nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒06‒02
six papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Stock markets and economic growth in oil exporting countries: evidence from Kuwait. By Bentour, El Mostafa
  2. Global Divergence in Growth Regressions By Battisti, Michele; Di Vaio, Gianfranco; Zeira, Joseph
  3. Social Capital, Government Expenditures, and Growth By Ponzetto, Giacomo AM; Troiano, Ugo
  4. China's Impact on Africa - the Role of Trade, FDI and Aid By Busse, Matthias; Erdogan, Ceren; Muehlen, Henning
  5. Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method By Campos, Nauro F; Coricelli, Fabrizio; Moretti, Luigi
  6. Twentieth Century Growth By Crafts, Nicholas; O'Rourke, Kevin Hjortshøj

  1. By: Bentour, El Mostafa
    Abstract: This paper empirically investigates the role played by the Kuwait stock market on the real sector. It uses useful steps and techniques to set up a regression based on the Mankiw-Romer-Weil model to answer whether there is an eventually positive effect of the stock market developments on the real economy. The results show a positive impact of the market capitalisation on the Gross Domestic Product. The elasticity of the market capitalization to GDP is around 0.17. This impact is also confirmed by an autoregressive vector model via estimation and impulse response functions on both total and non oil GDP.
    Keywords: Non oil GDP, Market Capitalization, Cobb-Douglas, Human Capital.
    JEL: O11 O47
    Date: 2014–05–15
  2. By: Battisti, Michele; Di Vaio, Gianfranco; Zeira, Joseph
    Abstract: This paper extends the standard growth regression model by adding an assumption that a country follows the global technology frontier either fully or partially. This additional assumption changes significantly the growth regression model and its results in three main ways. First, it shows that although a country converges to its long-run growth path, this path can diverge from the countries at the global frontier. We measure the degree of divergence for each country and find that most indeed diverge from the frontier. Second, we estimate growth dynamics without controlling for additional variables. Third, our new method enables us to disentangle the effects of the explanatory variables on the long-run rate of growth from the short-run effects.
    Keywords: Convergence; Divergence; Economic Growth; Global Frontier; Growth Regressions
    JEL: O40 O47 O57
    Date: 2013–10
  3. By: Ponzetto, Giacomo AM; Troiano, Ugo
    Abstract: The impact of social capital on economic growth is empirically well documented. Yet the reasons for this relationship remain theoretically understudied. We present a tractable stochastic endogenous growth model that explains how social capital influences economic development. In our model, social capital increases citizens' awareness of government activity. As a consequence, we find it alleviates the electoral incentives to under-invest in education, whose returns are delayed in time and relatively less visible to voters. In the dynamic equilibrium, higher social capital increases both the amount and the efficiency of public investment in education, permanently raising the growth rate. Our theory predicts that higher and more homogeneously distributed social capital should increase public expenditure on education. We provide suggestive cross-country evidence consistent with these predictions.
    Keywords: Economic Growth; Education Expenditures; Elections; Government Expenditures; Imperfect Information; Social Capital
    JEL: D72 D83 H52 I22 I25 O43 Z13
    Date: 2014–03
  4. By: Busse, Matthias; Erdogan, Ceren; Muehlen, Henning
    Abstract: We investigate the impact of Chinese activities in sub-Saharan African countries with respect to the growth performance of economies in that region. Using a Solow-type growth model and panel data for the period 1991 to 2011, we find that African economies that export natural resources have benefited from positive terms-of-trade effects. In addition, there is evidence for displacement effects of African firms due to competition from China. Chinese foreign investment and aid in Africa does not have an impact on growth.
    Keywords: China; Sub-Saharan Africa; Trade; FDI; Foreign aid; Economic growth; South-south cooperation
    JEL: F14 F23 F35 O47
    Date: 2014
  5. By: Campos, Nauro F; Coricelli, Fabrizio; Moretti, Luigi
    Abstract: This paper presents new estimates of the economic benefits from economic and political integration. Using the synthetic counterfactuals method, we estimate how GDP per capita and labour productivity would have behaved for the countries that joined the European Union (EU) in the 1973, 1980s, 1995 and 2004 enlargements, if those countries had not joined the EU. We find large positive effects from EU membership but these differ across countries and over time (they are only negative for Greece). We calculate that without deep economic and political integration, per capita incomes would have been, on average, approximately 12 percent lower.
    Keywords: economic growth; European Union; synthetic counterfactuals
    JEL: C33 F15 F43 O52
    Date: 2014–05
  6. By: Crafts, Nicholas; O'Rourke, Kevin Hjortshøj
    Abstract: This paper surveys the experience of economic growth in the 20th century with a focus on technological change at the frontier together with issues related to success and failure in catch-up growth. A detailed account of growth performance based on historical national accounts data is given and is accompanied by a review of growth accounting evidence on the sources of economic growth. The key features of our analysis of divergence in growth outcomes are an emphasis on the importance of ‘directed’ technical change, of institutional quality, and of geography. We provide brief case studies of the experience of individual countries to illustrate these points.
    Keywords: catch-up growth; divergence; growth accounting; technical change
    JEL: N10 O33 O43 O47
    Date: 2013–09

This nep-fdg issue is ©2014 by Iulia Igescu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.