scholarly journals An International Look at the Growth of Modern Finance

2013 ◽  
Vol 27 (2) ◽  
pp. 73-96 ◽  
Author(s):  
Thomas Philippon ◽  
Ariell Reshef
Keyword(s):  
Unit Cost ◽  
The United States ◽  
Income Share ◽  
Financial Deregulation ◽  
Skill Intensity ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Per Capita ◽  
The Relationship

We study the rise of finance across a set of now-industrial economies. The long-run pattern of the growth of the income share of finance from the nineteenth century to current times in the United States is similar to some economies, but not all economies reach the same size and instead reach a plateau. The relationship between financial output and income is nonhomothetic and changes three times in this sample. Most of the increase in real GDP per capita from 1870 occurred while financial output and the income share of finance were smaller than their size in 1980. After 1980 the elasticity of income with respect to financial output falls significantly. We find considerable heterogeneity in the size of finance in recent times. There is no evidence for an increase in the unit cost of financial intermediation. We find that information technology and financial deregulation can help explain the increase in relative skill intensity and in relative wages in finance, while common trends, which may be related to financial globalization, also play a role.

scholarly journals The Role of Exports in African Economic Development:  A Comparative Study of Mauritius and Tunisia

2021 ◽  
Author(s):  
◽  
Simon Michael Carey
Keyword(s):  
Economic Growth ◽  
Growth Process ◽  
Institutional Environment ◽  
Real Gdp ◽  
Export Policies ◽  
Real Gdp Per Capita ◽  
Per Capita ◽  
Econometric Tests ◽  
The Relationship

<p>Mauritius and Tunisia stand out as two remarkable exceptions to the African economic growth experience. Since their respective independences in 1968 and 1956, both have achieved average real GDP per capita growth well in excess of three percent per year. Export policies featured highly in the developmental strategies of both countries as they transitioned through a dependency on agriculture into manufacturing and then services. What makes this comparison so interesting is that despite such similar success, Tunisia and Mauritius are fundamentally very different. This study comprises the first ever in-depth comparison of these two countries, presenting a qualitative analysis and then augmenting it with a comprehensive set of econometric tests. The focus is on the relationship between exports and economic growth, but the discussion explores the wider context in both countries. Using the Granger-causality approach, we find strong evidence for export-led growth in Mauritius, but no significant evidence of any causal relationship in Tunisia. On the basis of a broader analysis we argue that exports were still important in both countries, but appear to have been more central to the growth process in Mauritius. This broader analysis also highlights that other factors – such as a strong institutional environment – were important in facilitating or directly contributing to such consistent growth.</p>

scholarly journals Fertility and Household Welfare in Nigeria: A Time Series Econometric Approach

2022 ◽  
Vol 10 (1) ◽  
pp. 1-10
Author(s):  
Ovikuomagbe Oyedele
Keyword(s):  
Unit Root Test ◽  
Household Consumption ◽  
Gdp Per Capita ◽  
Household Welfare ◽  
Demographic Dividend ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita

This study examines the effect of fertility levels on household welfare in Nigeria during the period from 1980 to 2020. Using data from the World Development Indicators for 2021, the estimation process began with a unit root test for the stationarity of the variables. A bounds cointegration test showed the presence of a long-run relationship between household consumption expenditure and fertility, but the result was inconclusive when real GDP per capita was used as a welfare proxy. The ARDL model was employed and the results showed that fertility had a negative, significant effect on household consumption per capita only in the short run. The effect was from previous years thereby showing a lagged effect. However, when welfare is measured using real GDP per capita, there were both short-run and long-run effects, such that Kuznets’ hypothesis of an inverted U-shaped relationship was obtained in the short run. In the long run, however, the relationship becomes U-shaped, implying that there is the possibility of a demographic dividend in the long run. Fertility policies must endeavor to control for the immediate or short-run negative effects of rising fertility rates and make deliberate plans to engage the future large working population in order to reap the possible demographic dividend.

China’s Economic Development

2020 ◽  
Author(s):  
Lawrence J. Lau
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Economic Reform ◽  
The United States ◽  
Gdp Per Capita ◽  
Free Markets ◽  
Real Gdp ◽  
The World ◽  
Real Gdp Per Capita ◽  
Per Capita

Chinese real gross domestic product (GDP) grew from US$369 billion in 1978 to US$12.7 trillion in 2017 (in 2017 prices and exchange rate), at almost 10% per annum, making the country the second largest economy in the world, just behind the United States. During the same period, Chinese real GDP per capita grew from US$383 to US$9,137 (2017 prices), at 8.1% per annum. Chinese economic reform, which began in 1978, consists of two elements—introduction of free markets for goods and services, coupled with conditional producer autonomy, and opening to international trade and direct investment with the rest of the world. In its transition from a centrally planned to a market economy, China employed a “dual-track” approach—with the pre-existing mandatory central plan continuing in force and the establishment of free markets in parallel. In its opening to the world, China set a competitive exchange rate for its currency, made it current account convertible in 1994, and acceded to the World Trade Organisation (WTO) in 2001. In 2005, China became the second largest trading nation in the world, after the United States. Other Chinese policies complementary to its economic reform include the pre-existing low non-agricultural wage and the limit of one-child per couple, introduced in 1979 and phased out in 2016. The high rate of growth of Chinese real output since 1978 can be largely explained by the high rates of growth of inputs, but there were also other factors at work. Chinese economic growth since 1978 may be attributed as follows: (a) the elimination of the initial economic inefficiency (12.7%), (b) the growth of tangible capital (55.7%) and labor (9.7%) inputs, (c) technical progress (or growth of total factor productivity (TFP)) (8%), and (d) economies of scale (14%). The Chinese economy also shares many commonalities with other East Asian economies in terms of their development experiences: the lack of natural endowments, the initial conditions (the low real GDP per capita and the existence of surplus agricultural labor), the cultural characteristics (thrift, industry, and high value for education), the economic policies (competitive exchange rate, export promotion, investment in basic infrastructure, and maintenance of macroeconomic stability), and the consistency, predictability, and stability resulting from continuous one-party rule.

scholarly journals The nexus between stock market development and economic growth

2016 ◽  
Vol 14 (1) ◽  
pp. 269-277
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Gdp Per Capita ◽  
Market Development ◽  
Stock Market Development ◽  
Real Gdp ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita ◽  
The Relationship

The study investigated the relationship between stock market development and economic growth in Belgium using ARDL approach with annual time series data from 1988 to 2012. Real GDP per capita was used as a proxy for economic growth and stock market capitalization as a ratio of GDP as an approximate measure of stock market development. The relationship between stock market development and economic growth falls into four categories which are (1) stock market-led economic growth, (2) economic growth-led stock market development, (3) feedback effect and (4) neutrality hypothesis where the relationship between the two variables does not exist. Despite the existence of these four views on the relationship between stock market and economic growth, it appears from the literature review done by the author that majority of the empirical evidence support the stock market-led economic growth view. The fact that the topic on the directional causality between stock market and economic growth is still inconclusive is the major motivating factor why the author chose to investigate the relationship between the two variables in Belgium. The study observed that there exist an insignificant long run causality running from stock market development towards economic growth in Belgium. This relationship was not detected in the short run. Moreover, the reverse causality from real GDP per capita to stock market capitalization both in the long and short run was not detected in Belgium. These results are at variance with the majority of the empirical findings reviewed earlier on. It could possibly be that certain conditions that are necessary to enable stock market to significantly positively influence economic growth were not in place in Belgium. Therefore, the study urges the Belgium authorities to put in place the right environment, policies and programmes that enable the stock market to play its role of stimulating economic growth.

scholarly journals Will Inequality Affect Growth?: Evidence from USA and China since 1980

2017 ◽  
Vol 8 (2) ◽  
pp. 1
Author(s):  
Yongqing Wang
Keyword(s):  
Income Inequality ◽  
Gdp Per Capita ◽  
Annual Data ◽  
Real Gdp ◽  
Long Run ◽  
The World ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita

Income inequality may hinder economic growth is a widespread concern. The results from previous literature are mixed. Although both USA and China is an excellent case study by itself, it is even interesting to compare them given they are the two largest economies in the world, and yet completely different from each other. We employ annual data from 1980 to 2012 and apply cointegration to study the effects of income inequality on real GDP per capita and real GDP of both USA and China. We also include the exchange rate into the model to examine possible effects of depreciation on growth. The main findings are: first, depreciation does not affect the growth of USA. Second, depreciation promotes growth of China in the short-run, but may hurt its growth in the long-run. Third, income inequality will hurt growth of USA in the short-run, while it encourages its growth in the long-run. Finally, income inequality may promote growth of China in both short-run and long-run.

scholarly journals TOURISM-LED GROWTH HYPOTHESIS AND ECONOMIC GROWTH IN KENYA

2021 ◽  
Vol 6 (1) ◽  
pp. 1-22
Author(s):  
Justin Yano ◽  
Joshua Matanda
Keyword(s):  
Economies Of Scale ◽  
Gdp Per Capita ◽  
International Tourism ◽  
Capital Investments ◽  
Vector Error Correction ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita

Purpose: The purpose of this study was to analyze tourism-led growth hypothesis in Kenya’s economy.  Materials and Methods: The descriptive research design was adopted. This study targeted international tourism receipts, employment, economies of scale and capital investments in tourism related economic activities that included hotels and food service activities, wholesale and retail trade, transport and information communication and travel agencies, entertainment and recreation in the period 1980 to 2019.The study used purposive sampling. a sample size of data for 40 years from 1980 to 2019 was used. The data were collected from KNBS, the World Bank and WTTC using a secondary data collection sheet. Using real GDP per capita as the dependent variable and international tourism receipts, tourism related employment, economies of scale and capital investments as the independent variables, the study used regression and vector error correction (VEC) to carry out the analysis. The analysis was systematic and begins with diagnostic tests that included Breusch-Godfrey Serial Correlation LM test, Breusch-Pagan-Godfrey test for homoscedasticity, Jarque-Bera normality test, VIF multi-collinearity test, Augmented Dickey Fuller unit root test and Johansen Co-integration test and finally the regression and the vector error correction analysis. Data analysis was done using E-views software. Results: The study results showed that international tourism receipts, tourism related employment and economies of scale positively influence real GDP per capita in both short run and long run equilibrium. Capital investments negatively affected real GDP per capita in the long run but had a positive effect in the short run equilibrium. Granger causality test presented a bi-directional causality between international tourism receipts, tourism related employment, economies of scale and capital investments and real GDP per capita. Unique contribution to theory, practice and policy: The country should enact policies that promote tourism related activities because the benefits derived from tourist expenditures positively influence the growth of the economy. Institutions such as Brand Kenya, Tourism Promotion Council, the Ministry of Tourism and recruitment of international tourism ambassadors should be strengthened to ensure more foreign tourists are attracted into the country.

scholarly journals The Impact of Human Capital Development on Economic Growth in Ethiopia: Evidence from ARDL Approach to Co-Integration

2014 ◽  
Vol 1 (3) ◽  
pp. 127-136 ◽  
Author(s):  
Kidanemariam Gidey Gebrehiwot
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Gdp Per Capita ◽  
School Enrolment ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita ◽  
The Government

The main objective of the study was to investigate the long run and short run impact of human capital on economic growth in Ethiopia (using real GDP per capita, as a proxy for economic growth) over the period 1974/75-2010/2011. The ARDL Approach to Co-integration and Error Correction Model are applied in order to investigate the long-run and short run impact of Human capital on Economic growth. The finding of the Bounds test shows that there is a stable long run relationship between real GDP per capita, education human capital, health human capital, labor force, gross capital formation, government expenditure and official development assistance. The estimated long run model revels that human capital in the form of health (proxied by the ratio of public expenditure on health to real GDP) is the main contributor to real GDP per capita rise followed by education human capital (proxied by secondary school enrolment). Such findings are consistent with the endogenous growth theories which argue that an improvement in human capital (skilled and healthy workers) improves productivity. In the short run, the coefficient of error correction term is -0.7366 suggesting about 73.66 percent annual adjustment towards long run equilibrium. This is another proof for the existence of a stable long run relationship among the variables. The estimated coefficients of the short-run model indicate that education is the main contributor to real GDP per capita change followed by gross capital formation (one period lagged value) and government expenditure (one period lagged value). But, unlike its long run significant impact, health has no significant short run impact on the economy. Even its one period lag has a significant negative impact on the economy. The above results have an important policy implication. The findings of this paper imply that economic performance can be improved significantly when the ratio of public expenditure on health services to GDP increases and when secondary school enrolment improves. Such improvements have a large impact on human productivity which leads to improved national output per capita. Hence policy makers and / or the government should strive to create institutional capacity that increase school enrolment and improved basic health service by strengthening the infrastructure of educational and health institutions that produce quality manpower. In addition to its effort, the government should continue its leadership role in creating  enabling environment that encourage better investment in human capital (education and health) by the private sector.  

scholarly journals Investigating the Causality Between Remittances, Infant Mortality, and Economic Growth in India: A Cointegration and Vector Error Correction Model Analysis

2021 ◽  
Vol 13 (3) ◽  
pp. 21
Author(s):  
Hassan Rashid ◽  
Miguel D. Ramirez
Keyword(s):  
Mortality Rate ◽  
Infant Mortality ◽  
Mortality Rates ◽  
Infant Mortality Rate ◽  
Gdp Per Capita ◽  
Series Data ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Per Capita

The main objective of this paper is to analyze the impact of remittances on human development as measured by infant mortality rates and real GDP per capita in India using time series data for the 1975-2018 period. By employing the Zivot-Andrews single-break unit root test and cointegration analysis using the Johansen procedure, a stable long-run relationship is found among the variables. Consequently, by estimating a VECM with dummy variables, results indicate that, in the long run, both remittances and real GDP per capita have a negative and significant impact on infant mortality rates in India. With infant mortality rate as a dependent variable, the adjustment coefficient for the cointegrating vector is negative and significant as the theory predicts. A Granger Block causality test is also conducted, and results indicate that remittances do not Granger cause real GDP and infant mortality rate; however, it is found that infant mortality rate and real GDP per capita Granger cause remittances. Policy implications are discussed.

scholarly journals The Role of Exports in African Economic Development:  A Comparative Study of Mauritius and Tunisia

2021 ◽  
Author(s):  
◽  
Simon Michael Carey
Keyword(s):  
Economic Growth ◽  
Growth Process ◽  
Institutional Environment ◽  
Real Gdp ◽  
Export Policies ◽  
Real Gdp Per Capita ◽  
Per Capita ◽  
Econometric Tests ◽  
The Relationship

<p>Mauritius and Tunisia stand out as two remarkable exceptions to the African economic growth experience. Since their respective independences in 1968 and 1956, both have achieved average real GDP per capita growth well in excess of three percent per year. Export policies featured highly in the developmental strategies of both countries as they transitioned through a dependency on agriculture into manufacturing and then services. What makes this comparison so interesting is that despite such similar success, Tunisia and Mauritius are fundamentally very different. This study comprises the first ever in-depth comparison of these two countries, presenting a qualitative analysis and then augmenting it with a comprehensive set of econometric tests. The focus is on the relationship between exports and economic growth, but the discussion explores the wider context in both countries. Using the Granger-causality approach, we find strong evidence for export-led growth in Mauritius, but no significant evidence of any causal relationship in Tunisia. On the basis of a broader analysis we argue that exports were still important in both countries, but appear to have been more central to the growth process in Mauritius. This broader analysis also highlights that other factors – such as a strong institutional environment – were important in facilitating or directly contributing to such consistent growth.</p>

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

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