nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2015‒06‒20
six papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis By Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
  2. The Effect of Energy Consumption and Human Capital on Economic Growth: An Exploration of Oil Exporting and Developed Countries By Fatema Alaali; Jennifer Roberts; Karl Taylor
  3. Does government size affect per-capita income growth? A Hierarchical meta-regression analysis By Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
  4. Economic growth and nonrenewable resources: An empirical investigation By Amos James Ibrahim-Shwilima
  6. Do capital inflows boost growth in developing countries ? evidence from Sub-Saharan Africa By Calderon,Cesar; Nguyen,Ha Minh

  1. By: Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
    Abstract: Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using meta-analysis. We also explain the heterogeneity in empirical results. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative. Our meta-regression analysis suggests that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We also find no evidence of publication selectivity.
    Keywords: government education expenditure,government health expenditure,human capital,economic growth
    Date: 2015–06–16
  2. By: Fatema Alaali (Department of Economics, University of Sheffield); Jennifer Roberts (Department of Economics, University of Sheffield); Karl Taylor (Department of Economics, University of Sheffield)
    Abstract: Energy has long been argued as an essential factor for the development of the economy and therefore it should be brought in line with the other production factors of neoclassical economics, capital and labour. Using panel data for 130 countries from 1981 to 2009, this paper explores the impact of multiple forms of energy consumption and human capital on per capita GDP growth. Generalized method of moments is applied to estimate an augmented neoclassical growth model that includes education and health capital as well as energy consumption. The key outcomes from this study show that education and health capital have a signifficant effect on economic growth. Energy consumption is also found to support higher growth. The results on the differential effects of energy and human capital on the economic growth of the developed and oil exporting countries indicate that energy consumption has a significant positive effect in both types of countries. Education capital affects the developed countries positively while health capital affects the oil exporting countries' economic growth negatively. These results are useful for policy makers, especially in less developed countries encouraging them to implement, for example, compulsory secondary education and child immunizations in order to reach higher standards of living. Moreover, energy must be used more efficiently to ensure sustainable growth.
    Keywords: Growth, Education, Health, Human Capital, Mortality Rates, Energy Consumption.
    JEL: I15 I25 Q43
    Date: 2015–06
  3. By: Awaworyi Churchill, Sefa; Yew, Siew Ling; Ugur, Mehmet
    Abstract: We conduct a hierarchical meta-regression analysis to review 87 empirical studies that report 769 estimates for the effects of government size on economic growth. We follow best-practice recommendations for meta-analysis of economics research and address issues of publication selection bias and heterogeneity. When measured as the ratio of total government expenditures or government consumption expenditures to GDP, government size is associated negatively with per-capita income growth in developed countries. However, the partial correlation coefficient is insignificant when the evidence relates to developing countries. When the evidence for both country types is pooled together, the partial correlation is insignificant in the case of total government expenditures but negative and significant in the case of government consumption. We also report that government size is associated with less adverse effects when primary studies control for endogeneity and are published in journals and more recently, but it is associated with more adverse effects when primary studies use averaged cross-section data. These findings indicate that the relationship between government size and growth is context-specific and the existing evidence is insufficient to establish a negative causal effect due to: (i) potential biases induced by reverse causality between government size and per-capita income; (ii) lack of control for country fixed effects in cross-section studies; and (iii) absence of control for non-linear relationships between government size and per-capita GDP growth.
    Keywords: Economic growth,Government size,Government expenditure,Government consumption,Meta-analysis,Evidence synthesis
    JEL: O40 H50 C1
    Date: 2015–06–16
  4. By: Amos James Ibrahim-Shwilima (Graduate School of Economics, Waseda University, Tokyo: Japan)
    Abstract: In this paper, we investigate the role of nonrenewable resources in economic growth from 1995–2010. The surprising result is that the share of nonrenewable resource exports in 1996 GDP was positively associated with subsequent economic growth. In fact, for the period under study, we found no strong evidence of the resource curse, after controlling for other important determinants of economic growth. For the period under study, most economies were open and followed policies that enabled large flows of foreign investment between economies. Our finding suggests that public institutions — measured by using an index of government effectiveness — are of paramount importance to economic growth. This suggests that if a resource-rich economy needs a greater contribution from its resources, it should improve its public- and private-sector institutions.
    Keywords: growth, primary-product exports, nonrenewable resources, institutions
    Date: 2015–01
  5. By: Evan Lau (Universiti Malaysia Sarawak); Alvina Syn-Yee Lee (Universiti Malaysia Sarawak); Ahmad Zubaidi Baharumshah (Universiti Putra Malaysia)
    Abstract: This study aims to examine the contribution of external debt to economic growth in three countries namely; Malaysia, Thailand and the Philippines. To discern the causal chain linkages among the I(1) macroeconomic variables typically utilized to test the connection between external debt and economic growth, several econometric procedures are employed in this study. By employing the cointegration test, the results reveal the existence of one unique long-run relationship among the variables for Malaysia while two cointegrating vectors are identified for both Thailand and the Philippines. From the results, it is evident that both the growth-driven exports and export-led growth hypothesis exist in Malaysia and Thailand respectively. The dynamic econometric analysis finds that exports of goods and services appear to be the most leading variable beyond the sample for the next 50 years. The findings from the study recommend the policy makers should formulate effective debt management policies to monitor the amount of external borrowings so that the accumulation of external debt will not hinder the economic growth.
    Keywords: External Debt; Economic Growth; Malaysia; Thailand; Philippines.
    JEL: F34 F43 H63
  6. By: Calderon,Cesar; Nguyen,Ha Minh
    Abstract: This paper examines whether domestic output growth helps attract capital inflows and, in turn, capital inflows help boost output growth in a set of 38 Sub-Saharan African countries. Using a two-step approach to address reverse causality and omitted variable issues, the paper finds that output growth in countries in Sub-Saharan Africa does not attract capital inflows. However, aid and foreign direct investment inflows enhance growth, while sovereign debt inflows do not. A 1 percent increase in the level of real aid inflows raises growth of real output per capita by 0.022 percentage point. For foreign direct investment inflows, the figure is 0.002 percentage point.
    Keywords: Pro-Poor Growth,Islamic Finance,Emerging Markets,Economic Growth,Macroeconomic Management
    Date: 2015–06–09

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