nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒02‒04
thirteen papers chosen by
Marc Klemp
Brown University

  1. Population Density, Fertility and Demographic Convergence in Developing Countries By David de la Croix; Paula E. Gobbi
  2. Going Up and Down: Rethinking the Empirics of Growth in the Developing and Newly Industrialized World By Francesco Lamperti; Clara Elisabetta Mattei
  3. Technological Progress, Time Perception and Environmental Sustainability By Evangelos V. Dioikitopoulos; Sugata Ghosh; Eugenia Vella
  4. Accelerating Convergence in the World Income Distribution By Tim Kane
  5. Does globalization promote civil war? An empirical research By Roberto Ezcurra; Beatriz Manotas
  6. Different Behavioral Explanations of the Neolithic Transition from Foraging to Agriculture: A Review By Tisdell, Clem; Svizzero, Serge
  7. Islamic Banking, Credit and Economic Growth: Some Empirical Evidence By Guglielmo Maria Caporale; Mohamad Husam Helmi
  8. Endogenous Infrastructure Development and Spatial Takeoff By Alex Trew
  9. Non-renewable resources, extraction technology, and endogenous growth By Stuermer, Martin; Schwerhoff, Gregor
  10. Tracking the Slowdown in Long-Run GDP Growth By Juan Antolin-Diaz; Thomas Drechsel; Ivan Petrella
  11. Thirty years in Africa.s development: From structural adjustment to structural transformation? By Tony Addison
  12. Is Green Growth Relevant for Poor Economies? By Edward B. BARBIER
  13. Understanding the relationship between growth and employment in Nigeria By Olu Ajakaiye; Afeikhena T. Jerome; David Nabena; Olufunke A. Alaba

  1. By: David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Paula E. Gobbi (National Fund for Scientific Research (FNRS) and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Whether the population tends towards a long-run stationary value depends on forces of demographic convergence. One such force is the result of fertility rates being negatively affected by population density. We test the existence of such an effect in 44 developing countries, matching georeferenced data from the Demographic and Health Surveys for half a million women with population density grids. When we correct for selection and endogeneity bias and control for the usual determinants of fertility such as education and income, a rise in density from 10 to 1000 inhabitants per square kilometer corresponds with a decrease in fertility of about 0.6 of a child. Duration analysis reveals that both age at marriage and age at first birth increase with density.
    Keywords: Demographic and Health Survey, Preventive check, Agglomeration externalities, Population Dynamics, Marriage
    JEL: J13 D19 O18 R11
    Date: 2016–01–18
  2. By: Francesco Lamperti; Clara Elisabetta Mattei
    Abstract: Growth dynamics are remarkably heterogeneous, in particular when one focuses on developing countries. Economic miracles and failures are embedded within extended phases of either growth or decline. We propose a methodology and a taxonomy that will characterize countries' growth patterns on the basis of the sequence of regimes they experience. In particular, we emphasize the difference between expansionary and recessionary regimes and, after classifying the growth pattern of all 123 developing countries in our dataset, we explore cross-sectional empirical regularities which emerge during upward and downward growth phases. Results show that expansionary regimes are associated with convergence and positive correlation between growth and (short run) volatility. On the contrary, in recessionary regimes, poorer countries face deeper failures and a negative correlation between growth and volatility is found, signifying that output fluctuates less around the trend during strong rather than mild recessions. Finally, we discover that regimes of growth and recession show similar average length (about 16 years). Although recessions on average are remarkably pronounced (14% loss), during expansions the magnitude of growth is much larger.
    Keywords: growth, structural breaks, expansionary and recessionary regimes, convergence
    Date: 2016–01–13
  3. By: Evangelos V. Dioikitopoulos (Department of Management, King's College London); Sugata Ghosh (Department of Economics amd Finanace, Brunel University London); Eugenia Vella (Department of Economics, University of Sheffield)
    Abstract: This paper explores the relationship among technological progress, environment and growth by combining endogenous efficiency of public abatement with endogenous discounting. Our model can feature two different balanced growth paths corresponding to different levels of environmental quality, which remains constant in the long-run although the economy grows. The multiple equilibria point to a non-monotonic relationship among technological progress, growth and the environment, as observed in the data. A Ramsey planner can implement the good equilibrium; however, under a positive technology shock, the economy achieves higher long-run growth at the cost of lower environmental quality (even if agents value the environment highly). This finding could help us explain why some advanced economies may not succeed in cleaning the environment effectively.
    Keywords: Time preference; growth; environmental quality; Fiscal policy; technological progress
    JEL: D90 E21 E62 H31 O44 Q28
    Date: 2016
  4. By: Tim Kane
    Abstract: In the 1990s, cross-country empirical data suggested that the world income distribution was diverging into two peaks, rich and relatively poor. With the passing of time, we can update that empirical analysis by calculating a Markov transition matrix for the most recent two decades. This paper presents the clearest empirical picture to date of how the world income distribution has changed every succeeding decade from 1960 to 2010. This paper also compares transition matrices for 122 countries over two periods, 1970-90 and 1990-2010 and finds that divergence in the earlier period has shifted to convergence in the latter. Further, differencing the two matrices shows how the dynamic is itself evolving. Projecting these dynamics forward suggests rapid growth across all regions over the coming century that will bring nearly all countries to within 80 percent of the per capita income frontier.
    Date: 2016–01
  5. By: Roberto Ezcurra (Departamento de Economía-UPNA); Beatriz Manotas (Departamento de Economía-UPNA)
    Abstract: This paper investigates the empirical relationship between globalization and in-trastate con ict in a sample of 160 countries over the period 1970-2009. To that end, we use a measure of globalization that distinguishes the social and political dimensions of integration from the economic dimension, thus allowing us to adopt a broader perspective than in most of existing studies and examine the e ect of these three distinct aspects of globalization on civil violence. The results of the paper show that the degree of integration with the rest of the world contributes signi cantly to increasing the incidence of civil wars, in direct contrast to arguments which defend that globalization has the bene cial e ect of deterring internal armed con icts. In particular, the dimension of globalization that most robustly relates with internal con ict is economic integration. Our ndings are not a ected by the inclusion of additional explanatory variables in the analysis, or by changes in the de nition of civil war. Likewise, the relationship observed between the degree of integration and civil violence does not seem to be driven by countries located in the most con ictive regions in the world.
    Keywords: globalization civil war
    Date: 2015
  6. By: Tisdell, Clem; Svizzero, Serge
    Abstract: This article examines how well two parallel behavioral approaches, one in economics and the other in anthropology, explain the economic evolution of Neolithic societies, particularly their transit from foraging to agriculture. Both assume rational optimizing behavior. It is argued that satisficing theories provide a superior explanation of transition (and non-transition) by some hunter-gatherers. Furthermore, many of the concepts associated with neoclassical economics are shown to be inadequate for analyzing the choice problems involved. Moreover, it is argued that all behavioral theories considering the relationship between human behavior and economic evolution need to pay attention to the way that decision-making is embedded in social structures. It is unlikely that a single theory will be able to explain the economic evolution of all societies when social structures and other relevant variables differ between communities.
    Keywords: Economic evolution, economic optimization, human behavioral ecology, hunter-gatherers, Neolithic Revolution, satisficing behavior, social embedding., Community/Rural/Urban Development, Crop Production/Industries, Institutional and Behavioral Economics, D01, O10, P00, Q10,
    Date: 2016–01–19
  7. By: Guglielmo Maria Caporale; Mohamad Husam Helmi
    Abstract: This paper examines the effects of Islamic banking on the causal linkages between credit and GDP by comparing two sets of seven emerging countries, the first without Islamic banks, and the second with a dual banking system including bothIslamic and conventional banks. Unlike previous studies, it checks the robustness of the results by applying both time series and panel methods; moreover, it tests for both long- and short-run causality. In brief, the findings highlight significant differences between the two sets of countries reflecting the distinctive features of Islamic banks. Specifically, the time series analysis provides evidence of long-run causality running from credit to GDP in countries with Islamic banks only. This is confirmed by the panel causality tests, although in this case short-run causality in countries without Islamic banks is also found.
    Keywords: Credit, growth, Islamic banking, causality tests
    JEL: C32 C33 G21 O11
    Date: 2016
  8. By: Alex Trew (University of St Andrews)
    Abstract: Infrastructure development can affect the spatial distribution of economic activity and, by consequence, aggregate structural transformation and growth. The growth of trade and specialization of regions, in turn, affects the demand for infrastructure. This paper develops a model in which the evolution of the transport sector occurs alongside the growth in trade and output of agricultural and manufacturing firms. Simulation output captures aspects of the historical record of England and Wales over c.1710-1881. A number of counterfactuals demonstrate the role that the timing and spatial distribution of infrastructure development plays in determining the timing and pace of takeoff.
    Keywords: Industrial revolution, growth, transport, spatial development.
    JEL: H54 O11 O18 O33 N13 N93 R12
  9. By: Stuermer, Martin (Federal Reserve Bank of Dallas); Schwerhoff, Gregor (Mercator Research Institute on Global Commons and Climate Change (MCC))
    Abstract: We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Firms increase their economically extractable stocks of non-renewable resources through R&D investment in extraction technology and reduce their stocks through extraction. We show how the geological distribution of the non-renewable resource interacts with technological change. Our model accommodates long-term trends in non-renewable resource markets - namely stable prices and exponentially increasing extraction - for which we present data going back to 1792. The model suggests that over the long term, development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries such as China.
    Keywords: Non-renewable resources; endogenous growth; extraction technology
    JEL: O30 O41 Q30
    Date: 2015–12–29
  10. By: Juan Antolin-Diaz (Department of Macroeconomic Research, Fulcrum Asset Management); Thomas Drechsel (Centre for Macroeconomics (CFM); Economics Department London School of Economics (LSE)); Ivan Petrella (Bank of England; Department of Economics, Mathematics and Statistics Birkbeck College; Centre for Economic Policy Research (CEPR))
    Abstract: Using a dynamic factor model that allows for changes in both the long-run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that most of this slowdown occurred prior to the Great Recession. We show how to use the model to decompose changes in long-run growth into its underlying drivers. At low frequencies, a decline in the growth rate of labor productivity appears to be behind the recent slowdown in GDP growth for both the US and other advanced economies. When applied to real-time data, the proposed model is capable of detecting shifts in long-run growth in a timely and reliable manner.
    Keywords: Long-run growth, Business cycles, Productivity, Dynamic factor models, Real-time data
    JEL: C32 E01 E23 E32 O47
    Date: 2014–10
  11. By: Tony Addison
    Abstract: The regional development policy in Brazil materializes mainly in the regional development funds for the north-east (FNE), the north (FNO), and the centre-west (FCO), in which more than EUR36 billion was invested between 2004 and 2010. This paper examines the economic effect of these regional development funds using for the first time a unique and recent data provided by Brazil.s government. The study uses spatial panel models and different spatial scales of municipalities and micro-regions to analyse the effect of development funds on regional GDP per capita growth during 2004-10. The results suggest that development funds have positive impact on GDP per capita growth mainly at municipality level. Furthermore, the results indicate that different modalities of FCO, FNO, and FNE affect regional growth differently. Africa has come a long way since the economic turmoil of the 1980s, the decade of .structural adjustment.. Growth has been strong, yet poverty remains high. Underlying the shortage of good livelihoods and high social inequality is the lack of diversification in Africa.s contrast to Asia.s success stories. Structural adjustment did not change the basic structure of economies. Many countries became mired in war in the 1980s and 1990s. This also brought about structural change, often of the worst kind. Today, structural transformation remains on the policy table, but many of the constraints, notably infrastructure and enterprise finance, have yet to be resolved. Agricultural productivity remains low. And without new manufacturing and service clusters, Africa is yet to follow East Asia in integrating with the global economy in ways that add value and good jobs. Instead, integration continues via Africa.s traditional primary exports, making the region vulnerable to commodity price shocks. Today.s policy agenda is subtle, and one in which the challenges have no easy answers.
    Keywords: Africa, economic transformation, poverty, inequality, aid
    Date: 2015
  12. By: Edward B. BARBIER (Université du Wyoming)
    Abstract: To be relevant to developing countries, green growth must be reconciled with the two key structural features of natural resource use and poverty in these countries.  First, primary products account for the majority of their export earnings, and they are unable to diversify from primary production. Second, many economies have a substantial share of their rural population located on less favored agricultural land and in remote areas, thus encouraging “geographic” poverty traps.  If green growth is to be a catalyst for economy-wide transformation and poverty alleviation in developing countries, then it must be accompanied by policies aimed directly at overcoming these two structural features.  Policies and reforms should foster forward and backward linkages of primary production, enhance its integration with the rest of the economy, and improve opportunities for innovation and knowledge spillovers.  Rural poverty, especially the persistent concentration of the rural poor on less favored agricultural lands and in remote areas, needs to be addressed by additional targeted policies and investments, and where necessary, policies to promote rural-urban migration.
    JEL: Q15 O13 O44
    Date: 2015–12
  13. By: Olu Ajakaiye; Afeikhena T. Jerome; David Nabena; Olufunke A. Alaba
    Abstract: This study examines the relationship between growth and employment in Nigeria to gain insights into the country.s paradox of high economic growth alongside rising poverty and inequality. The methodology adopted is the Shapley decomposition approach, complemented with econometric estimation of the country.s employment intensity of growth. The findings indicate that Nigeria.s growth over the last decade has been .jobless. and sustained largely by factor reallocations rather than productivity enhancement. Labour reallocations have been mainly from agriculture and manufacturing towards the low productive services sector. Employment elasticity of growth was positive and quite low, reflecting the country.s poor overall employment generation record, especially in manufacturing.
    Keywords: Employment, growth, poverty, employment elasticity, growth decomposition, Nigeria
    Date: 2015

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