Search

This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS 3 level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth - but not on convergence - which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables. Resumen Este artículo estima el impacto de la inversión pública en el crecimiento económico regional y la convergencia a nivel NUTS 3 en Grecia. Haciendo uso de una nueva base de datos de gasto público por región para el periodo 1978-2007, se propone un modelo que identifica no solamente el impacto de la inversión pública en las prefecturas griegas, sino también los efectos de spillover relacionados con la existencia de externalidades procedentes de regiones vecinas. Los resultados apuntan a un impacto positivo a largo plazo de la inversión pública per cápita en el crecimiento económico regional - pero no en la convergencia - el cual genera unos efectos de spillover considerables. Sin embargo, los retornos varían de acuerdo con los diferentes tipos de inversión pública, siendo la educación y los spillovers de infraestructura los de mayor impacto. En general, las externalidades de inversión pública parecen tener una mayor relevancia para el crecimiento regional que la inversión pública directa en cada región. Para terminar, el impacto de los diferentes tipos de inversión pública en Grecia se ve influido por sus políticas y otros factores políticos, pero el efecto de las políticas desaparece una vez que se controlan las variables espacialmente-invariantes de tipo político ligadas a un periodo específico. [ABSTRACT FROM AUTHOR]

This paper surveys the convergence literature. It begins by laying out different definitions of convergence and by showing the link between the convergence issue and the growth theory debate. The paper then follows the convergence research conducted along four different approaches, namely the cross-section, panel, time-series, and distribution approaches. The paper shows the association of these methodological approaches with various definitions of convergence and highlights the connections among the convergence results. It shows that, despite some impressions to the contrary, there is considerable agreement among the results. Although the convergence research might not have solved the growth debate entirely, it has helped both the neoclassical and the new growth theories to adapt and evolve. The research on convergence has established new stylized facts regarding cross-country growth regularities. It has brought to fore the existence of large technological and institutional differences across countries and has given rise to new methodologies for quantifying and analyzing these differences. This is providing a new information base for analysis of technological and institutional diffusion and for further development of growth theory in general. [ABSTRACT FROM AUTHOR]

We compare a set of econometric studies that measure the effect of net internal migration in neoclassical models of long-run real income convergence and derive 67 comparable effect sizes. The precision-weighted estimate of beta convergence is about 2.7 per cent. An increase of one percentage point in the net migration rate of a region increases the per capita income growth rate in that region on average by about 0.1 percentage points. Introducing a net migration variable in a growth regression increases the estimate of beta convergence slightly. Studies that use panel models or IV estimation methods yield smaller coefficients of net migration in growth regressions, while the opposite holds for regressions controlling for high-skilled migration. [ABSTRACT FROM AUTHOR]

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]

Based on Aghion et al. (), this article provides new insights regarding whether financial development can affect economic growth non-linearly by adopting the concept of threshold effects. The empirical approach adopted in this article allows for the finance-growth relationship to be piecewise linear with a set of indicators including access to finance acting as a regime-switching trigger. Using cross-country observations from 144 countries stretching from 1985 to 2009, strong evidence of threshold effects in finance-growth link is found. It is suggested that financial development in general, and access to finance in particular, is among the important forces contributing to cross-country (non)-convergences in growth rates. [ABSTRACT FROM AUTHOR]

As well‐known, the canonical Neo‐Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem—making the normal rate of utilization an endogenous variable that converges to the actual utilization rate—justifying it with new, micro‐founded premises. We argue that these new justifications for the convergence of normal to actual utilization do not stand closer scrutiny. First, the proposed microeconomic model relies on various restrictive assumptions, some of which are mutually inconsistent. Second, the derivation of the macroeconomic adjustment mechanism from the microeconomic analysis involves a logical leap that can be justified only by a very arbitrary assumption with little economic justification. Finally, we discuss the way in which this mechanism has been incorporated into the Neo‐Kaleckian growth model by proposers of this approach. We show that, even if one puts aside, for the sake of argument, the first two points, the existence of autonomous components of demand is sufficient to invalidate the resulting macroeconomic model. [ABSTRACT FROM AUTHOR]