nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2013‒04‒20
fourteen papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. The Causal Relationship between Exports and Economic Growth in the Nine Provinces of South Africa: Evidence from Panel-Granger Causality Tests By Tsangyao Chang; Beatrice D. Simo-Kengne; Rangan Gupta
  2. Education and Economic Growth: A Meta-Regression Analysis By Benos, Nikos; Zotou, Stefania
  3. Algumas evidências internacionais sobre a relação entre sistema financeiro e crescimento econômico no domínio da frequência By Bruno de Paula Rocha; Gabriela Igor Viveiros de Souza
  4. The Growth Effects of Tax Rates in the OECD By Gemmell, Norman; Kneller, Richard; Sanz, Ismael
  5. The Global Impact of China's Growth By Peter E Robertson
  6. Wage-led growth : concepts, theories and policies By Lavoie, Marc; Stockhammer, Engelbert
  7. Growth and deprivation in India: What does recent data say? By Sripad Motiram; Karthikeya Naraparaju
  8. How ethnic diversity affects economic Development? By Erkan Gören
  9. From Stagnation to Sustained Growth: The Role of Female Empowerment By Claude Diebolt; Faustine Perrin
  10. Export variety, technological content and economic performance: The case of Portugal By Francisco Rebelo; Ester Gomes da Silva
  11. Does the economic integration of China affect growth and inflation in industrial countries? By Christian Dreger; Yanqun Zhang
  12. Energy, Knowledge and Economic Growth By John Foster
  13. The Effects of Foreign Direct Investment on Industrial Growth: Evidence from a Regulation Change in China By Mitsuo Inada
  14. The Imprinting of Founders' Human Capital on Entrepreneurial Venture Growth: Evidence from New Technology-Based Firms By Luca Grilli; Paul H. Jensen; Samuele Murtinu

  1. By: Tsangyao Chang (Department of Finance, Feng Chia University, Taichung, Taiwan); Beatrice D. Simo-Kengne (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This paper examines the causal relationship between exports and growth in nine provinces of South Africa for the period 1995-2011, using panel causality analysis, which accounts for cross-section dependency and heterogeneity across regions. Our empirical results support unidirectional causality running from economic growth to exports for Mpumalanga only; a bi-directional causality between exports and economic growth for Gauteng; and no causality in any direction between economic growth and exports for the rest of provinces. This suggests that export expansion might not be an efficient strategy to improve provincial economic performance in South Africa as neither exports nor economic growth is sensitive to each other in almost all provinces.
    Keywords: Exports, Economic Growth, Dependency and Heterogeneity, Panel Causality Test
    JEL: C33 F14 R11 R12
    Date: 2013–04
  2. By: Benos, Nikos; Zotou, Stefania
    Abstract: This paper surveys the literature that examines the effect of education on economic growth. Specifically, we apply meta-regression analysis to 56 studies with 979 estimates and show that there is substantial publication selection bias towards a positive impact of education on growth. Once we account for this, we find evidence of a genuine effect of education on economic growth. The variation in reported estimates can be attributed to differences in the measurement of education and study characteristics, most importantly model specification, estimation methodology, type of data and the research outlet where studies were published, e.g. academic journals vs. working papers.
    Keywords: Education, human capital, economic growth, meta-regression analysis, world sample
    JEL: C01 E24 I25 O50
    Date: 2013–03
  3. By: Bruno de Paula Rocha (Cedeplar-UFMG); Gabriela Igor Viveiros de Souza (UFOP)
    Abstract: This paper aims to present causality tests between financial system and economic growth in the frequency domain for Brazil, India, France, Japan, United States and Korea. This approach allows to capture nonlinearities in the direction of the causality from short to longer terms. Indeed the results show variation in causality tests depending on the frequency of the cycles considered. There is evidence of that the financial system is a causal factor for long-term economic growth in Brazil. For developed countries (United States and France) that causality is not as important once controlled by capital accumulation.
    Keywords: economic growth; financial system; time series in frequency domain
    JEL: O16 G18 C32
    Date: 2012–04
  4. By: Gemmell, Norman; Kneller, Richard; Sanz, Ismael
    Abstract: The literature testing for aggregate impacts of taxes on long-run growth rates in the OECD has generally used tax rate measures constructed from macroeconomic aggregates such as tax revenues. These have a number of advantages but two major disadvantages: they are typically average, rather than marginal, rates, and are constructed from endogenous tax revenues. Theory predicts a number of responses to both average and marginal tax rates, but empirical analogues of the latter tend to be at the micro level. In addition though most OECD economies are best regarded as small open economies, previous macroeconomic tests of OECD tax-growth relationships have implicitly been based on closed-economy models, focusing on domestic tax rates. This paper explores the relevance of these two aspects – "macro average‟ versus "micro marginal‟ tax rates, and open economy dimensions – for test of tax-growth effects in OECD countries. We use annual panel data on a number of average and marginal tax rate measures and find: (i) statistically small and/or non-robust effects of macro-based average tax rates on capital income and consumption but more evidence for average labor income tax effects; (ii) statistically robust GDP growth effects of modest size from changes in marginal income tax rates at both the personal and corporate levels; (iii) international tax competition, in which both domestic and foreign corporate tax rates play a role, is consistent with the data; (iv) tax effects on GDP growth appear to operate largely via impacts on factor productivity rather than factor accumulation.
    Keywords: marginal tax rates, average tax rates, personal tax, corporate tax, GDP growth,
    Date: 2013–04–11
  5. By: Peter E Robertson (Business School, University of Western Australia)
    Date: 2013
  6. By: Lavoie, Marc; Stockhammer, Engelbert
    Keywords: wages, wage policy, economic policy, salaire, politique des salaires, politique économique, salario, política salarial, política económica
    Date: 2012
  7. By: Sripad Motiram (Indira Gandhi Institute of Development Research); Karthikeya Naraparaju (Indira Gandhi Institute of Development Research)
    Abstract: We investigate the relationship between growth and deprivation in India, an issue of immense interest. Given the continuing controversy in India over poverty lines, we use a framework that rigorously assesses the impact of growth on the poor over a range of poverty lines. Using National sample Surveys on consumption expenditure, we show that while growth has "trickled down" in both rural and urban areas, it has not been in favour of the poor. In urban areas, growth has been "anti-poor." We extend this methodology to incorporate sub-groups and consider disadvantaged caste groups and poorer/lower classes. We find that growth has not been in favour of the poor among these groups. Our findings raise serious concerns about the "inclusiveness" of Indian growth. Our analysis also has implications for pro-poor growth and the measurement of inequality.
    Keywords: Pro-poor growth; Poverty, Inclusion, India
    JEL: D63 I32
    Date: 2013–02
  8. By: Erkan Gören (University of Oldenburg, Department of Economics)
    Abstract: This paper investigates the empirical relationship between the two concepts of ethnicity and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross-country growth regressions by proposing an extended econometric system of equations to describe growth incorporates new channel variables for the potential indirect effects of ethnicity that are important in the process of economic development. The results, based on a sample of 95 countries for the period 1960-1999, suggest that the concept of ethnic fractionalization is a strong predictive measure for the direct effect of ethnicity on growth, whereas the concept of ethnic polarization has non-negligible indirect economic effects through the specified channel variables.
    Keywords: ethnic diversity; fractionalization; polarization; transmission channels; economic growth
    JEL: O11 O5
    Date: 2012–10
  9. By: Claude Diebolt (BETA/CNRS (UMR7522), University of Strasbourg, France); Faustine Perrin (BETA/CNRS (UMR7522), University of Strasbourg, France)
    Date: 2013
  10. By: Francisco Rebelo (Faculdade de Economia, Universidade do Porto); Ester Gomes da Silva (Faculdade de Letras/ISFLUP; CEF.UP, Universidade do Porto)
    Abstract: Although the analysis of the relationship between international trade and economic growth has an important tradition in the economic literature, the specific focus on a related matter, the link between export variety and economic growth, remains a relatively unexplored field of research. Recently, a few studies have approached this issue, adopting a neo-Schumpeterian framework. In line with this general frame of analysis, in this paper we investigate the impact of export variety on economic growth, cross-relating the variety dimension with technological upgrading. Cointegration econometric results based on the Portuguese experience over the past four decades (1967-2010) show that increased related variety has led to a significant growth bonus, but only in the case of technology advanced sectors. The impact of export variety on economic performance seems, therefore, to be conditioned by the technological intensity of the products involved.
    Keywords: Trade; variety; economic growth; technical change; Portugal.
    JEL: F10 O11 O30 O52
    Date: 2013–04
  11. By: Christian Dreger; Yanqun Zhang
    Abstract: The Chinese economic development affects GDP growth and inflation in the advanced countries. A GVAR approach is used to model the interdependencies between the business cycles in China and industrial countries, including the US, the euro area and Japan. For robustness, the results are compared to those obtained by leading structural econometric models, such as NiGEM and OEF. Evidence is based on the responses to a Chinese shock stemming from the recent fiscal stimulus package. The results indicate that the impact on GDP growth in the advanced economies is substantial for the Asian region. The expansionary effects to the US and the euro area responses are much lower and decrease due to rising inflation pressure. The analysis also reveals that China is still highly vulnerable to shocks in industrial countries, including the government debt crisis in the euro area.
    Keywords: GVAR, Chinese integration, shock transmission, euro area debt crisis
    JEL: E32 F15 C51
    Date: 2013–04
  12. By: John Foster (School of Economics, University of Queensland)
    Abstract: It is argued that the explosive growth experienced in much of the World since the middle of the 19th Century is due to the exploitation and use of fossil fuels which, in turn, was made possible by capital good innovations that enabled this source of energy to be used effectively. Economic growth, it is argued, has been due to an autocatalytic co-evolution of energy use and the application of new knowledge relating to energy use. A simple ‘evolutionary macroeconomic’ model of economic growth is developed and tested using almost two centuries of British data. The empirical findings strongly support the hypothesis that growth has been due to the presence of a ‘super-radical innovation diffusion process.’ Also, the evidence suggests that large and sustained movements in energy prices have had a very significant long term role to play. The paper concludes with an assessment of the implications of the findings for the future prospects of economic growth in Britain and the possible lessons that can be learned about the future of the global economy.
    Keywords: Energy; Knowledge; Evolution;
    JEL: Q43 O10 O43 P48 Q32
    Date: 2013–03
  13. By: Mitsuo Inada (Graduate School of Economics, Kyoto University)
    Abstract: Inward foreign direct investment (FDI) in China has been accompanied by rapid economic growth. A growing literature has emerged in recent years examining the role of FDI on Chinese economic growth. However, measuring the e?ects of FDI has been challenging, because other fac- tors which in?uence ?rms?productivity occur in parallel with FDI, and because economic growth also simultaneously attracts FDI. To address these endogeneities, this paper analyzes the e?ects of a change in the FDI regulations on the productivity growth of Chinese industries using Chinese industry-level panel data. In 2002, the Chinese government lifted its regulations on the entry of foreign a¢ liates, which has made it substantially easier for foreign ?rms to engage in FDI in a?ected industries. As a result of this regulation change, our di?erence-in-di?erences estimates show that these industries experienced signi?cantly larger increases in foreign ?rms?total sales, exports, and domestic sales. We also ?nd that this increase in FDI resulted in an increase in labor productivity and in total factor productivity (TFP) of the a?ected industries and local industries, but we do not ?nd that they experienced signi?cantly larger in?ows of FDI or productivity growth before 2002, which provides evidence against endogeneity concerns. The results above are su¢ - ciently robust to include changes in industrial tari? reduction as controls. These ?ndings suggest that the growth of foreign sales and TFP in a?ected industries is not well explained except by the e?ects of regulation changes.
    Keywords: Foreign Direct Investment; Regulation Change; Industrial Growth; Technology Spillovers; Difference-in-Differences.
    JEL: F21 O33 O38 O43
    Date: 2013–04
  14. By: Luca Grilli (Department of Management, Economics, and Industrial Engineering, Politecnico di Milano); Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Intellectual Property Research Institute of Australia, The University of Melbourne); Samuele Murtinu (Department of Management, Economics, and Industrial Engineering, Politecnico di Milano)
    Abstract: This paper tests the presence of an ‘entrepreneurial imprinting effect’ of founders’ human capital on entrepreneurial ventures’ performance. More specifically, we empirically explore the impact of entrepreneurs’ human capital on a firm’s sales growth performance by disentangling the effect of the stock of human capital possessed at foundation from the potential injections and losses of human capital due to exit of founders and/or addition of new owner-managers in the entrepreneurial team over time. Our analysis is based on a panel dataset composed of 338 Italian new technology-based firms (NTBFs) observed from 1995 (or since their foundation) to 2008 (or until their exit from the dataset). We consider the effects of several dimensions of entrepreneurial human capital on firm sales growth and estimate Gibrat law-type dynamic panel data models using OLS estimator and GMM-system estimator to control for endogeneity. Overall, our results point to a positive and significant presence of an ‘entrepreneurial imprinting effect’ exerted by founders’ specific work experience on venture growth which is robust to a series of controls.
    Keywords: Entrepreneurial ventures, imprinting effect, entrepreneurs’ human capital, firm growth, new technology-based firms
    JEL: L25 L26 O31
    Date: 2013–04

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