nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒06‒10
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Stalin and the Origins of Mistrust By Nikolova, Milena; Popova, Olga; Otrachshenko, Vladimir
  2. Living Standards, Inequality, and Human Development since 1870 : a Review of Evidence By Cha, Myung Soo; Prados de la Escosura, Leandro
  3. A health 'Kuznets' curve'? Cross-section and longitudinal evidence on concentration indices By Costa-Font, Joan; Hernández-Quevedo, Cristina; Sato, Azusa
  4. A simple characterization for sustained growth By Ha-Huy, Thai; Tran, Nhat-Thien
  5. Population and Poverty in Ireland on the Eve of the Great Famine By Alan Fernihough; Cormac Ó Gráda
  6. Demographic origins of the startup deficit By Karahan, Fatih; Pugsley, Benjamin; Sahin, Aysegul
  7. Automation, New Technology and Non-Homothetic Preferences By Clemens C. Struck; Adnan Velic
  8. Aggregate Implications of Changing Sectoral Trends By Foerster, Andrew; Hornstein, Andreas; Sarte, Pierre-Daniel G.; Watson, Mark W.
  9. Drivers of Growth in Fast Emerging Economies: a Dynamic Instrumental Quantile Approach to Real Output and its Rates of Growth in BRICS and MINT countries, 2001-2011 By Simplice A. Asongu; Nicholas M. Odhiambo
  10. Economic Development Thresholds for a Green Economy in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  11. Structural Transformation, Industrial Specialization, and Endogenous Growth By Paula Bustos; Juan Manuel Castro Vincenzi; Joan Monras; Jacopo Ponticelli

  1. By: Nikolova, Milena (University of Groningen); Popova, Olga (CERGE-EI); Otrachshenko, Vladimir (Nova School of Business and Economics)
    Abstract: We show that current differences in trust levels within former Soviet Union countries can be traced back to the system of forced prison labor during Stalin's rule, which was marked by high incarceration rates, repression, and harsh punishments. We argue that those exposed to forced labor camps (gulags) became less trusting and transferred this social norm to their descendants. Combining contemporary individual-level survey data with historical information on the location of forced labor camps, we find that individuals who live near former gulags have low levels of social and institutional trust. Our results are robust to a battery of sensitivity checks, which suggests that the relationship we document is causal. We outline several causal mechanisms and test whether the social norm of mistrust near gulags developed because of political repression or due to fear that inmates bring criminality. As such, we provide novel evidence on the channels through which history matters for current socio-economic outcomes today.
    Keywords: social trust, institutional trust, trustworthiness, forced labor, economic history, former Soviet Union
    JEL: D02 H10 N94 Z13
    Date: 2019–04
  2. By: Cha, Myung Soo; Prados de la Escosura, Leandro
    Abstract: During the last one‐and‐a‐half centuries, average world income grew 10‐fold, the composition of output and relative factor returns shifted, and globalization occurred. How have the fruits of growth been distributed among different income groups and countries? How did the West compare to the Rest of the world in terms of improving well‐being? In this survey, we conclude that consumption per person has grown over time, but more slowly than GDP per capita, as the share of private consumption declined, although was partly offset by the rising share of public consumption. Income inequality within countries fell from the early to late twentieth century and has risen in the recent decades. Living standards improved across the world, but the gap between the West and the Rest increased, and between‐country inequality widened over time until the 1990s, when the trend reversed. Among world inhabitants, income distribution has followed a similar trend, with inequality increasing up to 1990 and declining in the 21st century. Impressive long‐run gains in human development have taken place in the world without being interrupted by the economic slowdown and globalization backlash during 1914‐50.
    Keywords: Human Development; Well-being; Inequality; Living Standards
    JEL: O15 N30 I00
  3. By: Costa-Font, Joan; Hernández-Quevedo, Cristina; Sato, Azusa
    Abstract: The distribution of income related health inequalities appears to exhibit changing patterns when both developing countries and developed countries are examined. This paper tests for the existence of a health Kuznets' curve, that is an inverse U-shape pattern between economic developments measured by GDP per capita) and income-related health inequalities (as measured by concentration indices). We draw upon both cross section (the World Health Survey) and a long longitudinal (the European Community Household Panel survey) dataset. Our results suggest evidence of a health Kuznets' curve on per capita income. Our findings point towards the existence of a polynomial association where inequalities decline when GDP per capita reaches a magnitude ranging between $26,000 and $38,700.That is, income-related health inequalities rise with GDP per capita, but tail off once a threshold level of economic development has been attained.
    Keywords: concentration indices; self-reported health; health inequalities; Kuznets’ curve; income related health inequalities
    JEL: I18 I3 O1
    Date: 2018–04–01
  4. By: Ha-Huy, Thai; Tran, Nhat-Thien
    Abstract: This article considers an inter-temporal optimization problem in a fairly general form and give sufficient conditions ensuring the convergence to infinity of the economy. These conditions are easy to verify and can be applied for a large class of problems in literature. As examples, some applications for different economies are also given.
    Keywords: Unbounded growth, sustained growth, non-convex dynamic programming
    JEL: C02 C61 O4 O40 O41
    Date: 2019–05–21
  5. By: Alan Fernihough; Cormac Ó Gráda
    Abstract: The link between demographic pressure and economic conditions in pre-Famine Ireland has long interested economists. This paper re-visits the topic, harnessing the highly disaggregated parish-level data from the 1841 Census of Ireland. Using population per value adjusted acre as a measure of population pressure, our results indicate that on the eve of the Great Famine of 1846{50, population pressure was positively associated with both illiteracy rates and the prevalence of poor quality housing. But while our analysis shows that population pressure was one of the primary factors underpinning pre-Famine poverty, it also highlights the importance of geography and human agency. A counterfactual computation indicates that had Ireland's population stayed at its 1800 level, this would have led to only modest improvements in literacy and housing.
    Keywords: Famine; Malthus; Population; Ireland
    JEL: N33 B30 J11
    Date: 2018–12
  6. By: Karahan, Fatih (Federal Reserve Bank of New York); Pugsley, Benjamin (University of Notre Dame); Sahin, Aysegul (University of Texas Austin, NBER)
    Abstract: We propose a simple explanation for the long-run decline in the startup rate. It was caused by a slowdown in labor supply growth since the late 1970s, largely pre-determined by demographics. This channel explains roughly two-thirds of the decline and why incumbent firm survival and average growth over the lifecycle have been little changed. We show these results in a standard model of firm dynamics and test the mechanism using shocks to labor supply growth across states. Finally, we show a longer startup rate series, imputed using historical establishment tabulations, that rises over the 1960-70s period of accelerating labor force growth.
    Keywords: firm dynamics; demographics; business dynamism; macroeconomics
    JEL: D22 E24 J11
    Date: 2019–05–01
  7. By: Clemens C. Struck; Adnan Velic
    Abstract: To rationalize a substantial income share of labor despite progressive task automation over the centuries, we present a simple model in which demand moves along a vertically differentiated production structure toward goods of increasing sophistication. Automation of more sophisticated goods requires capital of increasing quality. Quality capital remains scarce along the growth path. This is why labor keeps up a substantial fraction of income. Real capital, however, that is capital measured in units of the quality of some base year, becomes abundant relative to labor. While our model features an entirely different mechanism, we show that its aggregate representation is the one of a neoclassical growth model with labor-augmenting technical change.
    Keywords: Uzawa's theorem; Automation; Goods quality; Structural change; Reallocations; Growth; Nonhomothetic preferences; Hierarchical demand
    JEL: E23 E24 E25 J23 J24 O14 O31 O33
    Date: 2019–05
  8. By: Foerster, Andrew (Federal Reserve Bank of San Francisco); Hornstein, Andreas (Federal Reserve Bank of Richmond); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond); Watson, Mark W. (Princeton University)
    Abstract: We find disparate trend variation in TFP and labor growth across major U.S. production sectors over the post-WWII period. When aggregated, these sector-specific trends imply secular declines in the growth rate of aggregate labor and TFP. We embed this sectoral trend variation into a dynamic multi-sector framework in which materials and capital used in each sector are produced by other sectors. The presence of capital induces important network effects from production linkages that amplify the consequences of changing sectoral trends on GDP growth. Thus, in some sectors, changes in TFP and labor growth lead to changes in GDP growth that may be as large as three times these sectors' share in the economy. We find that trend GDP growth has declined by more than 2 percentage points since 1950, and that this decline has been primarily shaped by sector-specific rather than aggregate factors. Sustained contractions in growth specific to Construction, Nondurable Goods, and Professional and Business and Services make up close to sixty percent of the estimated trend decrease in GDP growth. In addition, the slow process of capital accumulation means that structural changes have endogenously persistent effects. We estimate that trend GDP growth will continue to decline for the next 10 years absent persistent increases in TFP and labor growth.
    Keywords: trend growth; multi-sector model; production linkages
    JEL: C32 E23 O41
    Date: 2019–05–28
  9. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: We analyze the evolution of fast emerging economies of the BRICS (Brazil, Russia, India, China & South Africa) and MINT (Mexico, Indonesia, Nigeria & Turkey) countries, by assessing growth determinants throughout the conditional distributions of the growth rate and real GDP output for the period 2001-2011. An instrumenal variable (IV) quantile regression approach is complemented with Two-Stage-Least Squares and IV Least Absolute Deviations. We find that the highest rates of growth of real GDP per head, among the nine countries of this study, corresponded to China, India, Nigeria, Indonesia and Turkey, but the highest increases in real GDP per capita corresponded, in descending order, to Turkey China, Brazil, South Africa and India. This study analyzes the impacts of several indicators on the increase of the rate of growth of real GDP and on the logarithm of the real GDP. We analyze several limitations of the methodology, related with the selection of the explained and the explanatory variables, the effect of missing variables, and the particular problems of some indicators. Our results show that Net Foreign Direct Investment, Natural Resources, and Political Stability have a positive and significant impact on the rate of growth of real GDP or on real GDP.
    Keywords: Economic Growth; Emerging countries; Quantile regression
    JEL: C52 F21 F23 O40 O50
    Date: 2018–01
  10. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study investigates how increasing economic development affects the green economy in terms of CO2 emissions, using data from 44 countries in the SSA for the period 2000-2012. The Generalised Method of Moments (GMM) is used for the empirical analysis. The following main findings are established. First, relative to CO2 emissions, enhancing economic growth and population growth engenders a U-shaped pattern whereas increasing inclusive human development shows a Kuznets curve. Second, increasing GDP growth beyond 25% of annual growth is unfavorable for a green economy. Third, a population growth rate of above 3.089% (i.e. annual %) has a positive effect of CO2 emissions. Fourth, an inequality-adjusted human development index (IHDI) of above 0.4969 is beneficial for a green economy because it is associated with a reduction in CO2 emissions. The established critical masses have policy relevance because they are situated within the policy ranges of adopted economic development dynamics.
    Keywords: CO2 emissions; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  11. By: Paula Bustos; Juan Manuel Castro Vincenzi; Joan Monras; Jacopo Ponticelli
    Abstract: The introduction of new technologies in agriculture can foster structural transformation by freeing workers who find occupation in other sectors. The traditional view is that this reallocation of workers towards manufacturing can lead to industrial development. However, when workers moving to manufacturing are mostly unskilled, this process reinforces a country's comparative advantage in unskilled-labor intensive industries. To the extent that these industries undertake less innovative activities, this change in industrial specialization can lead to lower long run growth. We highlight this mechanism in an endogenous growth model and provide empirical evidence using a large and exogenous increase in agricultural productivity due to the legalization of genetically engineered soy in Brazil. Our results indicate that improvements in agricultural productivity, while positive in the short-run, can generate specialization in less-innovative industries and have negative effects on manufacturing productivity in the long-run.
    JEL: F1 F16 F43 O1 O13 O4
    Date: 2019–05

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