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The recent empirical growth literature has proposed three underlying fundamental determinants of economic growth, namely, physical geography, economic integration and institutional quality. This paper unpacks the final determinant into both political-economic institutions as well as the primarily political institution of democratic development. Using both cross-sectional and panel datasets, we show that, properly instrumented, there is no evidence that democracies grow faster or slower than non-democracies. This result is in contrast to much of the more recent literature, which tends to find a weakly positive relationship. Political- economic institutions, however, remain positive and significant determinants of economic growth, which corroborates much of the empirical evidence in the existing literature. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper provides a survey of the recent progress in the literature of financial development and economic growth. The survey highlights that most empirical studies focus on either testing the role of financial development in stimulating economic growth or examining the direction of causality between these two variables. Although the positive role of finance on growth has become a stylized fact, there are some methodological reservations about the results from these empirical studies. Several key issues unresolved in the literature are highlighted. The paper also points to several directions for future research. [ABSTRACT FROM AUTHOR]

The growth experiences of the Democratic Republic of the Congo and South Korea over the last several decades have been polar opposites. Despite this divergence in economic outcomes, the two countries shared some initial similarities including very low income, high population growth rates, harsh colonial regimes, military coups and Cold War politics. There were also important initial differences in population density, ethnolinguistic diversity, natural resource endowments and geography. Given its enormous mineral wealth, economic prospects initially appeared brighter in the Congo than in Korea to most contemporary observers. This paper explores the possible causes of divergences in the two countries by examining initial conditions, economic and demographic trends, geography and governance. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Previous aid effectiveness research often claims that foreign aid has been unsuccessful in increasing growth rates. This result could be due either to methodological weaknesses, or to genuine aid efficiency losses. Empirically, the author finds that once the best available techniques are employed, aid has a significant but moderate average effect on growth over the period 1970–2001. A promising explanation of why the estimated returns to aid are not larger is that bilateral aid had no significant effect on growth during the Cold War (pre-1990), but had a significant and sizeable effect thereafter. In contrast, multilateral aid seems to have had sizeable and significant effects throughout. These results imply that the negative conclusions drawn by earlier research should be interpreted in their proper historical context, rather than as a necessary condemnation of current aid effectiveness. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper reviews relations between government and the private sector in Malawi from independence to the present. The analysis charts the changing emphasis that official policy has attached to the role of the private sector throughout the transition from dictatorship to democracy; and from a PRSP that effectively ignored the role of the private sector in national development, to the current more balanced approach that recognises the private sector as the ‘engine of economic growth’ and the best means of achieving poverty reduction. However, in spite of progress, Malawi's private sector remains fragile and while the rhetoric from the highest levels of government towards the private sector has evolved, the enabling environment for private sector development is still inhospitable. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Following experience elsewhere in the world, China has pinned its hopes for development on industrialisation and China's economy has grown exceptionally fast in the last two decades. But many unintended environmental consequences have been recognised. This paper asks whether there really is a trade-off between economic and environmental performance. This is considered in the context of China's macroeconomic performance as well as in the case study of a Chinese state-owned enterprise (SOE) (Zhengzhou Abrasive Company (ZZAC)). The feature of the paper is that stakeholders' perceptions of the trade-off were considered. Our results indicate that the low economic performance of ZZAC to some extent resulted in its improved environmental performance. However, other factors like investment in pollution abatement, which is also influenced by the economic performance, have had a positive impact. Furthermore, ZZAC is found to have increased its labour productivity level, but is retreating from social commitments. Finally, our results clearly indicate that the characteristics of the stakeholders, as well as their positions in the local economy, make a significant difference to their perception of trade-offs between economic growth and the environment, which will finally affect environmental policy making in China. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper presents a critical review of evolutionary and new growth theories. The purpose is to discuss the often-made claim that the two approaches, both inspired by Schumpeter's seminal work, are becoming more and more similar in terms of the sources and mechanisms of the growth process on which they focus. According to this argument, some kind of theoretical convergence between the two paradigms is taking place. Differently from previous surveys of the field, this paper compares evolutionary and new growth theories by focusing on their major theoretical foundations. The discussion leads to the conclusion that the two approaches greatly differ with respect to all of their main theoretical building blocks, and that no convergence between the two paradigms is therefore taking place. This finding should be welcomed by both evolutionary and new growth scholars, because it is the process of interaction and the fruitful exchange of ideas between different approaches that lead to advances in growth theory, not their convergence to a common paradigm. [ABSTRACT FROM AUTHOR]

A pegged exchange rate regime has been pivotal to China's export-led development strategy. However, its huge trade surpluses and massive build up of international reserves have been matched by large deficits for major trading partners, creating acute policy concerns abroad, especially in the USA. This paper provides a straightforward conceptual framework for interpreting the effect of China's exchange rate policy on its own trade balance and that of trading partners in the context of discrepant economic growth rates. It shows how pegging the exchange rate when output is outstripping expenditure induces China's trade surpluses and counterpart deficits for its trading partners. An important corollary is that given its strictly regulated capital account, China's persistently large surpluses imply a significantly undervalued renminbi, which should gradually become more flexible. [ABSTRACT FROM AUTHOR]

This paper surveys recent evidence suggesting that market-oriented institutions and policies are strongly related to economic growth, focusing on studies using the economic freedom (EF) indicator of the Fraser Institute. This index is critically discussed. Also various serious shortcomings of empirical studies using this index are identified. Nevertheless, there are strong indications that liberalization, i.e. an increase in the EF index, stimulates economic growth. This paper also reviews studies on the determinants of EF. Political liberalization is often found to enhance economic liberalization, whereas there is less evidence for causality running in the other direction. [ABSTRACT FROM AUTHOR]

This paper describes the evolution of inventory investment in South Africa over the past two decades, and identifies the factors influencing inventory investment over this period. An econometric model of inventory investment in South Africa, based on the production smoothing approach, is constructed. The results of the model indicate that actual sales, production, unfilled orders, price levels, interest rates and expected sales have an influence on the evolution of inventory investment. These variables are directly or indirectly influenced by macroeconomic policy decisions and through their influence on inventory investment they also influence changes in gross domestic product. Therefore, prior information on the factors that influence inventory investment contributes to explaining changes in gross domestic product and may help to prepare more accurate short-term forecasts of overall economic activity. [ABSTRACT FROM AUTHOR]

This paper sets the contributions to this issue in the context of a large and rapidly growing literature. It argues, on theoretical and empirical grounds, that future research should focus on transitional growth dynamics. [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 addresses two challenges that the fiscal decentralisation and economic growth nexus faces - namely, endogeneity problems and inaccurate measurement of fiscal decentralisation. We introduce novel instrumental variables based on common legal system origin, common federal system, geographical position and relative country size. The positive relationship between fiscal decentralisation and economic growth that we find remains valid when using these instrumental variables. Using fiscal decentralisation measures that better reflect the autonomy of subnational governments changes this relationship. This finding, however, is the result of the accompanying changes in the sample rather than the use of these alternative measures themselves. [ABSTRACT FROM AUTHOR]

This paper performs a cointegration analysis using an Error Correction Model (ECM) on annual rice prices to measure and compare market integration in China and Japan during the nineteenth century. We find markets in Japan were more integrated than in China at both the regional and national levels during the period. Moreover, market integration in Japan improved during industrialisation. These findings support the view that a well-integrated market is a cause as well as a result of economic growth. [ABSTRACT FROM AUTHOR]

The MIRAB model offers an explanation of the evolution and operation of some tiny Pacific island economies. Proponents of the model have argued that it describes an economic system that is durable and persistent. Using an historical approach, this paper explores whether and how an economy of the MIRAB type can break out of its structural mould without regressing to an earlier stage of development. After establishing that Norfolk Island possessed strong MIRAB characteristics from the end of World War II until the early 1960s, the paper analyses the tourism-dominated economic growth that erased these characteristics, or at least reduced them to insignificance. It concludes that the island has achieved a sustained break-out from the MIRAB mould, although not without incurring some social costs. [ABSTRACT FROM AUTHOR]

Over 40 years of conventional economic analysis has not reached consensus on the effect of foreign aid on recipient country growth. We provide new insight into this relationship by using a network approach to characterize the topological properties of the Organization for Economic Co‐operation and Development (OECD) foreign aid network. Viewing the OECD foreign aid community as an interdependent and complex system, we characterize not only the amount of aid but also the position of both donor and recipient within the network. We find that the degree centrality of the recipient, with an edge inclusion threshold that sets a minimum share of a donor's aid to a particular recipient, is significantly correlated with the growth impact of that donor's aid. Contrarily, aid is uncorrelated with growth with a recipient‐side filter on the importance of the donor to the recipient. These results suggest that the importance of a recipient within the donor's network, rather than the volume of aid alone, is associated with the growth impact of bilateral aid. We explore mechanisms for these findings that include the complementarity of aid from multiple attentive donors. Our findings speak to the aid–growth puzzle and suggest that network metrics may illuminate non‐obvious channels of aid impact. [ABSTRACT FROM AUTHOR]

This paper investigates the factors that determine educational attainment in Ghana. The following specific questions are addressed: 1) What are the relative impacts of economic growth and improvements in school quality on educational attainment? and 2) What policy variables are most effective for reducing the gender gap in educational attainment? We find that economic growth will play the most significant role in raising the school attainment in Ghana in future years. Continued economic growth should also reduce the gender gap substantially. In addition to economic growth, provision of blackboards and repairing of leaking roofs will significantly raise school attainment. [ABSTRACT FROM AUTHOR]

Vector-borne diseases (VBDs) are widespread in less developed countries and reemerging in developed ones. Available economic studies agree that VBDs have significant effects on countries' economic outcomes, and affirm that a systematic evaluation of such effects is crucial for the efficient allocation of resources to health-related priorities. This paper provides a comparative assessment of available methodologies for measuring the economic impact of VBDs at national level. We review both macroeconometric and micro-based approaches, and examine advantages and disadvantages of current methods. We conclude by suggesting possible areas for future research. [ABSTRACT FROM AUTHOR]

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ABSTRACT Given its significant policy implications, the nexus between public expenditures and economic growth has been the subject of an extensive and often emotive theoretical and empirical debate. In this paper, a semiparametric model is used to explore the link between GDP and defence and non-defence government spending in the USA over the period 1929-2009. Evidence reported herein indicates that the latter represents a greater stimulus vis-à-vis the former. [ABSTRACT FROM AUTHOR]

Recent evidence shows that institutions figure prominently in explaining the 'Lucas paradox'. Using a threshold regression model, we extend this evidence to a situation where institutions index the relationship between foreign capital inflows and economic growth. We find strong and robust evidence that portfolio equity (including foreign direct investment) and debt inflows have positive effects on growth only in countries with high-quality institutions. Countries that fall below the threshold level of institutional quality record either insignificant or negative effects. This paper provides a possible explanation on the so-called Lucas paradox. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Using a sample splitting approach that does not impose an exogenous quadratic term, we examine the effect of financial development on economic growth in sub‐Saharan Africa by allowing the link to be mediated by the level of institutions. Our findings reveal a disproportionate growth‐enhancing effect of finance, given countries' distinct level of institutional quality. More specifically, when the International Country Risk Guide‐based measure of institutions is used as the threshold variable, below the optimal level of institutional quality, financial development does not significantly promote economic growth. For countries with institutional quality above the threshold, higher finance is associated with growth. However, when institutions are measured by World Governance Indicators proxy, we find a significant effect of financial development, irrespective of whether a country is below or above the threshold. Interestingly, the growth‐enhancing effect of finance is greater for low‐institution countries relative to high‐institution countries. Thus, through its ability to provide some crucial roles, the well‐developed financial sector may also perform the function of sound institutions in influencing economic growth. [ABSTRACT FROM AUTHOR]

This paper reviews the main features of the banking and financial sector in 10 new European Union members, and then examines the relationship between financial development and economic growth in these countries by estimating a dynamic panel model over the period 1994-2007. The evidence suggests that the stock and credit markets are still underdeveloped in these economies and that their contribution to economic growth is limited owing to a lack of financial depth. By contrast, a more efficient banking sector is found to have accelerated growth. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between the level and the distribution of education and economic development. We contribute to the literature by introducing an interaction term between the education Gini coefficient and average years of schooling. In a dynamic panel over 55 years and 134 countries we provide, on the one hand, strong evidence that more schooling is good for growth, but the coefficient is variable and substantially declining in the degree of inequality. The aggregate benefit to education thus depends on a country's position in the education distribution. On the other hand, we find a slight transitional increase in education inequality to be beneficial at a very low average level of schooling, but detrimental for growth at a relatively high average level. Allowing for the macroeconomic return to education to be heterogeneous with respect to the degree of inequality is therefore paramount in understanding the relationship between education and development. [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]

The Korean economy has entered a period of relatively sluggish growth after experiencing very dynamic and high economic growth since the 1970s. The recent growth rate has been around 3 percent, which is similar to that in many advanced countries. According to growth accounting, economic growth is possible because of input increases and productivity increases. Productivity growth is much more important than input increases for long‐term economic growth. We investigated whether there was a structural break in the Korean manufacturing industry and whether the main factor contributing to economic growth shifted from input to productivity. Using various econometric methods, we tested this question and found some interesting results. First, there was an important change in the 1990s, and the productivity trend seemed to show a big structural break at that time. Second, an input increase was the main factor contributing to economic growth before the break and productivity became more important after the break. Third, there was also a major change in the relationship between international trade and productivity. [ABSTRACT FROM AUTHOR]

In 2018, Paul Romer and William Nordhaus shared the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Romer was recognized "for integrating technological innovations into long‐run macroeconomic analysis". This article reviews his prize‐winning contributions. Romer, together with others, rejuvenated the field of economic growth. He developed the theory of endogenous technological change, in which the search for new ideas by profit‐maximizing entrepreneurs and researchers is at the heart of economic growth. Underlying this theory, he pinpointed that the nonrivalry of ideas is ultimately responsible for the rise in living standards over time. [ABSTRACT FROM AUTHOR]

Previous research has studied the relationship between higher education and economic growth, but the results are mixed. This paper analysed higher educational investment and economic growth theoretically and studied the long-term dynamic relationship between them by using Johansen test, Granger causality test, impulse response function, variance decomposition and other empirical methods based on vector autoregressive model. The result indicates a long-term stable equilibrium relationship among higher educational fund investment, human capital investment and economic growth. Specifically, higher educational fund investment and human capital investment have a significant positive impact on economic growth. Both higher educational fund investment and human capital investment are Granger causes of economic growth. Fund input is Granger cause of human input. Therefore, fund input is a major and driving impetus for higher education to promote economic growth. Theoretical and practical implications are discussed. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

In this paper, we provide an empirical investigation of the interaction between violent conflicts, democratization, and growth in the 'third wave' of democratization. The effect of democratization is weakened when taking into account the incidence of civil conflict. The results show that the growth effect of democratization is heterogeneous and depends on the democratization scenario. Peaceful transitions to democracy have a significant positive effect on growth that is even larger than reported previously in the literature, whereas violent transitions have no, or even negative, growth effects. [ABSTRACT FROM AUTHOR]

Cities exist because of the productivity gains that arise from clustering production and workers, a process called agglomeration. How important is agglomeration for aggregate growth? This paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of local agglomeration on aggregate growth. We combine aggregate time-series and city-level panel data to estimate the model's parameters via generalized method of moments. The estimates imply a statistically and economically significant impact of local agglomeration on the growth rate of per capita consumption, raising it by about 10%. [ABSTRACT FROM AUTHOR]

In his recent paper, Ravallion (2013) proposes a new method to predict changes in purchasing power parities ( PPPs), arguing that a model that includes economic growth and exchange rate movements is superior to the standard approach of using inflation differences. In this comment, I argue that his test is wrong and I show that with a correct specification of the test, there is no robust and stable relationship between changes in PPPs and economic growth while the usefulness of the standard approach is confirmed. I also suggest an approach that could be more helpful to understand changes in PPPs. [ABSTRACT FROM AUTHOR]

This paper examines Cambodia's socioeconomic development since the early 1990s peace settlement. The country's economic growth has arguably been the fastest among post-conflict societies, driven by the credible restoration of peace and security, large public and private capital inflows, economic openness, reasonably prudent macroeconomic management, and a dynamic, integrating neighborhood. A legacy of history and small size is that the government has limited policy space, although this has not necessarily retarded economic development. We also highlight some key challenges, including rising inequality, uneven spatial development, weak institutions, and high levels of corruption. Looking forward, we highlight the importance of strengthening supply side capabilities, broadening the benefits of growth, and developing stronger institutions and property rights. [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 paper examines the effect of foreign aid on poverty. The impact of aid on poverty is assessed using dynamic panel estimation techniques, which enable us to control for time-invariant country-specific effects and endogeneity of aid. The results suggest that aid has a significant poverty-reducing effect even after controlling for average income. Specifically, foreign aid is associated with a decline in poverty as measured by the poverty rate, poverty gap index and squared poverty gap index. We also find that the composition of aid matters-multilateral aid and grants do better in reducing poverty than bilateral aid and loans. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Using Hofstede's cultural data set, this paper examines the impact of cultural characteristics on a nation's economic performance. Using a two-step estimation procedure, we first estimate a panel growth regression and obtain estimates of each nation's fixed effects, which reflect idiosyncratic differences in growth performance. In the second step, we regress the fixed effects on invariant cultural and institutional variables. Our estimation results suggest that individuality and tolerance for uncertainty are the most important cultural factors in explaining nation-specific growth performance. Furthermore, our findings suggest that political and property rights play a major role in determining idiosyncratic growth. [ABSTRACT FROM AUTHOR]

Recent studies indicate that the effect of migrants' remittances on the economic growth of receiving countries depends negatively on the level of development of the domestic financial sector. In this paper, we introduce a new indicator of financial development to measure the efficiency of the domestic banking system, and find the existence of complementarity between remittances and bank efficiency in economic growth, such that remittances promote growth only in countries whose banks function well. This result is robust to controls for other traditional measures of financial depth and institutional quality indicators. [ABSTRACT FROM AUTHOR]

This article revisits a classical theme in economics, that is, the relationship between trade protection and economic performance, with an improved treatment of the endogeneity of tariffs and with consideration of alternative performance criteria. This paper also considers the effects of asymmetric protection, such as higher tariffs on consumer goods and lower tariffs on producer goods. Using sectoral data on Korean manufacturing during the period from 1967 to 1993, this study finds that the effect of trade protection by tariff tends to show up not in terms of total factor productivity but in terms of revealed comparative advantage and export shares of sectors. Such an effect tends to be greater in consumer goods, which are the main targets of promotion by higher tariffs. This study verifies the potentially positive role of tariffs under certain conditions, especially under discipline from world markets. [ABSTRACT FROM AUTHOR]

The paper addresses the question of whether migration plays a role in the determination of the per capita incomes in sub-regions of Brazil. In order to discuss this relationship, we slightly modified the Solow-Swan model with migration to better resemble the Brazilian context. Based on this model, we determined theoretically five different possibilities for the spatial dynamics regarding net migration, human capital differentials between migrants and nonmigrants, and capital stock per effective worker. We applied this framework to census data and the microregions in Brazil were empirically classified in one or other of these possibilities with the multivariate technique of cluster analysis. Finally, we used econometric models with instrumental variables applied to panel data and observed a tendency of increase in the variability of per capita income due to migration. [ABSTRACT FROM AUTHOR]

This paper utilizes for the first time age-structured human capital data for economic growth forecasting. We concentrate on pooled cross-country data of 65 countries over six 5-year periods (1970-2000) and consider specifications chosen by model selection criteria, Bayesian model averaging methodologies based on in-sample and out-of-sample goodness of fit and on adaptive regression by mixing. The results indicate that forecast averaging and exploiting the demographic dimension of education data improve economic growth forecasts systematically. In particular, the results are very promising for improving economic growth predictions in developing countries. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper reviews the mainstream, resource economics, and ecological economics models of growth. A possible synthesis of energy-based and mainstream models is presented. This shows that when energy is scarce it imposes a strong constraint on the growth of the economy; however, when energy is abundant, its effect on economic growth is much reduced. The industrial revolution released the constraints on economic growth by the development of new methods of using coal and the discovery of new fossil fuel resources. Time-series analysis shows that energy and GDP cointegrate, and energy use Granger causes GDP when capital and other production inputs are included in the vector autoregression model. However, various mechanisms can weaken the links between energy and growth. Energy used per unit of economic output has declined in developed and some developing countries, owing to both technological change and a shift from poorer quality fuels, such as coal, to the use of higher quality fuels, especially electricity. Substitution of other inputs for energy and sectoral shifts in economic activity play smaller roles. [ABSTRACT FROM AUTHOR]

Income differences arise from many sources. While some kinds of inequality, caused by differential rewards to effort, might be associated with faster economic growth, other kinds, arising from unequal opportunities for investment, might be detrimental to economic progress. This study uses two new datasets, consisting of 117 income and expenditure household surveys and 134 Demographic and Health Surveys, to revisit the relationship between total inequality and economic growth. In particular, we ask whether inequality of opportunity, driven by circumstances at birth, has a negative effect on subsequent growth. Using the income and expenditure micro dataset, we find that while both total income inequality and inequality of opportunity are negatively associated with growth, the coefficient estimates are insignificant. The evidence is similarly equivocal using the Demographic and Health Surveys data. On balance, the data do not provide support for the hypothesis that inequality of opportunity is bad for growth. [ABSTRACT FROM AUTHOR]

The objective of this paper is to analyse the role of tourism in the Tunisian economic growth. We used a trivariate model of real gross domestic product (GDP), real international tourism receipts and real effective exchange rate to discuss the relationship between tourism and economic growth. By using annual data for Tunisia for the period of 1970–2007, our results reveal that there is a cointegrating relationship between tourism and economic growth. In addition, our results for the Granger causality test indicate that tourism has a positive impact on GDP growth unidirectionally. Copyright © 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Economic growth is an important priority for many local governments. There is a long-standing theoretical debate on how to best organize government for economic growth. There is surprisingly little empirical research focusing on how government organization affects regional growth. In this paper we forward several recent measures of government fragmentation in contrast to the common measure of government units per capita to examine how government competition influences growth, testing them in a metropolitan statistics area (MSA) growth model for 1992−2002. Going somewhat against the current embrace of regional collaboration, our results suggest that regions with relatively fragmented governments had stronger relative economic performance over the study's time frame. [ABSTRACT FROM AUTHOR]

Does the institutional environment affect the causal relationship between banking development and economic growth? In the theoretical section of this paper, we develop an endogenous growth model where the institutional environment is captured through two indicators: judicial system efficiency and easiness of informal trade. We show that an improvement in the institutional environment has two effects. First, it intensifies the causality direction from banking to economic growth through a reduction in defaulting loans. Second, it reduces the interest rate spread. In the empirical section of the paper, we find bidirectional causality when analyzing 22 Middle Eastern and North African countries over the period 1984–2004. The first causality, which runs from banking development to economic growth, is more intense in countries with more developed institutional environment. The second causality runs from economic growth to banking and indicates that a more developed economy has a more developed banking system. [ABSTRACT FROM AUTHOR]

This paper investigates the reasons behind the resilience of China's economy to the global financial tsunami. China's economy is lowly leveraged in its banking, household, public and external sectors and, therefore, is less plagued by the global deleveraging than most developed economies. Chinese domestic sectors have improved significantly over the past decade, giving them larger capacity to cope with external shocks than during the Asian financial crisis a decade ago. Contrary to the conventional wisdom that China's economic growth is highly dependent on exports, we find that the main growth engine for China is domestic demand. Destocking, rather than falling exports, was the main cause of the sharp economic slowdown in China in late 2008 and early 2009. Therefore, the global economic slowdown should have limited impact on China's economy. We forecast a sustained economic recovery in China in 2009–2011, with real GDP growth exceeding 10 percent in 2010. [ABSTRACT FROM AUTHOR]

This paper revisits the question of whether the finance–growth nexus varies with the stages of economic development. Using a novel threshold regression with the instrumental variables approach proposed by Caner and Hansen (2004) to the dataset used in Levine et al. (2000) we detect overwhelming evidence in support of a positive linkage between financial development and economic growth, and this positive effect is larger in the low-income countries than in the high-income ones. The data also reveal that financial development tends to have stronger impacts on capital accumulation and productivity growth in the low-income countries than in the high-income ones. The findings are robust to alternative financial development measures and conditioning information sets. [ABSTRACT FROM AUTHOR]

This paper reviews the literature on economic development as it relates to indigenous people in the United States and Canada, and focuses on how institutions affect economic development of reservation and reserve economies. Evidence shows that strong property rights to reservation and reserve land and natural resources, whether communal or individual, are and always have been important determinants of productivity. Political and legal institutions that are perceived as stable and predictable to tribal members and to non-Natives also improve economic opportunities for indigenous people living on reservations and reserves. Research reviewed here also shows that culture and acculturation are important in the development process. Although our emphasis is on North America, the findings are applicable to indigenous people in other parts of the world and shed light on growth questions that loom large for developing countries around the world. [ABSTRACT FROM AUTHOR]

Acemoglu, Johnson and Robinson have dramatically challenged the tendency of economists to confine their empirical search for the causes of economic growth to the recent past. They argue that the kind of institutions established by European colonialists, either protecting private property or extracting rents, resulted in the poorer parts of the pre-colonial world becoming some of the richest economies of today; while transforming some of the more prosperous parts of the non-European world of 1500 into the poorest economies today. This view has been further elaborated for Africa by Nunn, with reference to slave trading. Drawing on African and comparative economic historiography, the present paper endorses the importance of examining growth theories against long-term history: revealing relationships that recur because the situations are similar, as well as because of path dependence as such. But it also argues that the causal relationships involved are more differentiated than is recognised in AJR's formulations. By compressing different historical periods and paths, the ‘reversal’ thesis over-simplifies the causation. Relatively low labour productivity was a premise of the external slave trades; though the latter greatly reinforced the relative poverty of many Sub-Saharan economies. Again, it is important to distinguish settler and non-settler economies within colonial Africa itself. In the latter case it was in the interests of colonial regimes to support, rather than simply extract from, African economic enterprise. Finally, economic rent and economic growth have often been joint products, including in pre-colonial and colonial Africa; the kinds of institutions that favoured economic growth in certain historical contexts were not necessarily optimal for that purpose in others. AJR have done much to bring development economics and economic history together. The next step is a more flexible conceptual framework, and a more complex explanation. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This study develops an economic growth model with residential distribution. The model synthesises the main ideas in the Solow-Uzawa growth model, the Alonso urban model, and the Muth housing model with perfect competition in all the markets, by proposing an alternative approach to household behaviour. We show that economic growth with the economic geography is governed by a single differential equation and analyse dynamic behaviour of the model. For explanation, we simulate the model over time and space. Resumen. Este estudio desarrolla un modelo de crecimiento económico con distribución residencial. El modelo sintetiza las ideas principales del modelo de crecimiento de Solow-Uzawa, el modelo urbano de Alonso, y el modelo de vivienda de Muth con una competencia perfecta en todos los mercados, por medio de proponer un enfoque alternativo al comportamiento de hogares. Mostramos que el crecimiento económico con la geografía económica está gobernado por una única ecuación diferencial y analizamos el comportamiento dinámico del modelo. A modo de explicación, realizamos una simulación del modelo en el tiempo y en el espacio. [ABSTRACT FROM AUTHOR]

This paper provides a preliminary exploration of the role of adaptive efficiency and institutional learning as the basis for long-run economic growth in Australia by means of an analysis of the institutional changes in water rights between 1850 and 1886 in the colony of Victoria. It is argued that the effects of adaptive efficiency and institutional learning led to the replacement of growth-hindering institutional arrangements in water supply in favour of growth-enhancing frameworks that provided the basis for better economic performance over the long-run. The analysis presents evidence that suggests that in addition to the colonial experience, adaptive efficiency embedded in the inheritance of British culture rather than institutions has played an important role in Australia's economic performance. [ABSTRACT FROM AUTHOR]