ABSTRACT FROM AUTHOR]

Knowledge of the long relationship between gender equality and economic growth is hampered by the lack of information and resources on the various dimensions of gender equality. This paper is a first attempt to assess the size of the gender gap and investigate its relationship with economic growth from a historical perspective. Exploiting a unique census-based dataset of 86 French counties in the mid-nineteenth century, I construct a historical gender gap index measuring the size of the gap between men and women in three critical areas: economic opportunities, educational attainment, and health. A county comparison allows me to identify the strengths and weaknesses of French counties in closing the gender gap. I find that France can be divided into two main areas, the North and the South. In particular, the Northern counties that have done most to narrow the gap display better economic performance. Boys' and girls' education and family structures appear to be crucial determinants of gender equality. Gender equality is positively and significantly associated with economic performance. Accounting for the multi-dimensions of gender equality is crucial for economic development. [ABSTRACT FROM AUTHOR]

This paper examines the progress made by the EU regions on the path of digitalisation and growth of digital economy, by analysing the dynamics and drivers of a selected number of specific indicators, based on Eurostat data running from 2001 to 2016. The study is conducted at regional level, and finally aims to identify policy measures that could enhance the growth of digital economy in the EU area. Moreover, the paper investigates whether a common set of economic and social policy measures is effective in improving several indicators of digital economy, in the New Member States (NMS) as well as in the Old Member States (OMS), given that they still exhibit different patterns of digital transformation at regional level. The increase in tertiary education attainments together with the increase in the number of issued patents are found to be policy measures that generate positive effects for several indicators of digital economy, as well as for the NMS and OMS. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to analyze the performance and the relationship between competitiveness, real gross domestic product (GDP) growth and human development in 20 countries of the Latin America and Caribbean region during the 2006-2015 period. The main argument to uphold here is that – from the perspective of virtuous circle – countries with better conditions of competitiveness are those with better economic performance and with better conditions for human development.Design/methodology/approach Time series data were organized at three levels: individual countries, groups of nations and Latin America and Caribbean as a whole. Indicators used were: index of competitiveness, rates of change in real GDP and Human Development Index. Cluster analysis tests were performed: data ranges were determined and quintiles were established. Countries were ranked in five categories and comparative position matrices were determined for each variable. Linear correlations between indexes were calculated. Linear correlation coefficients were determined in terms of groups of countries and considering Latin America and Caribbean as a whole.Findings Findings revealed that decreasing conditions in competitiveness and economic growth indicators are the representative situation since 2009. The most competitive country in the region is Chile, and the weakest is Venezuela. Nevertheless, all Latin American and Caribbean countries analyzed seem to have made progress in terms of human, economic and social development. Regarding correlations, Dominican Republic showed an inverse relationship between competitiveness and economic growth, while Jamaica and Venezuela showed inverse relationships between competitiveness and human development. At the individual country level, no statistically significant relationship between economic growth and human development was detected.Research limitations/implications Findings highlight the necessity of future research that result in a deeper understanding of the transmission mechanisms between economic and social performance in Latin American and Caribbean countries. Particular reasons at the micro level that explain improvements or deteriorations in competitiveness and human development must also be analyzed. Based on the degrees of freedom, time series could have included more years, but a lack of information was found for some countries. It would also be necessary to observe each particular case considering the type of economy, production characteristics and export/import composition.Practical implications Results complement the existing literature by exploring competitiveness and its relationship with economic and social variables in developing countries. The authors also believe that this paper is relevant for macroeconomic and social policy debates involving competitiveness and human well-being in this region of the world.Originality/value This paper supports an important argument: human well-being and national development must be the ultimate goal of competitiveness. Traditional literature focuses on levels and determinants of competitiveness in developed countries, but it usually does not take into account social and human aspects of the process in developing countries. Little attention has been paid to analyze the relationship between competitiveness and socioeconomic variables in developing countries. Methods and findings of this paper complement the existing literature by studying the relationships among competitiveness, real GDP growth and human development in Latin American and Caribbean countries, using correlation analysis. [ABSTRACT FROM AUTHOR]

The paper explores the factors driving Outward Foreign Direct Investment (OFDI) by Emerging multinational enterprisess (EMNEs) and the patterns of knowledge transfer in six cases of EMNEs from three BRICS’ economies (India, China and South Africa). It found that there are significant differences between the OFDI from EMNEs and Developed multinational enterprise (DMNEs), which cannot be explained by using traditional FDI models. The way that EMNEs enter and operate in developed and developing countries are different. Knowledge transfers between EMNEs and developing host economies are predominantly one way and the former transfers more technology and knowledge than they gain. In the case of EMNEs and developed host economies, the knowledge and technology transfers appears to be more evenly matched, a two-way street benefitting both parties. The paper makes two major contributions: (i) it attempts to identify and distinguish the factors driving OFDI and patterns of knowledge transfer of OFDI from EMNEs and shows how they differ from DMNEs; (ii) it highlights aspects of OFDI by EMNEs such as expansion into countries outside their respective regions, and different patterns of technology and knowledge transfer in the South and North respectively. [ABSTRACT FROM PUBLISHER]

The Total Sanitation Campaign (TSC), initiated by the Indian Government, and UNESCO's School Sanitation and Hygiene Education (SSHE) Program started providing gender-specific toilets in government schools in the late nineties. This paper examines the connection between separate female toilets and the gender parity indices of enrollment and participation in the primary (grades I–V) and upper primary (grades VI–VIII) levels of education for 28 states and four union territories of India between 2007 and 2015. Additionally, this paper investigates whether separate female toilets improve the gender parity index of education for scheduled-caste students. The results show that separate female toilets in schools are positively associated with the gender parity indices of enrollment and participation at the upper primary level only for all castes combined. This paper finds no evidence to suggest that separate female toilets can improve the gender parity indices of enrollment and participation for scheduled-caste students at the upper primary level. Additionally, separate female toilets in schools are negatively associated with the gender parity index of enrollment for scheduled-caste students at the primary level, which indicates tremendous caste-related discrimination in Indian society. [ABSTRACT FROM AUTHOR]

Protectionist sentiments have been rising globally in recent years. The consequences of a surge in protectionist measures present policy challenges for emerging markets (EMs), which have become increasingly exposed to global trade. This paper serves two main purposes. First, we collect several stylized facts that characterize EMs' role in the new geography of trade. We focus on differences between advanced economies (AEs) and EMs in trade linkages, production structures, and factor supplies. Second, we build a dynamic, general equilibrium, quantitative trade model featuring multiple countries, sectors, and factors of production. The model is motivated by and geared to jointly match the facts we present. We use the model to estimate the long-run global impacts of rising trade barriers on EMs—both direct impacts and spillovers through third-country effects. Heterogeneity in openness, production structure, trade linkages, and factor supplies leads to large differences between the impacts on AEs versus EMs. We find that variations in both technological comparative advantage and factor supplies play key roles in shaping these differences. [ABSTRACT FROM AUTHOR]

This paper develops new estimates of export quality, based on bilateral data, which are far more extensive than previous efforts. The data cover 166 countries and more than 800 products over the period 1962–2014. The analysis finds that, within any given product line, export quality on average converges rapidly across countries. However, there is also significant cross-country heterogeneity in the growth rate of quality. Institutional quality, liberal trade policies, foreign direct investment inflows, and human capital all promote quality upgrading, although their impacts vary across sectors. [ABSTRACT FROM AUTHOR]

Using the quarterly data of the United Kingdom (UK) for the period from 1975Q1 to 2016Q1, the paper analyses the dynamic and the asymmetric responses of inequality to the real gross domestic product (GDP) (income) volatility. For this purpose, we consider the bivariate Generalized Autoregressive Conditional Heteroskedasticity-in-mean (GARCH-M) Structural Vector Autoregressive (VAR) based models to examine the related relationship. Applying this method to the different measures of both income- and consumption inequality (i.e. the measures of the Gini, the standard deviation, and the 90–10 percentile differential), we find that income volatility has an increasing effect on inequality. Not only the real GDP volatility significantly increases inequality, but also its effect is asymmetric. In other words, inequality differently responds to positive and negative income growth volatility shocks. Moreover, the volatility in the GDP-inequality equation tends to amplify the positive dynamic response of inequality to a positive income shock, while diminishing the response of inequality to a negative income shock. The implications of these findings are also drawn. [ABSTRACT FROM AUTHOR]

The central thesis of the paper is that multinational companies (MNC) should invest in the use of "soft" methods (socially responsible behavior) to mitigate costs in society accrued due to use of "hardcore" tax evasion tactics (transfer mispricing) to maximize profits from operations in developing countries and/or countries with weak or inefficient tax laws and tax collection institutions. Therefore, we articulate the argument of corporate social responsibility (CSR) as an indirect compensation for transfer mispricing. Our aim is not to present CSR as a solution to transfer mispricing. An analytical approach is based on a content analysis of the existing literature with emphasis on a case study. We first discuss the dark side of transfer pricing (TP), next we present the link between TP and poverty and finally we advance arguments for CSR as a compensation for transfer mispricing. While acknowledging that TP is a legal accounting practice, we argue that in light of its poverty and underdevelopment externalities, the practice per se should be a strong defence for CSR because it is also associated with schemes that deprive developing countries of the capital essential for investment in health, education and development programmes. [ABSTRACT FROM AUTHOR]

Purpose While the relationship between military expenditure and economic growth during the Cold War period is well-researched, relatively less is known on the issue for the post-Cold War era. Equally how the relationship varies with respect to exposure to conflict is also not fully examined. Therefore, the purpose of this paper is to investigate the causal impact of military expenditure on growth in the presence of internal and external threats for the period 1990-2013 using data from 70 developing countries.Design/methodology/approach The main estimates are based on the generalized method of moments (GMM) regression model. But for comparison purposes, the authors also report estimates using fixed and random effects as well as pooled cross-section regressions. The regression specification accounts for non-linear effect of military expenditure allowing for interaction with conflict variable (where distinction is made between external and internal conflict).Findings The analysis indicates that methods as well as model specification matter in studying the effect of military spending on growth. Full sample estimates based on GMM, fixed, and random effects models suggest a negative and statistically significant effect of military expenditure. However, fixed effects estimate becomes insignificant for low-income countries. The effect of military spending is also insignificant in the cross-sectional OLS model if conflict is not considered. When the regression model additionally controls for conflict, the effect of military spending conditional upon (internal) conflict exposure is significant and positive. No such effect is present conditional upon external threat.Research limitations/implications One important limitation of the analysis is the small sample size – the authors had to restrict analysis to 70 low and middle-income countries for which the authors could construct post-Cold War panel data on military expenditure along with information on armed conflict exposure (the later from the Uppsala Conflict Data Program, 2015).Originality/value To the best of the author’s knowledge, this is the first paper to examine the joint impact of military expenditure and conflict on economic growth in post-Cold War period in a sample of developing countries. Moreover, an attempt is made to review and revisit the large Cold War literature where studies vary considerably in terms findings. A key reason for this is the somewhat ad hoc choice of econometric methods – most rely on cross-section data and rarely conduct sensitivity analysis. The authors instead rely on panel data estimates but also report results based on naïve models for comparison purposes. [ABSTRACT FROM AUTHOR]

The existing literature has focussed extensively on the development outcomes resulting from international migrant remittances. Yet, the human capital channel promoting remittance effectiveness has received little attention. Given the multilateral policy drive to promote female literacy in recent decades, it is relevant to examine whether female human capital formation improves the effectiveness of remittances in terms of its impact on per capita income. Using a panel of 103 developing economies over the period 1970–2012, this paper attempts to answer this question empirically. The paper finds that female human capital affects the remittance-growth relationship differently according to whether it is the primary, secondary or tertiary level of human capital. Our estimates of the marginal impacts of remittances show that while higher levels of skilled human capital (secondary and tertiary enrolments) enhance the marginal impact of remittances on per capita income, low-skilled human capital (primary enrolments) fails to do so. Our conclusion stresses the need to encourage female human capital beyond the promotion of literacy rates in developing countries. [ABSTRACT FROM PUBLISHER]

Inspired by the first evaluation processes on how nations and regions have interpreted and specified the smart specialization strategy, this paper applies the lens of evolutionary economic theory to interpret the causes of the lock-in mechanisms in learning processes that seem to prevail in most regions. The paper elaborates the notion of regional learning paradigms and trajectories to interpret evolution in the way innovation occurs in regions. By identifying the sources of path-dependence in regional learning paradigms and trajectories, the paper explains the difficulties faced by regions in ‘jumping’ on a new paradigm/trajectory and initiating an explorative entrepreneurial discovery process. Once the reasons for lock-in are highlighted, the paper advances some suggestions on possible adjustments to the design of a smart specialization strategy. [ABSTRACT FROM PUBLISHER]

Purpose The purpose of this paper is twofold: to investigate the existence of different degrees of returns to scale in low-tech and high-tech manufacturing industries; and to examine whether the degrees of returns to scale change through time.Design/methodology/approach The empirical investigation implemented in the paper uses data from the EU KLEMS Database, covering a sample of 12 manufacturing industries in 11 OECD countries over the period 1976-2006. The investigation employed two different estimation methods: instrumental variables and system GMM. The robustness of the results was assessed by employing two different specifications of Kaldor-Verdoorn’s Law, by using lags and five-year averages to smooth business-cycle fluctuations, and by dividing the sample into two time periods.Findings The results reported in the paper provide strong evidence in support of the hypothesis of substantial increasing returns to scale in manufacturing. The investigation suggests that high-tech manufacturing industries exhibit larger degrees of returns to scale than low-tech manufacturing industries. Finally, the analysis revealed also that the magnitude of the returns to scale in manufacturing have increased in the last decades, driven by increases in the magnitude of returns to scale observed in high-tech industries.Originality/value No previous work has assessed the hypothesis that increasing returns to scale vary according to the technological content of industries. Moreover, no previous work has used system GMM or data from EU KLEMS to test Kaldor-Verdoorn’s Law. Most importantly, the findings of the paper present new evidence on the degree of returns to scale in high-tech and low-tech manufacturing industries. [ABSTRACT FROM AUTHOR]

Measuring sustainable development requires multidimensional attitude as the process is characterised by compound relationships between social, economic and environmental spheres. The paper aims at assessing selected effects of sectoral employment for the three dimensions of developmental processes. We examine employment efficiency in 25 EU countries concerning four sectors: agriculture, industry, market services, and non-market services. We use a non-radial DEA input-oriented model, which allows the assessment of the general efficiency of labour resources, as well as the evaluation of in-depth efficiency in the three dimensions of the economies under study. The novelty of the research lays in both multidimensional attitudes to the effects of labour engagement as well as intersectoral comparisons of the employment results. We categorise the EU countries according to efficiency in gaining the sustainable development and its three dimensions. Generally, the "old" EU members are of higher efficiency than the "new" states. Our research shows desirable movements of labour force that are necessary to improve efficiency and thus offers some advice for a rational development policy. It appears that it is necessary to limit agricultural employment in favour of non-market and market services and, to a lower extent, of industry. We conclude that the structural changes in employment specified by patterns observed in the highly developed EU countries are favourable for realising the aims of sustainable development. [ABSTRACT FROM AUTHOR]

This paper reviews the literature in the intersection of renewable energies and politics adopting a multidisciplinary social sciences perspective. We begin by analyzing the recent literature dealing with renewable energies and politics, illustrating the analysis with bibliometric data. The search protocol revealed 853 contributions dated from 1998. Then we focus on the 186 contributions approached from a social sciences perspective, establishing a taxonomy to classify the contributions into the main issues covered. We identify contributions dealing with governance, with public acceptance, with markets and prices, and with political or policy determinants of renewable energies. In an empirical application we show that more democratic countries tend to invest more in renewable energies, taking into account other determinants (e.g. income, energy dependence, pollution emissions) of this investment. [ABSTRACT FROM AUTHOR]

The objective of this paper is to evaluate the role of the manufacturing sector in the development process based on two laws of Kaldor. The first law states that the higher the growth of the manufacturing output, the more significant is the growth rate of the economy's product as a whole. The second law, known as the Kaldor–Verdoorn law, establishes a deterministic relation between the growth of manufacturing productivity and manufacturing output growth. This paper begins showing stylized facts of the production and exports of manufactured goods to show that these remain related to the income level of countries in recent years. Thereafter, a theoretical reflection on the importance of manufacturing in the process of economic development is performed, associating it to the manufacturing exports and to the exchange rate regime. Then, the paper performs a Kaldorian model systematization to assess the importance of manufacturing and its exports on the economic development. Econometric tests are performed based on a dynamic panel data for a sample of 63 middle and high-income countries, excluding major exporters of fuels for the period between 1990 and 2011, to analyze whether there is any difference in growth dynamics between these two groups. Estimates attest the occurrence of the two Kaldor laws, demonstrating that output growth in the manufacturing sector is essential to increasing economic growth and productivity, particularly in middle-income economies. The results also confirm that manufacturing exports are relevant to the development process and that the exchange rate contributes to this process in middle-income countries. [ABSTRACT FROM AUTHOR]

This paper analyses patterns in regional inequality within and between Malaysia's 14 states, drawing upon estimates of Kuznets/Williamson curves, σ- and β-convergence and spatial spillovers. The path of regional inequality contradicts Kuznets predictions. Regional inequality initially fell but has subsequently risen with further economic development. While Malaysian governments have been successful at reducing poverty, they have been unable to curtail regional inequality in the long run. [ABSTRACT FROM AUTHOR]

This article documents terrain ruggedness as an underlying cause of lack of state capacity. The paper contends that rugged topography poses significant costs to cooperation among the constituent groups within the state. This problem then translates into inability to commit to policies and under-provision of public goods, leading to such outcomes as poor protection of rule of law, limited tax revenue, civil violence, and ultimately, a weak state apparatus. Using several indicators capturing different dimensions of state capacity, the paper econometrically tests its argument in a sample of 187 independent countries and finds robust and clear evidence in favor of its reasoning. Further, the paper documents that delayed urbanization constitutes an important transmission mechanism for the significant role of terrain ruggedness in reduced state capacity. [ABSTRACT FROM AUTHOR]

The focus of this paper is the simultaneous growth of a system of spatial units with India the case for empirical testing. The framework used to model the multiregional dynamics is consistent with spatial theory and spatial econometrics. It builds on the work by Arbia and Paelinck, which proposes a model based on the classical Lotka-Volterra predator-prey system to consider potential convergence dynamics of regions. The paper proposes a different method to estimate dynamic interdependencies and in its empirical exercise distinguishes between dynamics that may arise from geographic proximity and those that may arise from equivalent structures. Resumen Este artículo concentra su atención en el crecimiento simultáneo de un sistema de unidades espaciales con la India como caso para estudio empírico. El marco utilizado para modelizar las dinámicas multirregionales está en consonancia con la teoría espacial y la econometría espacial. Se basa en el trabajo de Arbia y Paelinck, que propone un modelo basado en el sistema clásico de predador-presa de Lotka-Volterra para considerar posibles dinámicas de convergencia regionales. El artículo propone un método diferente para estimar interdependencias dinámicas y en su desarrollo empírico distingue entre aquellas dinámicas que pueden resultar de la proximidad geográfica y las que pueden resultar de estructuras equivalentes. [ABSTRACT FROM AUTHOR]

Recent Conferences of the UNFCCC Parties (COP) emphasized international technology funding as a means of achieving carbon emissions reductions in developing countries. Such funds are now being realized. Nonetheless, this paper is possibly the first theory-based discussion of international technology funding. It sets up an intuitive Ramsey model of a developing economy including imports of capital and embodied technologies from abroad. Going beyond a scale, technique and composition effect, it disentangles five relevant effects and four technology-related policy levers and their interactions. It then discusses their role in designing an international technology fund with the aim to reduce emissions efficiently. The paper concludes that it is inefficient to address emissions reductions independent of the technological absorptive capacity and other aspects of economic development. Therefore, it opts for an integrated technology funding scheme. [ABSTRACT FROM AUTHOR]

This paper examines the impact of military expenditure on economic growth on a large balanced panel, using an exogenous growth model and dynamic panel data methods for 106 countries over the period 1988–2010. A major focus of the paper is to consider the possibility group heterogeneity and non-linearity. Having estimated the model for all of the countries in the panel and finding that military burden has a negative effect on growth in the short and long run, the panel is broken down into various groupings based upon a range of potentially relevant factors, and the robustness of the results is evaluated. The factors considered are different levels of income, conflict experience, natural resources abundance, openness and aid. The estimates for the different groups are remarkably consistent with those for the whole panel, providing strong support for the argument that military spending has adverse effects on growth. There are, however, some intriguing results that suggest that for certain types of countries military spending has no significant effect on growth. [ABSTRACT FROM PUBLISHER]

Pervasive credit constraints have been seen as major sources of slow growth in developing economies. This paper clarifies a mechanism through which an inefficient financial system can reduce productivity growth. Using a two-sector model, second, we examine the implications for employment and the distribution of income. Both classical and Keynesian versions of the model are considered; saving decisions are central in the classical version while firms’ investment and pricing decisions take center stage in the Keynesian version. We find that, although boosting the asymptotic rate of growth, a relaxation of credit constraints may reduce the share of the formal sector, increase inequality and underemployment, and have little or no effect on the medium-run rate of growth. [ABSTRACT FROM AUTHOR]

This paper explores the asymmetric effect of real exchange rate changes on poverty through the remittance channel for a panel of 99 countries, spanning the period 1980–2015. Considering a threshold partial adjustment modelling approach, the results document that real exchange rate depreciations exert a stronger positive effect on poverty through remittances. The results are expected to be of substantial importance in the case of emerging and developing countries in designing exchange rate and inflation policies that affect the poverty levels of their population through the mechanism of remittances. [ABSTRACT FROM AUTHOR]

Changing population age structures are shaping the trajectories of development in many countries, bringing opportunities and challenges. While aging has been a matter of concern for upper-middle and high-income economies, rapid population growth is set to continue in the poorest countries over the coming decades. At the same time, these countries will see sustained increases in the working-age shares of their population, and these shifts have the potential to boost growth and reduce poverty. This paper describes the main mechanisms through which demographic change may affect economic outcomes, and estimates the association between changes in the share of working-age population with per capita growth and poverty rate. An increase in the working-age population share and a reduction in the child dependency ratio are found to be associated with an increase in gross domestic product per capita growth, with similarly positive effects on poverty reduction. [ABSTRACT FROM AUTHOR]

We explore the relationship between natural disasters and income inequality in Sri Lanka as the first study of this nature for the country. The analysis uses a unique panel data set constructed for the purpose of this paper. It contains district inequality measures based on household income reported in six waves of the Household Income and Expenditure Survey of Sri Lanka during the period between 1990 and 2013, data on disaster affected population and other economic and social indicators. Employing a panel fixed effects estimator, we find that contemporaneous natural disasters and their immediate lags significantly and substantially decrease inequality in per adult equivalent household income as measured by the Theil index. Findings are robust across various inequality metrics, sub-samples and alternative estimators such as Ordinary Least Squares and System GMM. However, natural disasters do not affect household expenditure inequality. Either households behave as if they have a permanent income or all households reduce their expenditure proportionately irrespective of their income level in responding to natural disasters. Natural disasters decrease non-seasonal agricultural and non-agricultural income inequality but increase seasonal agricultural income inequality. Income of richer households is mainly derived from non-agricultural sources such as manufacturing and business activities and non-seasonal agricultural activities. Poorer households have a higher share of agricultural income. [ABSTRACT FROM AUTHOR]

This paper empirically examines the effects of export product diversification on overall export quality in a panel data set of 115 countries from 1970 to 2010. It uses the data sets of the overall export quality and three export diversification measures of the International Monetary Fund: the extensive margin (variation in the number of new products exported), the intensive margin (variation in export values among existing exports), and the overall (Theil) index. It finds that export quality has only been increasing with a higher variation in export values among existing exports in low- and lower-middle-income countries. It also observes that export quality has been increasing with both a higher variation in export values among existing exports and new products exported in upper-middle- and high-income countries. The results are robust to the changing measures of controls in the benchmark model, the inclusion of many other controls; i.e. various measures of globalization, country size, factor endowments, macroeconomic stance, etc., and the exclusion of outliers. [ABSTRACT FROM AUTHOR]

This paper studies the impact of political reservation for women on political participation and empowerment of women living in areas where gender quotas are mandated. Following the 1992 passage of the 73rd Constitutional Amendment in India, one-third of village government head positions are reserved for women. Utilizing the random allocation of reserved seats and a unique individual level data-set which captures a large set of measures on political participation of women, we find that women residing in areas with a female village government head show significantly higher levels of political participation and empowerment. Overall, the observed effect can be entirely attributed to improved outcomes of women from a lower socio-economic strata, while no effect is found for economically better-off women. The results suggest that the imposed gender quotas are an effective means of overcoming inequalities and contributed to giving disadvantaged women more voice and opportunity for political empowerment. We further investigate the role that the level of women’s political participation plays on the type and quality of public services delivered. Our results indicate that the level of women’s political participation and empowerment is an important channel through which public service delivery is influenced. [ABSTRACT FROM PUBLISHER]

This paper examines how the relative shares of public and private health expenditures impact income inequality. We study a two period overlapping generation's growth model in which longevity is determined by both private and public health expenditure and human capital is the engine of growth. Increased investment in health, reduces mortality, raises return to education and affects income inequality. In such a framework we show that the cross-section earnings inequality is non-decreasing in the private share of health expenditure. We test this prediction empirically using a variable that proxies for the relative intensity of investments (private versus public) using vaccination data from the National Sample Survey Organization for 76 regions in India in the year 1986-87. We link this with region-specific expenditure inequality data for the period 1987-2012. Our empirical findings, though focused on a specific health investment (vaccines), suggest that an increase in the share of the privately provided health care results in higher inequality. [ABSTRACT FROM AUTHOR]

After the North Atlantic Financial Crisis, the International Monetary Fund (IMF) shifted towards a greater acceptance of capital controls (what it calls capital flow management measures) for regulating international capital flows with the publication of its “New” Institutional View. This begs the question of what such a change means for developing economies; specifically, whether the new framework addresses the needs they have for producing financial stability. That is the topic examined in this paper. [ABSTRACT FROM AUTHOR]

This paper analyzes how transboundary pollution caused by the pursuit of economic growth in developing countries affects the environmental conditions and life expectancy in these countries and in neighboring developed countries. We develop an overlapping generations (OLGs) model, which considers the environmental interactions between two regions representing the developed and developing countries. We consider two models that differ in their environmental interactions: one in which the two regions share an environment and the other in which they do not. By comparing the environmental qualities of the two models’ steady states, we show that the two regions sharing an environment may enter a trap characterized by both lower environmental quality and shorter life expectancy due to a free rider problem. [ABSTRACT FROM PUBLISHER]

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies. [ABSTRACT FROM AUTHOR]

The paper discusses the relationship between industrial development and structural change in the Age of globalization. It sets within the same theoretical framework the fact that both the sectoral concentration of manufacturing activities and the internal structure of the whole economy do change in the course of industrial development, and shows that the speed of such transformations depends upon the time at which industrial development has taken place. In particular, for late industrializing countries the intra- and inter-sectoral structural adjustments have been significantly faster as compared to those experienced by nations that built their manufacturing base in earlier times. These results have strong implications for the current debate on early deindustrialization. [ABSTRACT FROM AUTHOR]

The present paper examines the directional causality between export diversification and real exchange rate in the middle-income countries of Asia and Latin America over the period from 1995 to 2013. Additionally, we investigate asymmetries in the causality issue by examining the direction across trading partners. Our empirical results show that there is a two-way causality between the two variables when we look at the sample as a whole. A causal link running from the real exchange rate to export diversification is consistent with the standard literature but it is not systematic at all. The reverse causation is very appealing and challenges the standard argument on exchange rate determination. When the causality issue is investigated by treating export markets differently, our findings at the aggregate level are confirmed in exports destined for the advanced countries. The analysis for ‘South-South’ trade only shows a unidirectional link from the real exchange rate to changes in export diversification. The same tests performed at the individual countries level reveal a heterogeneous causality across trading partners. [ABSTRACT FROM PUBLISHER]

The effects of military spending has on the economy continues to be a subject of considerable debate, with a lack of consensus in the literature. This paper takes advantage of the Stockholm International Peace Research Institute extended data-set to contribute to the debate using empirical methods made available, or more applicable, by the extra observations. It constructs a large panel of countries for the period 1970–2014 to explore the long-run equilibrium relationship between military spending and economic growth, applies the more flexible pooled mean group estimator, and compares the results with the more restrictive dynamic fixed effect method used in earlier influential studies. It also compares results from different time and country samples. Across the specifications it finds a significant and persistent negative effect of military burden on economic growth that is robust across different country groups, with the largest impact being for OECD countries. [ABSTRACT FROM AUTHOR]

This paper uses a formal model to analyze the effects of political military competition among states on the size and composition of state. Great economies of scale in warfare, even distribution of military capability among contestants and greater value of contested resources generate higher level of military capacity and growth of government. If there is decreasing return to scale in state revenue generating function and provision of public intermediate inputs, then there will be an increasing size of civilian public sector relative to that of military. The paper finally studies how waves of military revolutions affected international political military competition and the size and composition of government in history. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to investigate whether the proposed eco currency union has sufficient business cycle synchronization among its members to avoid problems such as those experienced in the last several years by countries in the eurozone. This monetary union would potentially include 18 countries – Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Republic of the Congo, Cote d’Ivoire, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Mali, Niger, Nigeria, Senegal and Togo – which collectively have a GDP of over 744 billion dollars and a population of over 300 million people.Design/methodology/approach The authors will apply some recently created econometric tools that were developed specifically to investigate business cycle synchronization in the eurozone. These tools – denoted synchronicity and similarity – overcome some of the limitations of previous studies which have used vector autoregressions and suffered simultaneity bias as a result.Findings The different measures employed suggest that the potential members of the eco exhibit a very low level of synchronization. Nigeria in particular, which is heavily dependent on oil, as are some, but not all potential members, would be the largest member, and exhibits a very low level of synchronization with other prospective eco member nations. Finally, preliminary evidence from several countries which have joined the existing African currency unions does not indicate that the act of joining a currency union improves synchronization, and this result contradicts the “endogenous optimal currency area” hypothesis.Research limitations/implications Like previous studies on the topic, the authors rely on the available data. The number of observations is more limited than would be optimal.Practical implications The results would strongly caution against the creation of the eco currency union, as members appear even less ready for monetary integration than countries in the eurozone did.Originality/value This is the first study to apply the synchronicity and similarity tools to the prospective West African eco nations. [ABSTRACT FROM AUTHOR]

This paper analyses the distributive impacts of internal violent conflicts, in contrast to previous literature which has focused on the effects of inequality on conflict. We use cross-country panel data for the time period 1960–2014 to estimate war-related changes in income inequality. Our results indicate rising levels of inequality during war and especially in the early period of post-war reconstruction. The return of inequality to pre-war levels may take up to four decades after the end of conflict. However, we find that this rise in income inequality is not permanent. While inequality peaks around 5 years after the end of a conflict, it declines again to pre-war levels within the end of the first post-war period. Lagged effects of conflict and only subsequent adjustments of redistributive policies in the period of post-war reconstruction seem to be valid explanations for these patterns of inequality. A series of alternative specifications confirms the main findings of the analysis. [ABSTRACT FROM PUBLISHER]

Mexico, as other Latin American countries, undertook far-reaching economic reforms in the 1980s and 1990s in a wide array of areas. Over the past three decades, the Mexican economy has gone through a structural change and experienced a successful insertion into global markets. Yet productivity growth has been modest, leading to low and volatile economic growth. To examine the weak association between structural change and productivity growth, two features are studied: inter- and intra-industry transformations, and the contribution of production factors to value added growth. The paper shows that despite a significant reallocation of hours worked across industries, its aggregate impact has been hindered by the prevalence of flows from sectors with high labor productivity growth towards those with lower or declining productivity growth. In addition, highly qualified production factors (both labor and capital) have not showed a significant contribution to value added growth. [ABSTRACT FROM AUTHOR]

This paper builds a two-country, two-sector (manufacturing and agriculture), semi-endogenous growth model and investigates the relationship between trade patterns and the growth rate of per capita real consumption. Under free trade, if the home country produces both goods and the foreign country specializes in agriculture, then the per capita growth rates of the home country and foreign country are equalized. By contrast, if the home country specializes in manufacturing and the foreign country specializes in agriculture, then the per capita growth rate of the home country is higher than that of the foreign country. [ABSTRACT FROM AUTHOR]

As the process of globalization has gained momentum in the past few decades, so too has interest in the effects of globalization on various socioeconomic outcomes grown. In this paper, I investigate the relationship between globalization and primary school enrollment. Both the economic globalization and social globalization measures from the KOF Index of Globalization are utilized in the analysis in order to capture the broad nature of globalization. The results of the panel data analysis indicate that there is a weak relationship between economic globalization and primary school enrollment, whereas the relationship between social globalization and primary school enrollment is both robust and highly significant. Examining the data by groups of countries indicates that relationship between economic globalization and school enrollment is positive and significant in Latin America and the Caribbean and in Asia, while it is weakly negative in Eastern Europe. The positive relationship between social globalization and school enrollment on the other hand is driven by countries in Latin America and the Caribbean and the Middle East and Africa. [ABSTRACT FROM PUBLISHER]

In this paper, we show that it may be optimal for individuals to educate more and retire earlier when life expectancy increases. This result reconciles the findings of Hazan (Econometrica 77:1829-1863, ) with theory. Further, the paper contributes to a better understanding of the conflicting empirical findings on the causal effect on income per capita from increased life expectancy. [ABSTRACT FROM AUTHOR]

Abstract: This paper contributes to the debate on the relationship between human capital, institutions, and economic growth. The paper first develops a micro-foundation model linking institutions to human capital. The advantage of our modeling strategy is that the human capital accumulation function is derived from an endogenous process. The theoretical model shows that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path. The paper uses cross-country panel data from 1965 to 2005 to test some of the model''s propositions and finds that deep structures or structural institutions – which are very persistent and rooted on the historical development path of an economy – affect long-term economic performance, while political institutions are uncorrelated with productivity and long-term economic growth. The empirical estimates also show that growth of physical and human capital – instead of levels – determines long-run economic growth. [Copyright &y& Elsevier]

In this paper, I explore the politically contested association between the degree of capitalism, captured by measures of economic freedom, and the risk and characteristics of economic crises. After offering some brief theoretical considerations, I estimate the effects of economic freedom on crisis risk in the post-Cold War period 1993–2010. I further estimate the effects on the duration, peak-to-trough GDP ratios and recovery times of 212 crises across 175 countries within this period. Estimates suggest that economic freedom is robustly associated with smaller peak-to-trough ratios and shorter recovery time. These effects are driven by regulatory components of the economic freedom index. [ABSTRACT FROM AUTHOR]

This paper compares alternative wealth estimates reported by the World Bank and in the Inclusive Wealth Reports. Although theoretical limitations and shortcomings are widely acknowledged in the literature, the extent to which the alternative approaches to wealth accounting matter empirically is not well known. Comparing the alternative data in levels, shares, growth rates, and monetary sustainability indices derived from them, major differences emerge between OECD and non-OECD countries. For the former, the alternative wealth estimates seem complementary, but only if a key assumption made in the derivation of inclusive wealth is violated. For the latter, the data seem much less useful. For example, depending on which data source is used, for the group of low income countries the share of natural capital in total wealth is either 36.8% or 60.4%, suggesting that extreme care must be taken if the composition of wealth were to be used to inform policy-making. Neither wealth data set provides a ‘definite guide’ to economic sustainability, but a combination of indices derived from both might be useful in a holistic assessment of sustainability. [ABSTRACT FROM AUTHOR]

This paper analyses long range fractional dependence of China pollution in four major cities, namely Beijing, Shanghai, Guangzhou and Shenzhen from September 28 of 2013 to December 12 of 2015. Unit roots hypotheses are tested by using fractional integration methods using both uncorrelated and autocorrelated errors. The results reveal that the pollution is persistent, meaning that it will continue until strong anti-pollution measures are adopted. Policy implication is derived. [ABSTRACT FROM AUTHOR]

Abstract: This paper develops a two-sector model that considers Baumol''s service paradox. The paper simultaneously incorporates two ideas about technological progress in the model: (1) the consumption of services contributes to human capital accumulation and (2) the production of manufacturing leads to technological progress due to learning-by-doing. Accordingly, productivity growth in both services and manufacturing is endogenously determined. We show that initially, a shift in the employment share toward the services sector decreases the per capita real GDP growth rate, but at some point in time, the shift begins to increase the growth rate. Therefore, we observe an endogenous phase switch from a phase where the employment shift toward services depresses the economy to another where the employment shift promotes the economy. [Copyright &y& Elsevier]