nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒11‒16
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Borderline Disorder: (De facto) Historical Ethnic Borders and Contemporary Conflict in Africa By Depetris-Chauvin, Emilio; Özak, Ömer
  2. Top Lights: Bright cities and their contribution to economic development By Richard Bluhm; Melanie Krause
  3. Economic Growth and Structural Change in the Iberian Incomes, 1800-2000 By Luciano Amaral; Concha Betr‡n; Vicente Pinilla
  4. Are long-run output growth rates falling? By Mengheng Li; Ivan Mendieta-Muñoz
  5. Inflation, Innovation and Growth: A Survey By Chu, Angus C.
  7. The Long Road to First Oil By Mihalyi, David
  8. Schumpeter and Keynes: Economic growth in a super-multiplier model By Nomaler, Önder; Spinola, Danilo; Verspagen, Bart
  9. Trade Integration, Global Value Chains, and Capital Accumulation By Michael Sposi; Kei-Mu Yi; Jing Zhang
  10. Political Instability, FDIand Economic Growth in Sub-Saharan African Countries: Evidence from Modelling Dynamic Simultaneous Equations By Gakpa Lewis Landry
  11. The impact of climate change on economic growth By Richard S.J. Tol

  1. By: Depetris-Chauvin, Emilio; Özak, Ömer
    Abstract: We explore the effect of historical ethnic borders on contemporary conflict in Africa. We document that both the intensive and extensive margins of contemporary conflict are higher close to historical ethnic borders. Exploiting variations across artificial regions within an ethnicity's historical homeland and a theory-based instrumental variable approach, we find that regions crossed by historical ethnic borders have 27 percentage points higher probability of conflict and 7.9 percentage points higher probability of being the initial location of a conflict. We uncover several key underlying mechanisms: competition for agricultural land, population pressure, cultural similarity and weak property rights.
    Keywords: Borders,Conflict,Territory,Property Rights,Landownership,Population Pressure,Migration,Historical Homelands,Development,Africa,Voronoi Tessellation,Thiessen Tessellation
    JEL: D74 N57 O13 O17 O43 P48 Q15 Q34
    Date: 2020
  2. By: Richard Bluhm (SoDa Laboratories, Monash University); Melanie Krause (SoDa Laboratories, Monash University)
    Abstract: Tracking the development of cities in emerging economies is difficult with conventional data. Even the commonly-used satellite images of nighttime light intensity fail to capture the true brightness of larger cities. This paper shows that nighttime lights can be used as a reliable proxy for economic activity at the city level, provided they are first corrected for top-coding. We present a stylized model of urban luminosity and empirical evidence which both suggest that these ‘top lights’ can be characterized by a Pareto distribution. We then propose a correction procedure which recovers the full distribution of city lights. Our results show that the brightest cities account for nearly a third of global economic activity. Applying this approach to cities in Sub-Saharan Africa, we find that primate cities are outgrowing secondary cities but are changing from within. Poorer neighborhoods are developing and sub-centers are emerging, with the side effect that Africa’s cities are also becoming increasingly fragmented.
    Keywords: Development, urban growth, night lights, top-coding, inequality
    JEL: O10 O18 R11 R12
    Date: 2020–11
  3. By: Luciano Amaral (Universidade Nova de Lisboa, Portugal); Concha Betr‡n (Universidad de Valencia, Spain); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Arag—n (IA2), Spain)
    Abstract: This paper analyses the stages of structural change between the three main sectors of the Iberian economies. We also measure the contribution of structural change to economic growth in the long term and we disaggregate within the three sectors to determine the leading industries at each stage of economic transformation. Finally, we also study the contribution of these sectors to economic growth. Our work shows that both Iberian countries were latecomers in industrialisation and also in agricultural success. With a late start in the mid-nineteenth century in relation to the core European countries, they advanced in terms of structural change during the interwar period and experienced post-1950 growth miracles. Major changes took place when technological change and foreign markets were adapted to their factor endowments. The main differences between both countries were the slow path of Portugal in relation to Spain, and the less intense Portuguese structural change, with agriculture having a lower and services a higher share of GDP and employment during the nineteenth century with the opposite being the case in the twentieth century. Within the industrial sector, light industries and industries less intensive in skilled labour and capital had a higher importance in Portugal than in Spain.
    Keywords: Iberian economic history, Structural change, European economic history, Economic growth
    JEL: N14 O47
    Date: 2020–11
  4. By: Mengheng Li (Economics Discipline Group, University of Technology Sydney, Australia); Ivan Mendieta-Muñoz (Department of Economics, University of Utah, USA)
    Abstract: Abstract This paper studies the evolution of long-run growth rates in the G-7 countries. We identify a measure of long-run output growth rate with that rate of growth consistent with a constant unemployment rate. The methodology proposed also allows the derivation of the long-run growth rate associated with technical progress by separating the effects derived from movements in the rate of growth of the labour force. To measure its trajectories during the postwar period, we use time-varying parameter models that incorporate both stochastic volatility and a Heckman-type two-step estimation procedure that deals with the possible endogeneity problem in the econometric models. Our results show a significant decline in long-run growth rates that is not associated with the detrimental effects of the Great Recession, and that the rate of growth of technical progress appears to be behind the slowdown in long-run GDP growth. JEL Classification: O41, O47, C15, C32.
    Keywords: Secular stagnation, long-run output growth rates, long-run technical progress growth rates, time-varying parameter models with stochastic volatility, Heckman two-step bias correction; Secular stagnation, long-run output growth rates, long-run technical progress growth rates, time-varying parameter models with stochastic volatility, Heckman two-step bias correction
    JEL: C O
    Date: 2019
  5. By: Chu, Angus C.
    Abstract: In this survey, we provide a selective review of the literature on inflation, innovation and economic growth. The relationship between inflation and economic growth is a fundamental question in economics. Most studies in this literature explore this relationship in capital-based growth models. This survey reviews a recent branch of this literature on inflation and innovation-driven growth. Specifically, we develop a canonical monetary Schumpeterian growth model to demonstrate the effects of inflation on innovation and the macroeconomy via different channels. We find that the cash-in-advance constraints on consumption and R&D investment have drastically different implications on the macroeconomic effects of inflation.
    Keywords: inflation; innovation;, economic growth
    JEL: E31 O3 O4
    Date: 2020–10
  6. By: Hartmut Lehmann (National Research University Higher School of Economics); Aleksey Oshchepkov (National Research University Higher School of Economics); Maria Giulia Silvagni (University of Bologna)
    Abstract: This paper studies the convergence in per capita gross regional products (GRPs) across Russian regions in the period from 1996 to 2017. We estimate growth equations, which are directly derived from a neoclassical growth model, augmented with human capital and migration. To our knowledge, this is the first paper that explicitly applies a neoclassical model to analyze regional convergence in Russia. We also take into account possible spatial effects and do a series of other robustness checks. Our main estimates establish a convergence rate of around 2% per year. While we fail to find any role of human capital for regional economic growth, we find that interregional migration and the interdependencies of the growth of Russian regions contribute to the economic convergence between them.
    Keywords: convergence, economic growth, regional economics, migration, Russia
    JEL: O47 R11 P2
    Date: 2020
  7. By: Mihalyi, David
    Abstract: This paper analyzes the factors affecting the speed at which newly discovered oil and gas fields are developed. Using data from over 25,000 oil and gas assets globally I demonstrate that both asset and country characteristics are critical in determining which assets reach production stage. I analyze the effects of countries adopting a set of market oriented reforms, to shed light on the impacts of institutional changes on petroleum extraction timeline. Mitigating climate change will require a large share of the world's already discovered fossil resources to stay underground. The results of this study can help inform how petroleum producers may respond to the energy transition underway. My findings also calls into question the assumption used in earlier research that giant oil and gas discoveries can be considered exogenous in their impacts on subsequent production.
    Keywords: resource curse, natural resources, oil discovery, institutions, liberalization
    JEL: P50 Q33 Q35
    Date: 2020–09–15
  8. By: Nomaler, Önder (UNU-MERIT); Spinola, Danilo (UNU-MERIT, Maastricht University); Verspagen, Bart (UNU-MERIT, Maastricht University)
    Abstract: We present a model of economic growth that is based on Keynesian ideas (the role of autonomous demand in economic growth) as well as Schumpeterian notions (technological change). Our model fits in the Sraffian supermultiplier (SSM) tradition, and we endogenise the growth rate of autonomous demand, and semi-endogenise productivity growth. The basic model has a steady state that is consistent with a stable employment rate. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that keeps the growing economy stable. We also introduce a version of the model where the burden for stabilisation falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.
    Keywords: Economic growth model, Sraffian supermultiplier, Research and Development , R&D, Keynesian theory, Technological change
    JEL: O31 O33 O41 E11 E12 E62
    Date: 2020–11–06
  9. By: Michael Sposi (Southern Methodist University); Kei-Mu Yi (University of Houston, Federal Reserve Bank of Dallas, and NBER); Jing Zhang (Federal Reserve Bank of Chicago)
    Abstract: Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. The presence of GVC trade boosts capital accumulation and economic growth and magnifies dynamic gains from trade. At the same time, endogenous capital accumulation shapes comparative advantage across countries, impacting the dynamics of GVC trade: a country becoming more capital abundant concentrates more on the capital-intensive stage of the production.
    Keywords: Multistage production; International trade; Capital accumulation
    JEL: F10 F43 E22
    Date: 2020–11
  10. By: Gakpa Lewis Landry (École Nationale Supérieure de Statistique et d’Économie Appliquée (ENSEA)-Abidjan-Côte d’Ivoire)
    Date: 2020
  11. By: Richard S.J. Tol (Department of Economics, University of Sussex, Falmer, United Kingdom)
    Abstract: Video discussion of the impacts of climate change on economic growth
    Keywords: environmental economics, climate change, postgraduate, video
    JEL: Q54
    Date: 2020–10

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