nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒08‒14
seven papers chosen by
Marc Klemp
University of Copenhagen

  1. The fallacy in productivity decomposition By Bruhn, Simon; Grebel, Thomas; Nesta, Lionel
  2. Organized Crime, Corruption and Economic Growth By Tamara Fioroni; Andrea Mario Lavezzi; Giovanni Trovato
  3. Assessing the Institutions-Innovation Channel within the Inequality-Growth Nexus By Sun, Yang; Easaw, Joshy; Logothetis, Vassilis
  4. A Gender Analysis of the Impact of Human Capital Development on Economic Growth in Nigeria By Chibuzor Happinessobi
  5. Post-growth and the demand-pull hypothesis of innovation: Biting the hand that feeds you? By Jasny, Johannes; Schubert, Torben
  6. Songlines By Kampanelis, Sotiris; Elizalde, Aldo; Ioannides, Yannis M.
  7. Technology Diffusion across Regions By Sebbesen, Anja

  1. By: Bruhn, Simon; Grebel, Thomas; Nesta, Lionel
    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 a 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: 2023
  2. By: Tamara Fioroni; Andrea Mario Lavezzi; Giovanni Trovato
    Abstract: In this paper we study the relationship between organized crime, corruption and economic growth. To shed light on this nexus, we propose a growth model in which organized crime can embezzle public spending by corrupting and threatening public officers. Then we bring the empirical implications of the model to data from Italian regions, as stylized facts show that less developed regions are characterized by the highest levels of corruption and of presence of criminal organizations of Mafia-type. Our main findings are: i) the per capita GDP dynamics of Italian regions in the period considered is characterized by multiple regimes identified by the initial level of organized crime, a finding consistent with a multiple steady state growth dynamics (e.g. Durlauf and Johnson, 1995); ii) in the regions with the higher levels of organized crime the estimated share of embezzled public expenditure is higher and, moreover, public expenditure has a negative effect on per capita GDP. Differently, in the regions with lower levels of organized crime the estimated share of embezzled public expenditure is lower and the effect of public expenditure on per capita income is positive.
    Keywords: Corruption, Organized crime, Economic growth, Public expenditure
    JEL: K42 O17 R11 O23
    Date: 2023–07–01
  3. By: Sun, Yang (Cardiff Business School); Easaw, Joshy (Cardiff Business School); Logothetis, Vassilis (Cardiff Business School)
    Abstract: The present paper assesses the interactions between innovation and economic institutions within the context of the inequality-growth nexus. By carrying out fixed effects estimations on a cross-country panel, we find that both institutional quality and innovations improve economic growth at the expense of income equality. We show that the marginal effects of innovations on growth and inequality diminish as institutions increase in quality, and the effects of institutions can be influenced by level of innovations. This indicates that while institutions and innovations can be inequality-inducing, their interactions dampen the effect. Similarly, both variables positively affect growth but their interactions are negative. More importantly, we note a series of transitory interactive effects on growth which show property right protection as the principal growth-enhancing institutions in earlier stages of development, and broader institutional quality in later stages. These results are verified and reinforced by GMM and IV estimations, the latter of which uses judicial independence as an instrument, as well as additional robustness tests.
    Keywords: income inequality, economic growth, institutions, entrepreneurship, innovation.
    JEL: C33 C36 D63 O33 O34 O43 O47
    Date: 2023–07
  4. By: Chibuzor Happinessobi (Obafemi Awolowo University, Ile-Ife, Nigeria)
    Abstract: This study analysed the impact of education human capital development on economic growth in Nigeria from 1980 to 2020. The study specifically used secondary school enrolment as a comprehensive measure of education human capital, while life expectancy at birth was used as a measure of health human capital. By employing annual secondary time series data, the research aimed to assess the relationship between education human capital and economic growth in Nigeria. The data, obtained from the World Development Indicators of the World Bank, were subjected to appropriate descriptive and econometric techniques, including the Autoregressive Distributive Lag method. The findings revealed a significant positive correlation between education human capital development, as measured by secondary school enrolment, and economic growth in Nigeria. Therefore, the study recommends that government expenditures be directed towards human capital development, with a particular emphasis on education, to promote increased, sustainable, and equitable economic growth. In summary, this research highlights the importance of gender analysis in understanding the effects of human capital developments on economic growth in Nigeria. By recognizing the specific impact of education and health on economic growth, policymakers can make informed decisions to foster sustainable economic development.
    Keywords: Development; Economic growth; Gender; Human capital; Investment
    Date: 2023–07
  5. By: Jasny, Johannes; Schubert, Torben
    Abstract: The post-growth discourse emphasizes the role need to limit economic growth as a primary means to stop continuous environmental degradation associated with production induced overexploitation of natural resources. A criticism of the post-growth discourse is, however, that innovation is known to be demand-driven implying that limiting growth may then undermine incentives to innovate. This may reduce the speed with which new environmentally friendly technologies are developed. Empirical analysis of this claim however do not exist. Relying on data from the European Manufacturing Survey 2018 for Germany, we match macroeconomic sector-growth statistics from the German Statistical Office and analyse how firm-level and sector level growth drive firms' innovation activities with a specific focus to environmental innovations. We find that while firm-level growth is strongly associated with all kinds of innovation activities, sector-level growth is not. Our results suggest that limiting overall economic growth may not undermine incentives to innovate as long as growth is still feasible on the level of the firm.
    Keywords: Economic growth, Innovation, Post-growth, Demand pull hypothesis, Green growth
    Date: 2023
  6. By: Kampanelis, Sotiris; Elizalde, Aldo; Ioannides, Yannis M.
    Abstract: This paper examines the long-term economic impacts of the adoption of local knowledge during European colonisation. We use the case of Australia, where Aboriginal knowledge of the landscape was integral to colonial exploration and settlement. To quantify the effects of this knowledge, we construct a newly digitised and georeferenced dataset of trade routes created by Aboriginal people based on oral traditions, known as Songlines. Our results indicate that Aboriginal trade routes are strongly associated with current economic activity as measured by nighttime satellite imagery. We attribute this association to path dependence and agglomeration effects that emanate from the transport infrastructure built by Europeans roughly along these routes, which have agglomerated economic activity. Finally, by exploiting exogenous variation in optimal travel routes, we provide evidence that our results are not entirely determined by the inherent characteristics of Australian topography, but rather by Aboriginal knowledge.
    Keywords: Aboriginal trade routes, Songlines, colonialism, agglomeration, Australia
    JEL: N77 O10 R12 Z10 Z13
    Date: 2023
  7. By: Sebbesen, Anja
    Abstract: Until recently, the geographical coverage of empirical studies on regional technology diffusion was usually rather limited or biased towards the industrialized world. This paper extends the sample of analysis and investigates regional TFP growth and the factors determining productivity spillovers for an extensive amount of regions. Nonlinearities in the effects of the explanatory variables as well as spatial spillovers are considered in the estimation model. The findings confirm a robust direct impact of technological catch-up on regional TFP growth. Catch-up speeds increase with higher levels of human capital and in countries with larger inflows of FDI. Furthermore, positive spatial spillovers of technology levels are observed.
    Keywords: Regional TFP growth; transmission channels; spatial spillovers; human capital; spatial switching regression
    Date: 2023–07

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