nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒12‒06
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Herding, Warfare, and a Culture of Honor: Global Evidence By Cao, Yiming; Enke, Benjamin; Falk, Armin; Giuliano, Paola; Nunn, Nathan
  2. Semi-Endogenous or Fully Endogenous Growth? A Simple Unified Theory. By Cozzi, Guido
  3. Institutions and Economic Development: New Measurements and Evidence By Esther Acquah; Lorenzo Carbonari; Alessio Farcomeni; Giovanni Trovato
  4. Civil War, Famine and the Persistence of Human Capital: Evidence from Tajikistan By Grogan, Louise
  5. Capital Flows and Endogenous Growth By Evgenij Komarov
  6. Pay-as-you-go social security and educational subsidy in an overlapping generations model with endogenous fertility and endogenous retirement By Chen, Hung-Ju; Miyazaki, Koichi
  7. Has Knowledge Improved Economic Growth? Evidence from Nigeria and South Africa By Shobande, Olatunji; Asongu, Simplice
  8. Environmental Performance in the West African Economy: MM-Quantile and 2SLS Approach By Musibau, Hammed; Yanotti, Maria Belen; Nepal, Rabindra; Vespignani, Joaquin
  9. The long-run impact of historical shocks on the decision to migrate: Evidence from the Irish Migration By Gaia Narciso; Battista Severgnini; Gayane Vardanyan
  10. Economic complexity shapes attitudes about gender roles By Athanasios Lapatinas; Anstasia Litina; Skerdilajda Zanaj
  11. Finance, Growth, and Inequality By Mr. Ross Levine
  12. On Some Problems of Using the Human Development Index in Economic History By Nicola Amendola; Giacomo Gabbuti; Giovanni Vecchi
  13. Migration and Cultural Change By Rapoport, Hillel; Sardoschau, Sulin; Silve, Arthur

  1. By: Cao, Yiming (Boston University); Enke, Benjamin (University of Bonn); Falk, Armin (briq, University of Bonn); Giuliano, Paola (University of California, Los Angeles); Nunn, Nathan (Harvard University)
    Abstract: According to the widely known 'culture of honor' hypothesis from social psychology, traditional herding practices are believed to have generated a value system that is conducive to revenge-taking and violence. We test this idea at a global scale using a combination of ethnographic records, historical folklore information, global data on contemporary conflict events, and large-scale surveys. The data show systematic links between traditional herding practices and a culture of honor. First, the culture of pre-industrial societies that relied on animal herding emphasizes violence, punishment, and revenge-taking. Second, contemporary ethnolinguistic groups that historically subsisted more strongly on herding have more frequent and severe conflict today. Third, the contemporary descendants of herders report being more willing to take revenge and punish unfair behavior in the globally representative Global Preferences Survey. In all, the evidence supports the idea that this form of economic subsistence generated a functional psychology that has persisted until today and plays a role in shaping conflict across the globe.
    Keywords: culture of honor, conflict, punishment, revenge
    JEL: N0 Z1
    Date: 2021–09
  2. By: Cozzi, Guido
    Abstract: Is growth ultimately fully endogenous or semi-endogenous? A quarter-century of theoretical and empirical growth economics has still kept both possibilities open. Consequently, I assume that R&D-driven growth is a general combination of both semi-endogenous and fully endogenous mechanisms. I here prove that if the semi-endogenous growth component is essential to the actual growth mechanism, the long-run growth rate will follow the semi-endogenous growth predictions. On the other hand, if the semi-endogenous is not essential, the fully endogenous growth mechanism may dictate the long run if the world population does not grow too fast. This result holds regardless of whether fully endogenous growth is essential. I also prove that if no other (third) growth mechanism exists, it suffices to prove that less research always leads to fewer innovations to ascertain semi-endogenous growth essentiality.
    Keywords: Strong scale effect; Semi-endogenous growth; Fully endogenous growth.
    JEL: O1 O3 O4
    Date: 2021–11–05
  3. By: Esther Acquah (FAE, University of Alicante); Lorenzo Carbonari (DEF and CEIS, Università di Roma "Tor Vergata"); Alessio Farcomeni (DEF and CEIS, Università di Roma "Tor Vergata"); Giovanni Trovato (DEF and CEIS,Università di Roma "Tor Vergata")
    Abstract: We propose a new set of indices to capture the multidimensionality of a country's institutional quality. Our indices are obtained by employing a dimension reduction approach on the institutional variables provided by the Frazer Institute (2018). We estimate the impact that our measures of institutional quality have on the level and the growth rate of per capita GDP, using a large sample of countries over the period 1980-2015. To identify the causal effect of our measures of institutional quality on a country's GDP dynamics we employ the Generalized Propensity Score method. Institutions matter especially in lowand middle-income countries, and not all institutions are alike for economic development. For this group of countries, we find: i) a positive correlation between our main institutional index and the GDP growth and ii) that improvement in the reliability and fairness of the legal system leads to a higher long-run per capita GDP level. We also document non-linearities in the causal effects that different institutions have on growth, and the presence of threshold effects.
    Keywords: Economic Development, Institutions, Threshold Effects, Mixture Model, High-income countries, Low- and middle-income countries.
    JEL: O43 O47
    Date: 2021–11–03
  4. By: Grogan, Louise (University of Guelph)
    Abstract: The dissolution of the Soviet Union and 1992-96 Tajik civil war resulted in huge human and economic losses. Nevertheless, contemporary data suggest the persistence of investments in human capital in the region most affected by famine and least favoured since the cessation of hostilities, Gorno-Badakhshan Autonomous Oblast. Famine-affected women have greater stature and final educational attainment, later ages at marriage and lower fertility than do those in the neighbouring border province, Khatlon. Educational interactions between adults and children under age six are much more frequent. The continued emphasis on human capital after economic collapse is consistent with a locational imperative for households to earn incomes outside of agriculture, and with a higher relative status of women in non-agrarian societies.
    Keywords: food security, anthropometry, schooling, child mortality, early childhood education, civil war, Tajikistan
    JEL: H4 J1
    Date: 2021–10
  5. By: Evgenij Komarov (Center of Economic Research, ETH Zurich, Zurichbergstrasse 18, 8092 Zurich, Switzerland)
    Abstract: So-called "capital flows", i.e. of physical capital from relatively poor to rich countries, are a new phenomenon with yet unclear impact. We develop a unified framework incorporating economic institutions, human capital and physical capital to study the interaction of international capital ows and growth. Analytically, we study conditions under which a positive change of a country's economic institutions can attract inflows of physical capital from abroad, leading to long-term growth via the accumulation of human capital. Our mechanism shows how a small initial difference in the level of institutions can lead to substantial divergence in income over time. We derive conditions under which a country receives in flows of capital over time and increases its investment in human capital. Finally, we provide simulations to illustrate our results.
    Keywords: Growth, International Capital Flows, Inequality, Institutions, Human Capital
    JEL: E02 F21 F43 O41 O43
    Date: 2021–11
  6. By: Chen, Hung-Ju; Miyazaki, Koichi
    Abstract: This study analytically investigates the effects of pay-as-you-go social security and educational subsidies on the fertility rate, retirement age, and GDP per capita growth rate in an overlapping generations model, where parents invest resources toward their children's human capital. We find that an old agent retires fully when his or her labor productivity is low and retires later when the labor productivity is high. Under the unique balanced-growth-path (BGP) equilibrium, when an old agent is still engaged in work, tax rates are neutral to the fertility rate, higher tax rates encourage him or her to retire earlier, a higher social security tax rate depresses the GDP per capita growth rate, and a higher tax rate for educational subsidies can accelerate growth. However, when an old agent fully retires, higher tax rates increase the fertility rate, a higher social security tax rate lowers the GDP per capita growth rate, and a higher tax rate for educational subsidies boosts growth. Additionally, if an old agent's labor productivity increases, the fertility rate also increases. We also conduct numerical simulations and analyze how an old agent's labor productivity affects the retirement age, fertility rate, and GDP per capita growth rate under the BGP equilibrium.
    Keywords: Pay-as-you-go social security; educational subsidy; fertility; endogenous retirement; GDP per capita growth rate
    JEL: H55 I25 J13 J26
    Date: 2021–11–11
  7. By: Shobande, Olatunji; Asongu, Simplice
    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
  8. By: Musibau, Hammed; Yanotti, Maria Belen; Nepal, Rabindra; Vespignani, Joaquin
    Abstract: The 2019 World Bank report on West Africa's coast indicates that over $3.8 billion is lost annually due to environmental issues, like erosion, flooding, and pollution. In this paper, the newly introduced environmental performance index (EPI) is incorporated into the neoclassical growth model to empirically address the impact of environmental performance on economic growth for the Economic Community of West African States (ECOWAS). Using the novel Method of Moments-Quantile Regression methodology and 2SLS models, the empirical investigation finds a positive relationship between environmental performance and economic growth across quantiles for ECOWAS. Empirical results provide evidence supporting bidirectional relationships running from environmental performance to economic growth; from government size to economic growth; and from trade openness to economic growth across all quantiles. Results show that environmental performance, government size, labour, and capital stock have a positive impact on West African Economic Growth, while trade openness decreases economic growth. We find a 48% optimal threshold of environmental performance index (EPI) on economic Growth for ECOWAS countries. Based on the findings, policies to encourage improved environmental performance above the threshold estimated will go a long way to enhance West African economies.
    Keywords: economic growth, environmental performance, ECOWAS, Moment of Method-QR estimator
    JEL: E00 F40
    Date: 2021–09–01
  9. By: Gaia Narciso (Department of Economics, Trinity College Dublin); Battista Severgnini (Copenhagen Business School); Gayane Vardanyan (Department of Economics, Trinity College Dublin)
    Abstract: What is the long-run impact of large negative historical events on the individual decision to migrate? We investigate this research question by looking at the effect of the Great Irish Famine (1845-1850) on the long-run individual decision to migrate to the US during the Age of the Mass Migration. We construct a unique dataset based on two early 20th century Irish Censuses and the Ellis Island Administrative Records. This allows us to test whether the Great Irish Famine, one of the most lethal episodes of mass starvation in history, had a long-run impact on individuals’ migration decisions. Controlling for individual and geographical characteristics, we find that the Irish Famine was a significant long-run driver of individuals’ migration choices.
    Keywords: mass migration, negative shock, long-run impact, Great Famine.
    JEL: F22 N33 N93
    Date: 2020–01
  10. By: Athanasios Lapatinas (European CoJoint Research Centre, EC, ISPRA, IT); Anstasia Litina (University of Macedonia, Thessaloniki, GR); Skerdilajda Zanaj (Department of Economics and Management, Université du Luxembourg)
    Abstract: “ He is a gentleman, and I am a gentleman’s daughter. So far we are equal ”, Pride and Prejudice, 1813. Imagine if Twitter or the Internet existed in 1813 when Jane Austen wrote the book! Would we observe similar gender roles we see today? Cultural norms that assign different roles to men and women originate from the use of primitive agricultural technologies and evolve with time. Does the knowledge accumulation part of economic growth affect attitudes towards women? We examine this hypothesis relating revealed attitudes of 26,727 to 64,954 individuals coming from 59 countries with the countries’ level of economic complexity. We find a U-shaped relationship. When economic complexity is limited, its further increase deteriorates female emancipation, back-lashing gender roles. However, when economic complexity is high, further knowledge accumulation favours more egalitarian attitudes. Our findings suggest that knowledge, encapsulated into technological advancement and the production of sophisticated goods, ultimately triggers a positive effect on female emancipation. Finally, we find that economic complexity favors the transition of female emancipation from the household into the society, but only when the level of economic development is sufficiently high.
    Date: 2021
  11. By: Mr. Ross Levine
    Abstract: Finance and growth emerged as a distinct field of economics during the last three decades as economists integrated the fields of finance and economic growth and then explored the ramifications of the functioning of financial systems on economic growth, income distribution, and poverty. In this paper, I review theoretical and empirical research on the connections between the operation of the financial system and economic growth and inequality. While subject to ample qualifications, the preponderance of evidence suggests that (1) financial development—both the development of banks and stock markets—spurs economic growth and (2) better functioning financial systems foster growth primarily by improving resource allocation and technological change, not by increasing saving rates. Some research also suggests that financial development expands economic opportunities and tightens income distribution, primarily by boosting the incomes of the poor. This work implies that financial development fosters growth by expanding opportunities. Finally, and more tentatively, financial innovation—improvements in the ability of financial systems to ameliorate information and transaction costs—may be necessary for sustaining growth.
    Keywords: spurs economic growth; producing information; incomes of the poor; fields of finance; cost of capital; resource allocation; Financial sector development; Income distribution; Income inequality; Stock markets; Income; Global
    Date: 2021–06–11
  12. By: Nicola Amendola (CEIS & DEF, University of Rome "Tor Vergata"); Giacomo Gabbuti (St.Antony’s College, University of Oxford); Giovanni Vecchi (CEIS & DEF, University of Rome "Tor Vergata")
    Abstract: We argue against the use of composite indices, such as the Human Development Index (HDI), in economic history. We show that the HDI can be interpreted as a formal representation of the analyst’s ethical system. We support our claim by introducing a new class of paternalistic social welfare functions (Graaff 1957, Mas-Colell, 1995) which encompasses all the HDI formulas put forth by the literature. The theoretical framework is illustrated by an empirical investigation of the long-run evolution of Italians’ living standards and civic liberties. We conclude that any history based on composite indices is one where both data and history play a minor role, if any.
    Keywords: Human development index,Economic wellbeing,Composite indices,Living standards,CES,Social welfare functions,Italy
    JEL: N01 N3 O15
    Date: 2021–11–09
  13. By: Rapoport, Hillel (Paris School of Economics); Sardoschau, Sulin (Humboldt University Berlin); Silve, Arthur (Université Laval)
    Abstract: We propose a novel perspective on migration and cultural change by asking both theoretically and empirically – and from a global viewpoint – whether migration is a source of cultural convergence or divergence between home and host countries. Our theoretical model derives distinctive testable predictions as to the sign and direction ofconvergence for various compositional and cultural diffusion mechanisms. We use the World Value Survey for 1981-2014 to build time-varying measures of cultural similarity for a large number of country pairs and exploit within country-pair variation over time. Our results support migration-based cultural convergence, with cultural remittances as its main driver. In other words and in contrast to the populist narrative, we find that while immigrants do act as vectors of cultural diffusion, this is mostly to export the host country culture back home.
    Keywords: migration, cultural change, globalization
    JEL: F22 O15 Z10
    Date: 2021–10

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