nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2016‒07‒30
two papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Significance of Infrastructure Investment for Economic Growth By Younis, Fizza
  2. Long-term social, economic and fiscal effects of immigration into the EU: The role of the integration policy By d'Artis Kancs; Patrizio Lecca

  1. By: Younis, Fizza
    Abstract: The study attempts to examine the impact of infrastructure investment on economic growth in Pakistan. For this purpose, social and economic infrastructure indices are constructed using Principle Component Analysis and VECM is applied to estimate the long-run as well as short-run relationship between the variables. The study follows the theoretical background of Barro’s (1990) model of government expenditure. The theory suggests that infrastructure investment can have negative impact on economic growth if marginal product of such investment falls below price of capital. The results show that long-run impact of private investment and social infrastructure investment on economic growth is positive and significant while economic infrastructure investment affects economic growth negatively. In short-run, on the other hand, infrastructure investment does not have any significant impact on economic growth. But national savings rate and private investment rate show negative impact on growth. Whereas, price of capital and direct tax have positive impact on economic growth. Diagonastic tests are also performed to test validity of the model. The results have important policy implications as the study reveals inefficiency of infrastructure investment in Pakistan. There is need to divert resources from economic infrastructure to social infrastructure which has the potential to increase growth rate.
    Keywords: Economic growth; Infrastructure investment; Economic and social infrastructure; Empirical analysis; Vector error correction model
    JEL: C5 O4 O53
    Date: 2014–01–01
  2. By: d'Artis Kancs; Patrizio Lecca
    Abstract: The issues of the forced migration and the integration of refugees in the society and labour markets are high on the policy agenda of the EU. Apart from humanitarian aspects, a sustainable integration of refugees is important also for social, economic, budgetary and others reasons. Indeed, the potential consequences of the asylum seeker acceptance are being often discussed, though little scientific evidence has been provided for the policy debate so far. The present study attempts to shed light on the long-run social, economic and budgetary effects of forced immigration into the EU by applying a macroeconomic model of the European Commission and performing scenario analysis of alternative refugee integration scenarios. Our simulation results suggest that, although, refugee integration (e.g. by providing language and professional training) is costly for the public budget, in the medium- to long-run, the social, economic and fiscal benefits may significantly outweigh the short-run refugee integration costs. In addition, the integration policy has the potential to play an important role in improving the social inclusion, filling vacancies, improving the ratio of workers to economically inactive, addressing Europe’s alarming demographic challenges, and boosting jobs and growth in the EU.
    Keywords: Migration, refugees, social inclusion, labour market, integration policy, modelling, scenario analyses.
    JEL: F22 J6 J11 J24
    Date: 2016–01–08

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