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Abstract: This paper looks at the link between the quality of economic institutions and innovation, and innovation and growth. We construct a measure of the innovation content of individual manufacturing industries and show that countries with stronger economic institutions specialize in more innovation‐intensive industries. Our results also provide evidence that industries involving higher levels of innovation grow relatively faster in countries with better economic institutions. The results suggest that innovation is an important channel through which higher quality economic institutions contribute to better growth performance in the long run. [ABSTRACT FROM AUTHOR]

This paper evaluates the economic impact of the $14 billion preparatory infrastructure investments for the 2010 FIFA World Cup in South Africa. We use satellite data on night light luminosity at municipality and electoral district level as a proxy for economic activity, applying synthetic control methods for estimation. For the average World Cup municipality, we find significantly positive, short‐run effects before the tournament, corresponding to a reduction of unemployment by 1.3 percentage points. At the electoral district level, we reveal distinct effect heterogeneity, where especially investments in transport infrastructure are shown to have long‐lasting, positive effects, particularly in rural areas. [ABSTRACT FROM AUTHOR]

This paper examines investment decisions in an economy with two financial markets: an official market, which is subject to rationing due to an interest rate ceiling, and an unrestricted market, with a higher interest rate. In this context, the long-run equilibrium aggregate capital stock is unambiguously higher than in the absence of the interest rate ceiling, even though its relationship with the ceiling is non-monotonic. Empirical results using aggregate panel data from 52 developing countries for the period 1974-1988 provide support for the model, particularly in economies that have some access to international capital markets. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between banking sector development, stock market development, economic growth, and four other macroeconomic variables in ASEAN countries for the period 1961–2012. Using principal component analysis for the construction of the development indices and a panel vector auto-regressive model for testing the Granger causalities, this study finds the presence of both unidirectional and bidirectional causality links between these variables. The study contributes to understanding the importance of the interrelationship between the variables and combines the different strands of the literature. It also contributes to the literature by focusing on a group of countries that have not been studied before. One particular policy recommendation is to make the banking sector more accessible for those country's inhabitants that do not have bank accounts. Another policy recommendation is to nurture stock market development, which will facilitate the increased raising of capital for investment purposes to enhance economic growth. [ABSTRACT FROM AUTHOR]

Beginning from the early 1980s countries in Sub-Saharan Africa embarked on financial liberalization policies with a view to reversing the ill-effects of financial repression. This paper provides a survey of financial liberalization in Sub-Saharan African countries over the period 1980 to 2004. Our review of empirical studies showed that financial liberalization has had diverse and contrasting effects on savings, investment and economic growth. Most studies found a significant positive effect of financial liberalization on investment whereas its effect on savings has been largely insignificant. The evidence on the effect on economic growth is inconclusive as different studies find contrasting results. It is found that financial liberalization policies have not had the desired and expected results as both financial and macroeconomic variables have not improved following financial liberalization in these countries. This calls for a rethinking of financial liberalization in Sub-Saharan African countries. It is important that financial liberalization is carried out in a stable macroeconomic environment. In addition to this, there should be a building and reform of institutions and the strengthening of prudential regulation. Following this, financial liberalization can be embarked upon but it must be properly sequenced and not rushed. [ABSTRACT FROM AUTHOR]

This study extends the previous empirics and conducts a comprehensive analysis of the effects of terms of trade (TOT) on economic growth in the large and emerging market economy, India, which experienced tremendous transformation from a persistently low‐growth economy in the 1950s–1970s to a moderate‐growth economy in the 1980s and then to a high‐growth economy, following the onset of inclusive economic reforms from the beginning 1990s. The TOT remained unfavourable during the 1950s, witnessed boom during the mid‐1960s to the mid‐1970s, showed sharp downturn during the mid‐1970s to the mid‐1980s, and then displayed deteriorations again from the late 1990s to 2017–2018. The model estimated in one‐regime setting with no structural break and in a sample‐split setting with multiple structural breaks—over both "long" and "short" time periods—supports the presence of cointegration among variables and suggests the positive and significant long‐run effects of TOT on economic growth. The diversification of trade, the continual improvements in the quality of export products, and the development of high value‐added industries are essentially crucial to induce long‐term improvements in TOT. The improvements in TOT need to be accompanied by the development of financial sector, expansion of external trade, and acceleration of domestic investment. [ABSTRACT FROM AUTHOR]

In Great Britain, a basic inter-urban network of motorways was completed in a very short period between the end of 1959 and 1972. We calculate that this substantial investment had the potential to reduce most inter-urban journey times by about one third. In spite of this, a recent OECD study suggested that the investment had no discernible positive impact on the trend rate of economic growth. We attribute this outcome to a serious misalignment of the early investments with the then predominant flows of industrial and commercial traffics and a significant, and probably endogenous, increase in real wages in a road transport industry in which labour productivity was slow to improve. We conclude with a number of policy recommendations. [ABSTRACT FROM AUTHOR]

This article examines the relationship among foreign direct investment ( FDI), institutions and economic growth in sub-Saharan Africa in different country environs. We employ a two-step generalized methods of moments estimator with Weidmeijer corrected standard errors and orthogonal deviations to examine the empirical relations. In the full sample, we do not find evidence that FDI promotes growth. We also do not find a significant relationship between institutions and economic growth. Finally, we do not find convincing evidence that institutions alter favorably the effect of FDI on economic growth. In the subsample that excludes countries with developed financial markets, again we do not find a significant relation between FDI and economic growth. However, we find evidence suggesting that institutions play a direct role in spurring economic growth. Further, the quality of institutions seems to alter favorably the relationship between FDI and economic growth. Finally, in the sample that excludes countries with abundant natural resources, we find a direct and positive relationship between FDI and economic growth. We also find a direct relationship between institutions and economic growth. The growth-enhancing effects of FDI, however, seem to reduce as the quality of institutions improves. The major implication from our study is that countries should take into consideration their own realities when they fashion policies to benefit from FDI in terms of achieving better growth outcomes. © 2016 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

Many studies have considered how democratization affects economic growth. We expand this work by allowing short- and long-run effects of democracy upon growth to differ since effects during political transitions need not coincide with those under established democracies. We also allow these short- and long-run effects to differ across world regions since history, demography and geography vary across regions. Using annual, cross-county data from 1960 to 2010, we find that democratizations increased growth rates in sub-Saharan Africa both in the short run and in the long run but lowered them in Europe. Effects in other regions appear less strong. Our results suggest that democracy could be most beneficial for growth in poorer, less stable regions. We also do not find any evidence of a transitional cost. Stronger evidence arises that these effects come from rising productivity rather than through greater investment. Finally, some support though mixed suggests that democracy's ability to mitigate the effects of ethnic heterogeneity provides a partial explanation for the cross-regional heterogeneity. [ABSTRACT FROM AUTHOR]

We use the perpetual inventory method to estimate gross fixed capital stock at the provincial level in Indonesia. We employ a relatively long series of past annual investments at constant prices for 1983-2007 and a province-specific survival function for capital. For this purpose, we use published data on provincial income accounts, input-output tables, and surveys from existing studies. Capital was found to be over-concentrated in the Java-Bali region and inefficiently distributed among provinces. This distribution contributed to national growth in the majority of the sample years. [ABSTRACT FROM AUTHOR]

'Improve the investment climate!' is the dominant advice for governments wishing to achieve substantial increases in productive private investment. However, national-level investment-climate approaches have been criticised for not paying adequate attention to context and feasibility. This article experiments with a new approach which focuses on sectors and on relationships between policy-makers and investors, and shows how their common interest helped to overcome obstacles to investment and growth in Egypt. Such public-private relationships can be abused but they have provided effective transitional arrangements for enhancing investment and inducing a new growth dynamic. [ABSTRACT FROM AUTHOR]

The growing body of literature devoted to studying the impact of inequality on economic growth has centered its attention on the income distribution effect, even though the theoretical relationships are more related to assets distribution. While some recent studies have tried to overcome this limitation by introducing asset indicators, they meet new constraints when dealing only with time-invariant measurements for this explanatory variable. This article provides a theoretical discussion and some novel empirical tests to better understand the relationships between assets distribution and economic growth. We assembled a new panel database that includes observations for more than 30 countries over the last three decades. The data include a time-varying variable for changes in the Land Gini index over this period that enables us to overcome the limitations of previous studies. A system general method of moments (GMM) estimator is used to generate truly unbiased and consistent estimates for the parameters of interest. We explore some of the likely channels through which asset distribution and economic growth may be linked, paying particular attention to the role of secure property rights and the relations between land ownership and education. We find robust and significant negative signs for land inequality in the growth regressions, indicating that changes in asset distribution are an important factor for economic development. [ABSTRACT FROM AUTHOR]