nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2008‒12‒01
three papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Endogenous Determination of FDI Growth and Economic Growth:The OECD Case By Burcu Türkcan; I. Hakan Yetkiner
  2. Trade, Remittances, Institutions, and Economic Growth By Thanh Le
  3. Demographic Change and Economic Growth in Asia By David E. Bloom; David Canning; Jocelyn E. Finlay

  1. By: Burcu Türkcan (Department of Economics, Izmir University of Economics); I. Hakan Yetkiner (Department of Economics, Izmir University of Economics)
    Abstract: This paper tests the endogenous relationship between FDI growth and economic growth using a panel dataset for 23 OECD countries for the period 1975-2004. In particular we estimate a two-equation simultaneous equation system with the generalized methods of moments (GMM) that treats economic growth and FDI growth as endogenous variables. We find that FDI growth and economic growth are significant determinants of each other. We also find that export growth rate and human capital are statistically significant determinants of both FDI growth and economic growth. Our findings lead us to conclude that FDI growth and economic growth have an endogenous relationship.
    Keywords: FDI growth, economic growth, Panel Data, GMM
    JEL: C33 O5 F21
    Date: 2008–11
  2. By: Thanh Le (MRG - School of Economics, The University of Queensland)
    Abstract: This paper empirically investigates the role of trade, remittances, and institutions in economic development in a large sample of developing countries using recently developed instruments for all these variables. Both cross country (over 30 years) and dynamic panel data (over 5-year periods) regressions of growth rates on instrumented trade, remittances, and institutions provide evidence of a significant impact of trade, institutions, and remittances on growth. While institutions foster growth, remittances hamper it. The effect of trade on growth is positive in cross sectional regressions but ambiguous in dynamic panel data regressions. These results are indicative of a more important role for trade in explaining growth in the very long run than over shorter horizons.
  3. By: David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Jocelyn E. Finlay (Harvard School of Public Health)
    Abstract: In 1994 the World Bank called East Asia's strong economic growth performance a "miracle". Trade openness, high savings rates, human capital accumulation, and macroeconomic policy only explained part of this growth performance; the remainder was left unexplained. Research in the ensuing years has shown that when demographic change in East Asia is taken into account, the miracle is explained. These earlier studies used the 1960-1990 sample period, but since 1990 Asia has undergone major economic reforms in response to financial crises and other factors. Moreover, rapid demographic change has continued in East Asia, and in Asia more generally, with fertility rates falling below replacement in many of these countries. In this paper, we re-examine the role of the demographic transition in explaining cross-country differences in economic growth, with a particular focus on East Asia. With the working-age share beginning to decline in many Asian countries, innovation and flexibility in the labor market will be required for them to continue to enjoy the high rates of economic growth they have experienced to date.
    Keywords: Global health, fertility, Asia, labor, Aging, Economics, Demography.
    Date: 2008–11

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