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This paper assesses the relationship between trade openness and economic growth in Africa by accounting for the heterogeneity of African countries. In addition, the paper contributes to the literature on trade openness and economic growth nexus by applying the instrumental variable panel smooth transition regression, a methodology that accounts for nonlinearity and endogeneity in the relationship between the two variables. The results of the empirical analysis reveal that the investment ratio is a channel through which trade openness affects economic growth in the African continent. In addition, the relationship between trade openness and economic growth varies according to the degree of a country's development in Africa. The study finds a negative relationship between openness and growth in low‐income countries. Conversely, for upper‐income countries, the coefficients of trade indicators are positive and statistically significant. The results indicate that African countries are not homogeneous, especially concerning trade openness and economic growth nexus. [ABSTRACT FROM AUTHOR]

This paper assesses the stabilization properties of fixed versus flexible exchange rate regimes and aims to answer this research question: Does greater exchange rate flexibility help an economy's adjustment to weather shocks? To address this question, the impact of weather shocks on real per capita GDP growth is quantified under the two alternative exchange rate regimes. We find that although weather shocks are generally detrimental to per capita income growth, the impact is less severe under flexible exchange rate regimes. Moreover, the medium‐term adverse growth impact of a 1°C increase in temperature under a pegged regime is about −1.4 percentage points on average, while under a flexible regime, the impact is less than one half that amount (−0.6 percentage point). This finding bolsters the idea that exchange rate flexibility not only helps mitigate the initial impact of the shock but also promotes a faster recovery. Importantly, there is evidence of nonlinear effects, whereby greater exchange rate flexibility can be more beneficial for EMDCs with hotter climates. In terms of mechanisms, our findings suggest that the depreciation of the nominal exchange rate under a flexible regime supports real export growth. In contrast to standard theoretical predictions, we find that countercyclical fiscal policy may not be effective under pegged regimes amid high debt, highlighting the importance of the policy mix and precautionary (fiscal) buffers. [ABSTRACT FROM AUTHOR]

Vietnam's long‐term economic growth comparisons with ASEAN nations have been striking since its 1986's economic reforms. Such key factors as economic liberalization, a young population and low‐cost labor, knowledge diffusion, and the manufacturing sector have driven Vietnam's growth. Until 2023, Vietnam has the potential to capitalize on several favorable circumstances, including the diversion of trade and investment from China, the growth of the middle class, and the global digital transformation. Nevertheless, Vietnam's economic growth will confront various obstacles and a declining trajectory that predates the COVID pandemic. To circumvent the risk of falling into the middle‐income trap, this paper proposes "active" economic integration, labor productivity, innovation and research and development, the services sector, and green growth as new growth drivers for Vietnam till 2030. Considering the many policy ideas put forth by the Vietnamese government and the World Bank, this paper presents several distinct recommendations on institution reform and human capital accumulation. [ABSTRACT FROM AUTHOR]

This paper investigates the nexus between financial development (FD), institutions, and economic growth using a spatial autoregressive model on a panel dataset of 82 countries from 1990 to 2019. We measure the dependence between countries through geographical and institutional proximity. The latter has not been widely explored in the finance‐growth literature. The concept of institutional proximity proposes that countries with similar institutions will have similar levels of economic growth and larger spillovers once spatial effects of FD and institutional quality are controlled. Overall, our findings support this proposition, as FD and political institutions are shown to have significant positive effects on growth. However, the growth‐effect of FD becomes negative beyond a certain threshold. We also find significant positive spatial lag growth in the model, indicating the presence of indirect spillover effects of FD and institutions on the growth of neighbouring countries in both geographical and institutional spheres. Furthermore, the spatial growth model with the institutional proximity matrix exhibits a higher rate of convergence and larger size of spillover than the model with geographical proximity. These findings are robust to various model specifications, and the paper concludes with some policy recommendations. [ABSTRACT FROM AUTHOR]

While the effect of higher public debt levels on economic growth has received much attention, the literature partly points to contradictory results. This paper applies meta‐regression methods to 816 estimates from 47 primary studies. The unweighted mean of the reported results suggests that a 10 percentage points increase in public‐debt‐to‐GDP is associated with a decline in annual growth rates by 0.14 percentage points, with a 95% confidence interval from 0.09 to 0.19 percentage points. However, we cannot reject a zero effect after correcting for publication bias. Furthermore, the meta‐regression analysis shows that tackling endogeneity between public debt and growth leads to less adverse effects of public debt. In testing for nonlinear effects, our results do not point to a uniform public‐debt‐to‐GDP threshold beyond which growth slows. Threshold estimates are sensitive to data and econometric choices. These findings imply a lack of evidence of a consistently negative growth effect of higher public‐debt‐to‐GDP. The main policy implication is that there should be caution with regard to "one‐size‐fits‐all" fiscal policy prescriptions in dealing with higher public debt levels. [ABSTRACT FROM AUTHOR]

This paper explores the dynamic relationship between tourism and economic growth using panel data for 144 countries over the period 1995–2019. The study was carried out in two steps. First, the set of countries was classified by considering simultaneously two criteria, tourism and the economic development of the countries over time. Two classifications of homogeneous countries with four clusters each are obtained using a non‐parametric methodology and two tourism indicators. Second, the Granger causality was tested for each of the identified groups and the entire sample. The results determined that there were significant differences between clusters and that causality from tourism to economic growth could only be verified for the group of countries with low income and low tourism. This relationship was confirmed by estimating impulse response functions, which showed a positive response of economic growth to innovations in tourism. The tourism sector could, therefore, be a way out of poverty and generate development and prosperity in low‐income countries that are in the early stages of tourism development. [ABSTRACT FROM AUTHOR]

The paper argues that the dynamics of trade induced income convergence depend on the nature of bilateral trade between nations. To justify this argument, the paper presents a comprehensive approach that explicitly accounts for trade among OECD countries (north–north trade), trade between OECD and SSA countries (north–south trade) and trade among SSA countries (south–south trade). The approach also allows for the identification of the direct and indirect effects of bilateral trade on income convergence. The results show that bilateral trade among OECD countries accelerates income convergence both directly and indirectly. This result appears to be consistent with the new trade theories by Krugman, Journal of International Economics, 1979, 9, 469–479; Krugman, American Economic Review, 1980, 70, 950–959. and the intuitions of Heckscher, The effect of foreign trade on the distribution of income 1919, 1950, 1–32 and Ohlin, Interregional and international trade, 1933. The trade‐convergence relationship for OECD to SSA trade is the strongest both directly and indirectly. This is the empirical evidence that the nature of this bilateral trade, promotes one directional knowledge spillover from developed to developing countries, which enables developing countries to adopt new technologies and grow faster than their rich counterparts. However, bilateral trade among SSA countries does not have any significant effect on income convergence. [ABSTRACT FROM AUTHOR]

Against the backdrop of the current political developments in Central and Eastern European (CEE) countries, such as Ukraine, Poland, and Romania, the question arises as to the role played by economic transformation and the resulting innovation linkages in these countries over the last 20 years. The main purpose of this paper is to explore the impact of economic and institutional dimensions on the development of CEE countries, explicitly distinguishing between European Union (EU) members and non‐members, and thus reflecting the differences in institutions and path dependency. Furthermore, the paper contrasts the performance of CEE countries with that of Western European countries. To achieve these objectives, the impact of factors such as innovation, institutions, and political practices on the economic development of 37 European countries from 2000 until 2020 is followed using fixed effects regression and Ordinary least squares (OLS) regression. The results of the analysis show the importance of institutional factors such as low levels of corruption, political freedoms, and intellectual property. The effect of institutional variables was particularly pronounced in the case of non‐EU countries, which indicates the particular importance of the development of stable institutions for achieving higher levels of economic development for this category of countries. [ABSTRACT FROM AUTHOR]

A large volume of econometric literature has studied the effects of economic globalisation on economic growth around the world. Reported results, however, vary considerably, which makes it difficult to draw valid conclusions. This paper applies meta‐analysis and meta‐regression methods to a novel dataset consisting of 5542 estimates on globalisation–growth effects reported in 516 primary studies. We find evidence for publication selection bias in favour of positive growth effects of globalisation. After correcting for this bias, the size of the effect of economic globalisation on output growth is more than halved, but it remains positive. The growth‐promoting effect, however, is due to trade globalisation, as we cannot reject the hypothesis that the impact of financial globalisation on growth is, on average, zero. The meta‐regression results also reveal that the growth effects of economic globalisation have varied over time, and that education and institutions serve as significant moderator variables. [ABSTRACT FROM AUTHOR]

The dynamics of economic inequality and its relationship with economic growth in the preindustrial world is increasingly attracting the attention of both economists and economic historians. In this paper, we tackle this theme by introducing new estimates of the labor share in five major European countries (England, France, Holland, Spain, and Portugal) for the period 1250–1850. Our estimates are constructed using an innovative method based on the conversion of real wages in 2011 PPP $. Overall, we find a complex pattern of evolution of the labor share with major fluctuations. Furthermore, using the inequality possibility frontier (IPF) framework, our results suggest that preindustrial Europe was characterized by a negative relationship between the extraction ratio and GDP. [ABSTRACT FROM AUTHOR]

There has been ongoing interest in China's economic growth. What were the drivers of China's economic growth in past years? What policies were used to promote China's economic growth? Although different lenses may be used to understand and explain China's economic growth, this paper draws on historical, theoretical, and empirical perspectives to discuss the nexus between China's regional policies and economic growth. First, we review the evolution of China's regional policy and the policy's changing emphasis in different development stages, from balanced, unbalanced, and coordinated development to synergistic development. Then we construct a theoretical model to illustrate the impact of regional policy on the local economy and conduct an empirical examination with a case study of regional policy using regression discontinuity design. This paper analyzes the concept of regional policy and the underpinning logic of economic growth and presents practical approaches to formulate a better regional policy framework. [ABSTRACT FROM AUTHOR]

This paper surveys the literature on the relationship between finance and growth, from the initial simple correlation through debates on causality and channels of impact to the more recent threshold analysis. The gaps in the revisionism regarding the relationship between finance and growth are critically teased out, not least neglect of the effects of speculative finance in developing countries where a positive nexus continues to hold sway in the threshold analysis. The paper argues that the literature has focused on pursuit of a positive nexus, with inadequate attention to institutional context, which is prerequisite for enhancing a positive relationship. It has also narrowed drastically the complexity of cause and effect and ignored broader analytical approaches to the relationship between finance and growth. The classical political economy debate on finance productiveness is drawn upon, in which positive contribution is based on real output, as a critical point of departure for why greater emphasis ought to be placed on institutional context to enhance the contribution of finance to growth. [ABSTRACT FROM AUTHOR]

The number of holidays differs significantly across Indian states. Moreover, some of the governing political parties have been accused of using holidays as a tool either to mollify disgruntled workers or to woo voters before the state elections. In this context, this paper explores the relationship between the number of holidays and economic growth across 24 Indian states, spanning the period 2008–2016, by employing a panel model analysis. The paper presents evidence suggesting that holidays seem to affect growth negatively in the rich states but are inconsequential for the growth performance of the poor states. [ABSTRACT FROM AUTHOR]

Bank regulations affect the behaviour of credit and money creation; hence, they are essential for economic growth and stability. This paper develops an analytical model of the monetary circuit to show the macroeconomic effects of money creation under bank regulations. It describes the equilibrium in which banks create money in accordance with capital adequacy ratios or net stable funding ratios. This study reveals the equilibrium economic growth rate and debt level. In addition, this paper demonstrates how bank regulations influence firm capital structures, and the conditions for firms using debt and filing for bankruptcy. Results show that bank regulations can transfer risk from banks to firms. In fact, this study identifies a channel through which banks actively influence the macroeconomy through their money creation. [ABSTRACT FROM AUTHOR]

This paper examines the four‐way linkages between innovation, trade openness, financial development and economic growth using panel‐VAR approach for 11 European countries over the period 2001‐2016. Most importantly, the findings revealed that there is a unidirectional relationship between economic growth and financial development, between trade and economic growth and between innovation and financial development. The findings also revealed a negative relationship between innovation and economic growth and between trade and economic growth. The paper concludes that further regulation of financial systems and the quality of funding are important ingredients to foster economic development. The paper also concludes that country‐specific characteristics can play an important role in fostering innovation and productivity. Furthermore, policymakers should improve institutional quality and improve the regulatory environment in order to benefit more from trade openness. Also, policy makers need to use innovation incentives for local companies in order to counteract the negative effects induced by market opening. [ABSTRACT FROM AUTHOR]

Various types of international connectivity serve as channels for the transmission of knowledge, which, in turn, is critical for long‐run economic growth. However, how much knowledge is transmitted to a country is not only the result of the overall level of connectivity, but also to whom a country is connected. For example, being well connected to an economy with wide‐reaching global connections is likely to be a stronger conduit for knowledge transfers than being connected to an isolated economy. Likewise, connections are likely to complement each other. This wider definition of connectivity, referred to as multi‐dimensional connectivity, is explored in this study as it applies to Europe and Central Asia (ECA). This paper shows that multi‐dimensional connectivity is an economically and statistically important determinant of future economic growth. The paper further discusses the potential risks and transfer of shocks that can result from cross‐country economic connectivity. Furthermore, it provides some examples of how policy tools can be designed to leverage the benefits of connectivity channels and mitigate their risks. [ABSTRACT FROM AUTHOR]

This paper dealt with the regulatory and policy variables influencing Foreign Direct Investment (FDI) in South Africa. Since the advent of democracy 26 years ago, South Africa had its own share of benefits from democratic rule. This was the period of great success, and three free and fair elections were held without violence and intimidation. The South African government started using the "inflation targeting monetary policy framework" to have an environment where inflation will stabilise. Although in literature it is stated that many governments have adopted this policy in order to lure investors in through their attractive risk‐free returns in their investment portfolios. The paper used unobtrusive techniques to analyse secondary data. The South African investment climate remains faced with challenges, which curtail the full attainment of conditions conducive for quality FDI. When regulations are made less cumbersome, it becomes simpler for investment to flow into the country, and international and local entrepreneurs prosper as the ease of doing business improves. South Africa does not have a complex regulatory framework, but its challenges stem from a lack of regulatory transparency, which impeded investment. TISA the agency, which DTI created to reduce obstacles encountered in FDI offers foreign investors clarification on the regulatory and legal environment. Many countries have also cancelled their BITs with South Africa, including Ecuador, Bolivia, and Venezuela. South Africa's business environment and its investment climate are largely dependent on the events that occur in the political arena and the economic environment. [ABSTRACT FROM AUTHOR]

Services provided by nature and ecosystem capital are unpriced and their contributions cannot be observed through factor payments. Estimates of nature's gross domestic product contribution are thus based on bottom‐up extrapolations of local ecological valuations or various sectoral dependency assumptions. These estimates are hence partial and wide‐ranging. On the other hand, omission of nature and ecosystem capital in standard growth regressions potentially biases estimated returns to other factors of production. This paper incorporates various categories of natural capital and biodiversity into growth regressions, with annual data covering more than 100 economies over more than two decades. A range of econometric specifications are used, including fixed effect panel regressions, Arellano and Bond, and Pseudo Poisson Maximum Likelihood. The estimates point to natural capital, especially the narrower and specific ecosystem capital, having a sizeable positive elasticity of around one‐third of total gross fixed capital. Ecosystem capital is thus estimated to contribute around USD6–12 trillion (or 10–20 trillion in purchasing power parity terms) annually for the global economy. This estimated contribution is significantly higher than what is implied by existing stock valuations, underscoring the importance of ecosystem capital to sustainable growth. [ABSTRACT FROM AUTHOR]

This paper highlights the significance of nurturing and safeguarding minor crops as a means of achieving regional sustainable development, preserving biodiversity, and ensuring food security. Minor crops play a critical role in addressing various environmental challenges like climate change, biodiversity loss, desertification, and soil salinity. Simultaneously, they offer local farmers economic opportunities by providing income stability and resilience. To demonstrate the potential of minor crops in promoting sustainable development, a case study from Greece is presented, focusing on three crops: blackcurrant, rice, and sunflower, which bring substantial economic and environmental benefits to the region. The study assesses the economic and environmental impact of these crops across three different rural territories in Greece. Despite covering less than 4% of total agricultural land, these crops are predominantly grown in marginal, mountainous, and insular regions. By analyzing the farm‐level and broader economic effects, the study determines their potential for agricultural and regional development. The results indicate that these crops are more profitable and environmentally friendly compared to their counterparts in all three cases. Additionally, they make significant contributions to the regional economies relative to their cultivated land area, supporting economic growth while conserving and enhancing agricultural land. In conclusion, this article emphasizes the crucial need to promote the cultivation and preservation of minor crops to support sustainable development, biodiversity conservation, and regional economic growth. Policymakers and agricultural practitioners should prioritize the cultivation and preservation of regional minor crops to safeguard biodiversity at the regional level and at the same time sustainable regional development. [ABSTRACT FROM AUTHOR]

The economic impact of resource investments into higher education has been the focus of considerable research in recent years. Many contributions analyse the strength of the connection between economic development and higher education at the local level and the conditions which make certain systems more effective and efficient than others. In this paper, we provide a systematic bibliometric review of the available literature on the subject, various dimensions of this complex issue, constructing and analysing a map of variables used by selected researchers in the field. A summary of knowledge gaps, research limitations, topics explored and applied methods is provided to envisage future research in this field. [ABSTRACT FROM AUTHOR]

This paper aims to empirically explore the linkage between the cooperative sector and economic growth in Italian provinces (NUTS‐3), through a panel analysis covering the period between 2013 and 2019. We hypothesize that the cooperative sector can contribute to economic growth through its ability to generate social capital, thereby helping to mitigate market failures. The empirical analysis does not provide us with robust evidence of the positive connection between the cooperative sector as a whole and local economic growth. However, when we disaggregate the cooperative sector into ordinary and social cooperatives, we find intriguing results. Indeed, there is robust evidence of a negative relationship between the territorial distribution of ordinary cooperatives and economic growth, while for social cooperatives we find a positive relationship. We interpret these results as showing that the pursuit of general interest objectives, which allows the principle of mutuality to be extended to indirect forms of reciprocity, could make cooperative firms more effective in promoting the economic performance of territories. This is because they are more likely to generate bridging social capital that encourages the spread of generalized trust, a key factor in the advancement of modern market economies. [ABSTRACT FROM AUTHOR]

This paper introduces a dynamic model of economic growth and tourism when the environmental dimension is included in the decision‐making process of the agents. In this setup, the economy can be represented by a four‐dimensional dynamic system, which admits a set of four‐dimensional optimal trajectory. Using dynamic programming tools, we aim to study the economic behaviour of a touristic economy in which environmental dimension is considered as a system's component. It is shown that there is a unique non‐trivial equilibrium of all variables. The general results of the study indicate that the variable's dynamic relationships are complex and that the growth guided by the tourism development could exist under the presence of pollution as well as the dynamic of natural resources. The main policy implication of the results is that policy makers should control the main system's variables in order to stay in a desirable path. [ABSTRACT FROM AUTHOR]

The development of renewable energy is considered as an important step toward sustainable development. In sub‐Saharan African (SSA) countries, institutional quality can play an essential role in encouraging investment and implementation of policies favoring renewable energy. This paper examines the role of institutional quality in the effect of renewable energy on economic growth across 25 SSA countries from 2002 to 2018. The results from the dynamic panel threshold model reveal a significant threshold effect of institutional quality on the contribution of renewable energy to economic growth. While renewable energy consumption positively contributes to economic growth, its impact is notably amplified when the institutional quality index, set at 0.304, is above the threshold. Our findings remain robust when altering institutional quality indicators. In terms of economic implications, improving overall institutional quality by promoting good political, economic, and institutional governance could significantly increase the contribution of renewable energies to economic growth in SSA countries. [ABSTRACT FROM AUTHOR]

Over recent decades, the growing research on social diversity at country level has striven to explain several outcomes such as the differences in income across countries and the origins of civil conflicts. The literature employs a wide range of indices to measure social diversity that hinders the comparison of the results with respect to their effects on socio‐economic performance. This paper intends to disentangle such a variety of indices and their applications. To achieve this goal, we have collected the social diversity indices used in cross‐country studies, and have ascertained not only their similarities and differences, and the relationships between them, but also their main applications. Studies at country level have been selected that construct their own indices and that make their databases available. We show that the dimension and the index chosen to measure social diversity, the level of disaggregation of the social groups, and the geographical unit of analysis explain the tangle of indices and the mixed results achieved by the literature focused on socio‐economic outcomes of social diversity. This paper enables the suitable evaluation and comparison of the effects of social diversity and the selection of the appropriate index depending on the analysis to be carried out. [ABSTRACT FROM AUTHOR]

Cooperatives play important role in economic development via multiple channels, particularly, in developing countries' cases. Considering this fact, Nepal's constitution 2017 has incorporated the cooperative as one of the three pillars of her economy. This paper aims to analyze the role of cooperatives in the economic development of Nepal. For this, first, this paper documents the trend and pattern of Nepalese cooperatives' evolving structure, then moves to the econometric estimation to analyze the role of cooperatives in economic growth employing an advanced methodology. Looking at the properties of time series data for the period of 49 years from 1970 to 2018, the autoregressive distributed lag (ARDL) approach of cointegration is employed. The major finding is that the development of the cooperatives has a long‐run relationship with economic growth. However, the focus should be seen as on the involvement of many people in the cooperatives' activities rather than just on amassing the cooperatives' capital. The results also suggest that there is a need for the attention of policymakers so ensure that share capital contributes to economic growth. Therefore, the areas of priorities and scope of work of cooperatives need to be reconsidered when formulating new policies related to cooperatives. [ABSTRACT FROM AUTHOR]

New evidence on the relationships between economic freedoms and poverty traps is provided. Methodologically, a new way to classify countries into clusters is used, which stresses the relative position of economies with respect to each other. The paper investigates whether economic freedoms have any impact on shifts from one cluster to another, towards either better or worse situations. Moreover, it analyzes the contribution of economic freedoms to avoid falling into a poverty trap. The impacts of the five macro‐components of the index are studied separately. The results show that economic freedoms help economies to grow and to avoid poverty traps. [ABSTRACT FROM AUTHOR]

Foreign direct investment (FDI) has been widely acknowledged as a prominent vehicle to transfer technology, increase productivity and promote economic growth in recipient countries. However, FDI's contribution to economic growth can be more or less pronounced across countries conditioned on the development strategy adopted. This paper theoretically and empirically explores the impact of FDI inflows on economic growth when a comparative advantage development strategy is followed and when it is defied. By employing cross‐country panel data evidence for 72 countries over the 1971–2019 period, the results suggest that FDI is an essential driver for economic growth. However, the greater the level of defiance from comparative advantages estimated by the technology choice index (TCI), the lower the FDI inflow contributes to economic growth. The findings are more significant for the instrumental variable approach postulating the potential endogeneity of FDI and TCI and decomposed FDI by sector. [ABSTRACT FROM AUTHOR]

This paper develops a quality‐ladder growth model with elastic labor supply and distortionary taxes to analyze the effects of different subsidy instruments: subsidies to the production of final goods, subsidies to the purchase of intermediate goods, and subsidies to research and development (R&D). Moreover, the model is calibrated to the US data to compare the growth and welfare implications of these subsidies. The main results are as follows. First, we analytically show that an optimal coordination of all instruments attains the first‐best outcome. Second, in the calibrated economy, we numerically find that for the use of a single instrument, R&D subsidy is less growth‐enhancing and welfare‐improving than the other subsidies, whereas for the use of a mix of two instruments, subsidizing the production of final goods and the purchase of intermediate goods is most effective in promoting growth but least effective in raising welfare. [ABSTRACT FROM AUTHOR]

This paper aims to investigate the impact of the Covid‐19 pandemic on technological knowledge, wage inequality, and economic growth, by proposing a Direct‐Technical‐Change model with two economies, an Innovative and other Follower. Six hypotheses are considered: (i) decrease in the unskilled‐labor supply, (ii) decrease in the absolute advantage of unskilled labor, (iii) decrease in the intensity of the unskilled sector, (iv) hypothesis (i) combined with a lower decrease in the skilled‐labor supply, (v) hypothesis (ii) combined with a lower decrease in the absolute advantage of skilled labor, (vi) all the variations previously considered. By comparing the steady states before and after the shock, we find an increase in the technological‐knowledge bias that favors the skill‐intensive sector, which positively affects the skill premium. However, in hypotheses (i) and (iv), the decrease in the relative supply of unskilled labor dominates the effect on the skill premium, which thus decreases. The economic growth rate is always penalized except for hypothesis (iii). Hypotheses (ii) and (iv) are undesirable because they increase wage inequality and penalize economic growth. Governments should support innovative activity, the engine of technological‐knowledge progress, and thus economic growth, but with caution not to exacerbate the skill premium. [ABSTRACT FROM AUTHOR]

This study assesses whether the component of across‐sector labor and capital misallocation induced by real effective exchange rate (REER) misalignments in turn significantly affects economic development. REER imbalances are derived from a Behavioral Equilibrium Exchange Rate model; labor and capital misallocation is measured according to indicators in Ando and Nassar (IMF Working Papers, 2017, 17, 1) and Aoki (Journal of the Japanese and International Economies, 2012, 26, pp. 473–494), on a unique cross‐country cross‐sector national account dataset of 54 countries and 12 sectors over 1980–2015. Both REER over‐ and undervaluations are found to lead to rising across‐sector labor (but not capital) misallocation and, uniquely via this channel, significantly hamper real growth. [ABSTRACT FROM AUTHOR]

The object of this paper is to investigate the dynamic causal relationship between economic growth and renewable energy in Canada. The causal relationship is examined under the neoclassical production function framework. We employed a panel autoregressive distributed lag model controlling for different states of the economy by incorporating a dummy variable, which indicates the economic peak and trough. The data set consists of annual real GDP, capital formation, labor, and electricity generation by renewables for nine Canadian provinces covering from 1981 to 2015. The empirical results find that there is a unidirectional causality from renewable energy to economic growth in the long run. In the short run, a unidirectional causality going from renewable energy to economic growth only during the expansion period is observed. Our study suggests that renewable energy policies should be designed and implemented in a way that takes into account the nonlinear relationship between renewable energy and economic growth. This could involve promoting the development and deployment of renewable energy sources as part of their economic stimulus packages during economic upturns. [ABSTRACT FROM AUTHOR]

This article brings together some of the improvements to GDP estimates from the income side since the publication of Charles Feinstein's 1972 volume National income, expenditure and output of the United Kingdom, 1855–1965. Many of the improvements and refinements were made by Feinstein himself and this paper makes a start in bringing the different elements together, focusing chiefly on reconstructing the income‐based estimates for the period 1841–1920. The new data are then used to comment on several features of the late nineteenth‐century UK economy, considering both the trend and cyclical path of the economy. The new data, coupled with modern de‐trending methods, suggest that there was a long‐term slowing of the UK economy from the late nineteenth century, starting from the 1870s. To undertake the trend–cycle decomposition, we employ a wavelets methodology to describe the time–varying features of trends and cycles over this period. [ABSTRACT FROM AUTHOR]

The association between social trust and long‐run economic growth is well documented. However, which determinants of growth are affected by social trust remains an open question. This paper therefore explores to which extent social trust affects the rate of factor accumulation versus productivity improvements. Previous studies indicate that social trust could affect both the accumulation of physical and human capital and the rate of productivity increases. Existing literature also indicates that part of the growth effects may be due to how trust affects the quality of formal institutions. The effects of trust are estimated in a panel of 64 countries observed in 5‐year periods between 1977 and 2017, using growth accounting to separate patterns of growth. The results unequivocally show that social trust predominantly affects long‐run growth by affecting the growth of productivity and that only a small share of that effect runs through the effects of trust on formal institutions. [ABSTRACT FROM AUTHOR]

This paper argues that although Allyn Young was influenced by Alfred Marshall, he was an original economic thinker in his own right. The objective of this paper is to bring out their similarities as well as differences. This theoretical comparison will throw light on questions such as whether increasing returns are microeconomic or macroeconomic or whether they arise due to economies of scale at the firm level or are due to other factors. Marshall and Young had many similarities like both had an evolutionary perspective towards society, both had a process view of competition, both had almost common views on the method of economics and both saw economics as useful in solving practical problems. However, while Marshall emphasised statics (by assuming ceteris paribus) and analysed change mostly at the microeconomic level, Young emphasised disequilibrium and had a generalised conception of increasing returns. [ABSTRACT FROM AUTHOR]

This paper surveys the theoretical and empirical literature on the effects of the real exchange rate (RER) on international trade, economic development and growth. We summarize the main conceptual issues, briefly discuss the relevance of the RER as an instrument of development policy, provide an overview of the macroeconomic and microeconomic mechanisms that link the RER to trade and long‐run growth and development, analyse the challenges – especially the disconnect between theory and data – that often arise in empirical applications, and discuss new avenues for future research. In the process, we present some updated estimates and illustrative figures. The mechanisms through which the RER influences long‐run growth and structural change remains a promising area of research and the relevance of individual channels in different contexts deserves much more careful investigation. Greater data availability should help fill some of these gaps in our understanding. [ABSTRACT FROM AUTHOR]

This paper aims to investigate the effect of financial development and renewable energy consumption on consumption‐based CO2 emissions in Chile while controlling for economic growth and electricity consumption. Based on the aim of the paper, autoregressive distributed lag (ARDL) bounds with Kripfganz and Schneider's (2018) approximations, fully modified ordinary least square (FMOLS), dynamic ordinary least square (DOLS), and gradual shift causality tests are applied in this study. The outcomes clearly reveal that while financial development and renewable energy consumption reduce the consumption‐based CO2 emissions in Chile, economic growth and electricity consumption increase consumption‐based carbon emissions. The gradual shift causality test provides consistent results with ARDL, FMOLS, and DOLS estimators. Therefore, policymakers in Chile should dynamically encourage the research and development of low‐carbon technologies and renewable energy investments while imported nonrenewable energy sources level should be targeted, and especially those sectors which are more energy‐intensive and causing to increase in consumption‐based CO2 emissions. [ABSTRACT FROM AUTHOR]

Economic historians have recently treated Islamic institutions as "growth retarding," "averse to change," "path dependent," "lacking creative destruction" and "extractive" rather than "inclusive" and blamed their failure to change for the underdevelopment of the Middle East. This paper argues for a different approach to Islamic institutions which implies that they boosted economic growth. The paper explores changes in economic structures, a transition in population levels from high to low and a transition to individual property rights and provides economic indicators of growth. Articulated via Islamic law, legally sanctioned birth control and women's property rights were instrumental in assuring low fertility rates and equitable and well‐distributed income in the population. The paper concludes theoretically and empirically that Islamic institutions were innovative, amenable to change and efficient. [ABSTRACT FROM AUTHOR]

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This paper investigates the extent to which commodity prices can predict economic growth, the growth exposure of the countries to specific commodity group, and whether the country stage of development matters for growth dependency on commodities. We use a novel time‐varying mixed‐frequency vector autoregressive model to jointly estimate causality between monthly commodity prices and quarterly economic growth for the period from January 1980 to March 2020. Our findings suggest that growth dependency on commodities varies over time and across different synthetic measures, but in general solid evidence of predictability is determined. The overall commodity index shows better performance in predicting economic growth than the segregated proxies of either fuel or non‐fuel commodities in developed economies. However, the overall commodity index is as effective as the fuel index in predicting economic growth for their developing counterparts. We develop a new index of global commodity growth connectivity (GCGCI) to determine the economic growth dependency on commodities over time. Our results show that economic growth dependency on commodities has increased at least three times with financialization of commodity markets. The GCGCI for all commodities reveals a higher growth dependency on commodities in developing countries than developed ones in the post‐financialization period. Interestingly, we find that growth decreases its reliance on fuel commodities in both developed and developing countries after financialization of commodity markets. Our findings bear implications for policymakers to design stabilization policies in an attempt to protect economies vulnerable to commodity price shocks and lay the foundation for sustainable economic growth. [ABSTRACT FROM AUTHOR]

Motivated by Rajan's study and existing economic reform theories (especially the lobby theory), we highlight income inequality as a driver of financial liberalisations. However, no evidence yet supports this idea. To verify this liberalisation‐induced‐by‐inequality hypothesis, the nexus of income inequality and financial liberalisations is formalised and empirically investigated in this paper. We utilise an ordered logit model with two‐way fixed effects and panel data from 91 countries to conduct the analyses. The baseline empirical results indicate that income inequality is a positive and significant determinant of financial liberalisations in aggregate and three component indicators. The results for three component indicators remain stable after a series of robustness checks, including mitigating the potential endogeneity via IV‐2SLS, Lewbel instrumental variable technique and difference within group, assessing the bias from the unobservable variables, considering the persistent and learning effects of liberalisations and the interaction effects, alternating the measures of income inequality, reducing business cycle, and using financial reforms rather financial liberalisation as independent variable. The results for aggregate liberalisations are slightly unstable in models with persistent and learning effects. Thus, liberalisation‐induced‐by‐inequality hypothesis is generally confirmed. In addition, the impacts of income inequality on financial liberalisations are widely heterogeneous across countries, the rate of change in income inequality and wealth inequality could also predict the occurrence of financial liberalisations, and the evidence that income inequality makes the poor easier access credits (i.e., Rajan's hypothesis) is found. Finally, the role is investigated of financial liberalisations in shaping banking stability, and we find that financial liberalisations can enhance growth and lower financial risks. [ABSTRACT FROM AUTHOR]

The main aim of this paper is to explore economic inequality in 'the Belt and Road' region where the investigation of the economic status is important but remains underdeveloped. The application of night‐time satellite imagery in 2015 can effectively make up for the shortcomings of insufficient data at various scales, especially for developing countries. We explored inequality at a multi‐scale level using the Theil decomposition method. As a result, (1) night‐time light data can present economic development and assess inequality in 'the Belt and Road' region. (2) The between‐sub‐region inequality contributed most to disparity, while the between‐country inequality was the least. Night‐time light data in West Asia and Central and Eastern Europe was higher than that in other sub‐regions. Countries within Central, Southeast and West Asia exhibited high inequalities, indicating an obvious sub‐regional pattern. (3) Both positive and negative impacts of economic growth on inequality are observed, indicating that 'the Belt and Road' countries are in different stages of economic development. Nightlight satellite imagery can effectively monitor social‐economic development and will play an important role in the implementation of 'the Belt and Road' initiative and achieving the sustainable development goals. [ABSTRACT FROM AUTHOR]

Turkey is one of the highest donors in the world, who also receives substantial amount of aids from various entities and countries. This paper aims to investigate the on going nexus between economic growth (EG) and foreign aid (AID) in Turkey; utilizing yearly data between 1960 and 2022 by employing wavelet analysis tools: namely the power spectrum, wavelet coherence, wavelet cohesion and Continuous Wavelet Transform (CWT) causality approach, which provides information of both long‐run and short‐run linkages for separate subperiods of time and frequencies. Our results reveal that; (a) the result of the power spectrum indicates that at different frequency and period, there is evidence of significant variation in EG and AID; (b) the outcome of the wavelet coherence confirms that there is comovement at varying frequencies and varying periods between EG and AID, with AID leading; (c) the outcome of the wavelet cohesion shows a positive/negative connection in the short and medium term, but a negative connection in the long term; (d) the result of the CWT causality approach confirmed the 'feedback hypothesis' at the aggregate level, in‐phase and out‐phase condition. As a result, policymakers should be more effective in supporting EG at high frequencies and only under the rule of the economic cycle. [ABSTRACT FROM AUTHOR]

In this paper, we advance the empirical literature on US state and local fiscal policymaking by using the synthetic control method (SCM) to create pairwise matches for states in subsequent regression analysis of the relationships between state and local fiscal policies and several state economic outcomes. Additional contributions include the use of principal component analysis to construct broader narratives of state economic performance and to reduce the dimensionality of the characteristics used in SCM matching, while the regressions also include variables to control for post‐matching economic shocks. Compared to conventional regression analysis, the SCM matching‐regression approach better addresses potential endogeneity, reduces interpolation bias, and creates fiscal policy measures that better reflect policy differences. The SCM‐matched regressions produce more statistically significant relationships between state and local fiscal variables and economic outcomes than do the conventional unmatched regressions, suggesting improved identification of state and local fiscal policy effects on economic outcomes. Robust relationships found include negative economic effects of the own‐source revenue burden and property taxes. Consistent with the existing literature, the estimated fiscal policy effects are quantitatively small and unlikely to drive differences in state economic performance. [ABSTRACT FROM AUTHOR]

Using data for 22 sub‐Saharan African (SSA) countries, this paper investigates the effects of public debt on economic growth in SSA countries covering the period 1990–2021. Relying upon the estimation of Panel Smooth Transition Regression and generalized method of moments method, our findings offer strong evidence that public debt nonlinearly impacts economic growth. More specifically, there exists a threshold beyond which public debt exerts a negative effect on growth. These results can be used to formulate economic recommendations that the public authorities could implement to improve public debt management and maintain stable economic growth. [ABSTRACT FROM AUTHOR]

This paper examines the effect of preferences for liquidity on the relationship between disasters and growth along with disaster risk management. It further demonstrates that preferences for liquidity lead to less consumption. Moreover, from preferences for liquidity perspective, our model can potentially reconcile the conflicting predictions on the interaction between disasters and growth in the empirical findings. Finally, we find that preferences for liquidity cause policymakers to become more incentivized in mitigating disaster risk and lead them overestimate the welfare benefit of policy instruments. [ABSTRACT FROM AUTHOR]

Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decades. The unprecedented growth of cross‐country FDI flows has been attributed to a rich set of economic, geographical and institutional factors. In this paper, Ι examine the role of financial system heterogeneity as a potential detrimental factor to FDI flows across OECD economies. To do so, Ι use a panel dataset of the most recently updated bilateral FDI data at the country level according to OECD BMD4 definition and construct measures of financial distance using a broad set of financial indicators. The econometric approach consists of a gravity‐style model, estimated according to the latest advancements in econometric techniques in order to avoid omitted variable bias. The results indicate that financial system similarity is associated with increased bilateral FDI flows, a conclusion that is robust across different estimation strategies and financial distance measures. This insightful policy implication for advanced economies is that the restructuring of the financial system and harmonisation to best practices can contribute to economic recovery through the FDI channel as well. Finally, the results highlight the importance for the full implementation of the Banking Union and the Capital Markets Union in the EU. [ABSTRACT FROM AUTHOR]

Nowadays, economic growth is influenced by many domestic and foreign global issues, concerning the decrease of industrial output for the rise in economic inequality and the weakening of the overall condition in the countries. The role of economic growth is based on human capital and investment. Therefore, in this paper, the human capital and economic management system (HC‐EMS) has been proposed to enhance the country's quality based on the capital structure investment. HC explores the role of command and its significance in the production and creation aspects of human capital such that an area can grow creatively. HC‐EMS analysed critical monitoring systems for developing human resources and the high‐tech and creative economic sectors and presented suggestions for change. Besides, there is a need to prove the shortcomings and benefits of human resource development systems and statistical approaches for gathering and analysing information. The impact of financial services and financial transactions may vary; therefore, it is critically important for fostering economic growth. The experimental result suggests that the proposed HC‐EMS achieves the highest growth development ratio than other existing methods. [ABSTRACT FROM AUTHOR]

Structural transformation in most currently developing countries takes the form of a rapid rise in services but limited industrialization. In this paper, we propose a new methodology to structurally estimate productivity growth in service industries that circumvents the notorious difficulties in measuring quality improvements. In our theory, the expansion of the service sector is both a consequence—due to income effects—and a cause—due to productivity growth—of the development process. We estimate the model using Indian household data. We find that productivity growth in nontradable consumer services such as retail, restaurants, or residential real estate was an important driver of structural transformation and rising living standards between 1987 and 2011. However, the welfare gains were heavily skewed toward high‐income urban dwellers. [ABSTRACT FROM AUTHOR]

This paper investigates therelationship between prosperity and national account data during wartime, focusing on Canada. In particular, we build off of existing literature arguing that military outlays must be excluded for real output measures to reasonably approximate economic prosperity. We analyse all non‐war components of Canadian gross national product during both world wars and estimate a novel price deflator for World War II in order to take into account wartime price controls. This allows us to obtain a new estimate of real output in Canada excluding military outlays. We then compare the trends in our new real output series with domestic private investment and stock market trends, all three of which either fell or grew at an anemic pace in Canada during both world wars. Combined, we argue that this provides evidence against the idea of wartime prosperity and more specifically, against the notion of World War II ending the Great Depression in Canada. [ABSTRACT FROM AUTHOR]

This paper examines the extent to which host‐country institutions influence the relationship between inward foreign direct investment (FDI) and economic growth. We develop a theoretical model to analyse how different types of institutions condition the FDI‐growth relationship and use various institutional proxies to conduct threshold estimations on panel data for 51 developed and developing countries over the period 1991–2016. Our results consistently reveal a robust, contingent effect of political stability on the FDI‐growth nexus, suggesting that, among all the institutional factors considered, the absence of civil conflict or violence in the host economy is most critical in terms of yielding both direct and indirect growth‐enhancing benefits associated with technology transfer and spillover effects from FDI inflows. This finding is pertinent to both developed and developing countries, although the threshold level of political stability required to achieve sizeable growth benefits from FDI tends to be lower for developing countries. [ABSTRACT FROM AUTHOR]