nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒01‒24
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. Remittances, Natural Resource Rent and Economic Growth in Sub-Saharan Africa By Pamela E. Ofori; Daryna Grechyna
  2. Markov Chains, Eigenvalues and the Stabilityof Economic Growth Processes By Fernando Delbianco; Andrés Fioriti; Fernando Tohmé
  3. Using maps to predict economic activity By Imryoung Jeong; Hyunjoo Yang
  4. Kaldor and Kuznets Together in a Three-way Growth-Equity Nexus in Developed and Developing Countries: The Common Decoupling of Functional and Household Income Distribution but Different Details of the Nexus By Juneyoung Lee; Keun Lee
  5. Historical Prevalence of Infectious Diseases and Entrepreneurship: the Role of Institutions in 125 Countries By Omang O. Messono; Simplice A. Asongu
  6. The fallacy in productivity decomposition By Simon Bruhn; Thomas Grebel; Lionel Nesta
  7. Social mobility and economic development By Neidhöfer, Guido; Ciaschi, Matías; Gasparini, Leonardo; Serrano, Joaquín
  8. Air Pollution and Innovation By Felix Bracht; Dennis Verhoeven
  9. The Past as a Stochastic Process By David H. Wolpert; Michael H. Price; Stefani A. Crabtree; Timothy A. Kohler; Jurgen Jost; James Evans; Peter F. Stadler; Hajime Shimao; Manfred D. Laubichler
  10. "Technology and Productivity: A Critique of Aggregate Indicators" By Fred Block

  1. By: Pamela E. Ofori (University of Insubria, Varese, Italy); Daryna Grechyna (University of Granada, Spain)
    Abstract: Despite the established link between oil rent fluctuations and remittances received, its plausible joint effect on economic growth in Sub-Saharan Africa (SSA) remains unexplored. To fill this gap, first, we determine whether natural resource rent (composed of oil rent, forest rent and natural gas rent) reduces economic growth in SSA. Second, we examine whether positive macroeconomic signals such as remittances mitigate the negative effect of oil rents on economic growth in a sample of 43 SSA countries spanning 1990-2017. We employ the pooled ordinary least squares, fixed-effects and random-effects, and generalized method of moments. The resulting empirical evidence established are; (1) there is a positive impact of forest rent on economic growth whilst oil rent and natural gas rent have a negative impact on economic growth (2) there is a positive marginal and net effect on economic growth from the interaction between remittances and oil rent. Also, the unconditional effect of remittances on growth is positive. We further perform a threshold analysis to establish a critical ground that could also influence economic growth positively. This threshold is crucial because below these critical mass remittance inflows mitigate the negative incidence of oil rent on economic growth and above the threshold, negative oil rent on growth is completely nullified. This is relevant for policy implications because policymakers are provided with actionable levels of remittances which are easily attainable in sampled countries
    Keywords: Remittances, Natural resource rent, oil rent, Economic growth, Sub-Saharan Africa
    Date: 2021–01
  2. By: Fernando Delbianco (Universidad Nacional del Sur/CONICET); Andrés Fioriti (Universidad Nacional del Sur/CONICET); Fernando Tohmé (Universidad Nacional del Sur/CONICET)
    Abstract: In this paper we explore the data on economic growth processes in the lastdecades, assuming they follow Markov processes. We look for the regimes guidingthem and define Markov chains according to which the time series switch from oneregime to another. Our findings show that most of the growth processes are quitestable in the sense of remaining most of the time in a dominant regime. Furthermore,we do not find support for the hypothesis of convergence of economies. The mainconclusion of our analysis is that growth processes can be better understood interms of their idiosyncratic dominant regimes.
    Keywords: Markov Process, Regime Switching, Economic Growth.
    Date: 2021–09
  3. By: Imryoung Jeong; Hyunjoo Yang
    Abstract: We introduce a novel machine learning approach to leverage historical and contemporary maps to systematically predict economic statistics. Remote sensing data have been used as reliable proxies for local economic activity. However, they have only become available in recent years, thus limiting their applicability for long-term analysis. Historical maps, on the other hand, date back several decades. Our simple algorithm extracts meaningful features from the maps based on their color compositions. The grid-level population predictions by our approach outperform the conventional CNN-based predictions using raw map images. It also predicts population better than other approaches using night light satellite images or land cover classifications as the input for predictions.
    Date: 2021–12
  4. By: Juneyoung Lee; Keun Lee
    Abstract: This study analyzes the three-way relationship of economic growth and the two aspects of income distribution, namely, functional income distribution (labor income share) and household income distribution (Gini coefficient). It reveals the more serious nature of inequality in developing countries with a lower value of labor share but a higher Gini coefficient in comparison with developed countries, although both groups show a sharp decline of labor share but stable Gini coefficients over time. The study confirms the same three-way relationship in two groups of countries but with several different determinants and the different trends of the key variables. One contribution of such three-way analysis is to find the ¡®decoupling¡¯ pattern of the growth-equity nexus, namely decoupling between functional income distribution and household income distribution, as it finds that economic growth tends to increase labor income share but worsen household income inequality. Moreover, for both groups, higher labor income shares and household income inequality lead to a higher rate of economic growth. These findings are indicative of the common growth mechanism driven by skill-biased technical changes. The study also confirms the different determinants of equity. That is, declining labor share and stable Gini coefficients seem to be caused by the slow growth and increasing years of schooling in developed countries, whereas by sharp decreases in fertility rates and government expenditure in developing countries.
    Keywords: Income Distribution; Economic Growth; Simultaneous Equations System; Gini Coefficient; Labor Income Share; Kuznets;
    JEL: O11 O15 O47
    Date: 2022–01
  5. By: Omang O. Messono (University of Douala, Douala, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the effects of the historical prevalence of infectious diseases on contemporary entrepreneurship. Previous studies reveal the persistence of the effects of historical diseases on innovation, through the channel of culture. Drawing on the epidemiological origin of institutions, we propose a framework which argues that the impact of infectious disease prevalence on contemporary entrepreneurship is mediated by property rights. The central hypothesis posits that a guarantee of property rights reduces the effect of past diseases on entrepreneurship. Using data from 125 countries, we find strong and robust evidence on the proposed hypothesis and other results. Property rights are higher in countries where the prevalence of diseases was low, which leads to good entrepreneurship scores. In contrast, countries with high disease prevalence did not have time to develop strong institutions to secure property rights. This explains their low level of entrepreneurship today. These results are robust to alternative methods and measures of property rights. Furthermore, our results also confirm the level of development, culture and the digitalization of economies as transmission channels between past diseases and the current level of entrepreneurship.
    Keywords: entrepreneurship; institutions; diseases; property rights
    JEL: I0 J24 I21 I31
    Date: 2021–09
  6. By: Simon Bruhn; Thomas Grebel; Lionel Nesta (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: This paper argues that the typical practice of performing growth decompositions based on log-transformed productivity values induces fallacious conclusions: using logs may lead to an inaccurate aggregate growth rate, an inaccurate description of the microsources of aggregate growth, or both. We identify the mathematical sources of this log-induced fallacy in decomposition and analytically demonstrate the questionable reliability of log results. Using firm-level data from the French manufacturing sector during the 2009-2018 period, we empirically show that the magnitude of the log-induced distortions is substantial. Depending on the definition of accurate log measures, we find that around 60-80% of four-digit industry results are prone to mismeasurement. We further find significant correlations of this mismeasurement with commonly deployed industry characteristics, indicating, among other things, that less competitive industries are more prone to log distortions. Evidently, these correlations also affect the validity of studies that investigate the role of industry characteristics in productivity growth.
    Keywords: productivity decomposition,growth,log approximation,geometric mean,arithmetic mean
    Date: 2021–01–01
  7. By: Neidhöfer, Guido; Ciaschi, Matías; Gasparini, Leonardo; Serrano, Joaquín
    Abstract: We explore the role of social mobility as a driver of economic development. First, we map the geography of intergenerational mobility of education for 52 Latin American regions, as well as its evolution over time. Then, through a new weighting procedure that considers the participation of cohorts to the economy in each year, we estimate the impact of changes in mobility on regional economic indicators, such as income per capita, poverty, child mortality, and luminosity. Our findings show that increasing social mobility had a significant and robust effect on the development of Latin American regions.
    Keywords: Intergenerational Mobility,Equality of Opportunity,Development,Growth,Latin America
    JEL: D63 I24 J62 O15
    Date: 2021
  8. By: Felix Bracht; Dennis Verhoeven
    Abstract: Existing estimates of the economic costs of air pollution do not account for its effect on inventive output. Using two weather phenomena as instruments, we estimate this effect in a sample of 1,288 European regions. A decrease in exposure to small particulate matter of 0:17 g=m3 – the average yearly reduction in Europe – leads to 1.7% more patented inventions. After ruling out reallocation of human capital, inventor mortality and R&D expenditures as drivers of the effect, we conclude that air pollution’s harm to economic output increases by at least 10% when accounting for innovation.
    Keywords: Air Pollution, Air Quality, Innovation, Patent, Productivity
    Date: 2021–12–20
  9. By: David H. Wolpert; Michael H. Price; Stefani A. Crabtree; Timothy A. Kohler; Jurgen Jost; James Evans; Peter F. Stadler; Hajime Shimao; Manfred D. Laubichler
    Abstract: Historical processes manifest remarkable diversity. Nevertheless, scholars have long attempted to identify patterns and categorize historical actors and influences with some success. A stochastic process framework provides a structured approach for the analysis of large historical datasets that allows for detection of sometimes surprising patterns, identification of relevant causal actors both endogenous and exogenous to the process, and comparison between different historical cases. The combination of data, analytical tools and the organizing theoretical framework of stochastic processes complements traditional narrative approaches in history and archaeology.
    Date: 2021–12
  10. By: Fred Block
    Abstract: Economic analysts have used trends in total factor productivity (TFP) to evaluate the effectiveness with which economies are utilizing advances in technology. However, this measure is problematic on several different dimensions. First, the idea that it is possible to separate out the relative contribution to economic output of labor, capital, and technology requires ignoring their complex interdependence in actual production. Second, since TFP growth has declined in recent decades in all of the developed market societies, there is good reason to believe that the decline is an artifact of the slower rates of economic growth that are linked to austerity policies. Third, reliance on TFP assumes that measures of gross domestic product are accurately capturing changes in economic output, even as the portion of the labor force producing tangible goods has declined substantially. Finally, there are other indicators that suggest that current rates of technological progress might be as strong or stronger than in earlier decades.
    Keywords: Total Factor Productivity; Technology; Economic Growth; Economic Output
    JEL: D24 O40 O47
    Date: 2022–01

This nep-gro issue is ©2022 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.