nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒10‒04
five papers chosen by
Marc Klemp
University of Copenhagen

  1. Factor Supply Elasticities, Returns to Scale, and the Direction of Technological Progress By Li, Defu; Benjamin, Bental
  2. The asymmetric effect of internet access on economic growth in sub-Saharan Africa: Insight from a dynamic panel threshold regression By Abdulqadir, Idris; Asongu, Simplice
  3. Constrained scenarios for twenty-first century human population size based on the empirical coupling to economic growth By Barry W. Brook; Jessie C. Buettel; Sanghyun Hong
  4. Has Knowledge Improved Economic Growth? Evidence from Nigeria and South Africa By Olatunji A. Shobande; Simplice A. Asongu
  5. Mind the Gap By Prydz, Espen Beer; Jolliffe, Dean; Serajuddin, Umar

  1. By: Li, Defu; Benjamin, Bental
    Abstract: This paper finds that the steady-state direction of technological progress is determined by the relative size of factor supply elasticities and the returns to scale of the production function, which have so far been ignored. However, the relative price (Hicks, 1932) and relative market size (Acemoglu, 2002) emphasized in the existing literature have only short-term effects. This conclusion is obtained by introducing generalized factor accumulation processes that do not restrict factor supply elasticities, and a generalized production function that does not restrict the returns to scale. It emanates solely from the characterizations of production function, steady-state growth, direction of technological progress and factor supply elasticities. The paper also analyzes a particular micro-founded growth model and uses it to exemplify the conclusions. The findings of this paper provide new explanations to the Uzawa (1961) steady-state theorem puzzle as well as to the Kaldor facts characterization of modern economic growth. It also suggests a way to reconcile falling investment good prices with the Kaldor facts. In addition, it may help explain why technological progress did not increase per capita income before the industrial revolution and what might have led to the modern pattern of economic growth.
    Keywords: Economic Growth, Direction of Technological Progress, Returns to Scale, Factor Supply Elasticities, Uzawa’s Steady-State Theorem, Industrial Revolution, Adjustment Cost
    JEL: E13 E25 O33 O41
    Date: 2021–09–26
  2. By: Abdulqadir, Idris; Asongu, Simplice
    Abstract: This article investigates the asymmetric effect of internet access (index of the internet) on economic growth in 42 sub-Saharan African (SSA) countries over the period 2008-2018. The estimation procedure is obtained following a dynamic panel threshold regression technique via 1000 bootstrap replications and the 400 grids search developed by Hansen (1996, 1999, 2000). The investigation first explores the presence of inflection points in the relationship between internet access and economic growth through the application of Hansen's threshold models. The finding from the nonlinearity threshold model revealed a significant internet threshold-effect of 3.55 percent for growth. The article also examines the linear short-run effect of internet access on economic growth while controlling for the effects of private sector credit, trade openness, government regulation, and tariff regimes. The marginal effect of internet access is evaluated at the minimum, and the maximum levels of government regulation and tariffs regime are positive. On the other hand, the minimum and maximum levels of private sector credit and trade openness are negative via the interaction terms. The article advances the literature by its nonlinear transformation of the relevance of internet access on economic growth by exploring interactive mechanisms of: internet access versus financial resource, internet access versus trade, internet access versus government regulation, and internet access versus the tariff regimes from end-user subscriptions. In policy terms, the statistical significance of the joint impact of government regulations and tariff regimes is relevant in the operation of the telecommunication industry in SSA countries.
    Keywords: Internet access; economic growth; government regulations; trade openness; tariff regimes; sub-Saharan Africa
    JEL: C0 G0 O1
    Date: 2021–01
  3. By: Barry W. Brook; Jessie C. Buettel; Sanghyun Hong
    Abstract: Growth in the global human population this century will have momentous consequences for societies and the environment. Population growth has come with higher aggregate human welfare, but also climate change and biodiversity loss. Based on the well-established empirical association and plausible causal relationship between economic and population growth, we devised a novel method for forecasting population based on Gross Domestic Product (GDP) per capita. Although not mechanistically causal, our model is intuitive, transparent, replicable, and grounded on historical data. Our central finding is that a richer world is likely to be associated with a lower population, an effect especially pronounced in rapidly developing countries. In our baseline scenario, where GDP per capita follows a business-as-usual trajectory, global population is projected to reach 9.2 billion in 2050 and peak in 2062. With 50% higher annual economic growth, population peaks even earlier, in 2056, and declines to below 8 billion by the end of the century. Without any economic growth after 2020, however, the global population will grow to 9.9 billion in 2050 continue rising thereafter. Economic growth has the largest effect on low-income countries. The gap between the highest and lowest GDP scenarios reaches almost 4 billion by 2100. Education and family planning are important determinants of population growth, but economic growth is also likely to be a driver of slowing population growth by changing incentives for childbearing. Since economic growth could slow population growth, it will offset environmental impacts stemming from higher per-capita consumption of food, water, and energy, and work in tandem with technological innovation.
    Date: 2021–09
  4. By: Olatunji A. Shobande (University of Aberdeen, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines whether knowledge causes economic growth in Africa's two leading economies: Nigeria and South Africa. Using the Vector Autoregressive and Vector Error Correction approach, the findings show cointegration among the variables. The speed of convergence of the variables to their long-term mean values is relatively higher for South Africa than for Nigeria. In the short run, it is observed that knowledge unidirectionally Granger causes growth for Nigeria, whereas bidirectional causality is observed for South Africa. The higher correlation between knowledge and growth in South Africa reflects the success of greater investment in education. Nigeria must increase investment in education and modern infrastructure to converge to South Africa’s growth trajectory. Moreover, for Nigeria, (i) knowledge unidirectionally Granger cause growth, (ii) evidence of bidirectional causality flow is apparent between trade, the economic incentive and growth and (iii) health unidirectionally Granger cause knowledge. As for South Africa: (i) there is bidirectional causality between knowledge, trade openness and growth, whereas investment and economic incentive, unidirectionally Granger causes growth, (ii) investment, trade openness and health unidirectionally Granger cause knowledge and (iii) economic incentive unidirectionally Granger cause trade openness. In conclusion, this paper argues that a transformed education system can provide the knowledge base essential for promoting and sustaining economic growth.
    Keywords: Convergence; Growth performance; Knowledge-based economy; Nigeria; South Africa
    JEL: O10 O30 O38 O55 O57
    Date: 2021–01
  5. By: Prydz, Espen Beer; Jolliffe, Dean; Serajuddin, Umar
    Abstract: Estimates of average per capita consumption and income from national accounts differ substantially from corresponding measures of consumption and income from household surveys. Using a new compilation of more than 2,000 household surveys matched to national accounts data, we find that the gaps between the data sources are larger and more robust than previously established. Means of household consumption estimated from surveys are, on average, 20 percent lower than corresponding means from national accounts. The gap with GDP per capita is nearly 50 percent. The gaps have increased in recent decades and are largest in middle-income countries, where annualized growth rates for consumption surveys are systematically lower than national accounts growth rates. We show that the gaps in measures across these two sources have implications for assessments of economic growth, poverty, and inequality. We find that typical survey measures of consumption and income may exaggerate poverty reduction and underestimate inequality.
    Keywords: National Accounts Systems,Household Income and Expenditure Surveys,Poverty,Inequality
    JEL: I3 I32 E31 F01
    Date: 2021

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