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The purpose of the study is to investigate the correlation between credit supply to government and credit supply to the private sector to determine whether there is a crowding-out or crowding-in effect of credit supply to government on credit supply to the private sector.

The study used data from 43 countries during the 1980–2019 period. The study employed the Pearson correlation methodology to analyze the data.

There is a significant positive correlation between credit supply to government and credit supply to the private sector. There is also a significant positive relationship between credit supply to government and credit supply to the private sector, implying a crowding-in effect of government borrowing on private sector borrowing. The positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the period before the Great Recession, while the positive correlation is weaker and less significant during the Great Recession, and the correlation further weakens after the Great Recession. The regional analyses show that the positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the African region than in the Asian region and the region of the Americas.

There is no evidence on the correlation between credit supply to government and credit supply to the private sector during the Great Recession.

The purpose of this paper is to analyse the institutional threshold effects of foreign aid on foreign direct investment (FDI).

This paper develops a theoretical model from an extended Solow model that introduces the conductive effect of institutions in an aid recipient country towards the capacity of attracting FDI. This study evidences threshold effects with the most recent panel threshold models that consider endogeneity issues. The data on economic institutions and foreign aid are decomposed into disaggregated level to reveal the detailed threshold pattern. Several sample subsets are used for a heterogeneity analysis.

Conducting empirical research on a sample of 62 countries during the period 2003–2016, this study finds robust evidence of the existence of an institutional threshold in the aid–FDI nexus which a country must attain to reap the full attraction of FDI by foreign aid providing financial resources. Furthermore, foreign aid tends to promote FDI in institutions characterized by a right-sized government, a strengthened legal system and an appropriate regulatory environment. On the other hand, aid may crowd out FDI. The results are robust to regional combinations and a subset of low and lower-middle-income countries. In addition, this study finds that aid targeted at social infrastructure and services has a positive effect regardless of institutional threshold.

This paper contributes to the literature by introducing a non-linear and discontinuous effect of aid on FDI, i.e. a threshold effect, highlighting the relevance of legal systems and regulations and the possibility of a crowding-out effect on FDI for specific institutional regimes. The thresholds provide a guide for donor countries to ensure aid effectiveness at the risk of being counterproductive and for recipient countries to better assess the institutional dimensions that need to be improved.

This study examined the roles of public spending and population moderating characteristic structure of selected African economies on bank-based financial development through credit to private sector.

The study sampled 37 selected African economies for the years 1991–2018, and it applied a pooled mean group (PMG) estimator to account for short-run and long-run causal effects, and confirmed short-run adjustments towards the long-run convergences between the variables. Specific suitable tests were also applied.

Evidence confirms positive impacts of both capital formation and final consumption expenditures on financial development in the short run and long run. The moderation of population structures on expenditure structures help to speed up convergences.

This work attests its innovation by accounting for the separate effects of the expenditure types, the moderation effects of young and mature populations for capital and final consumption expenditure on financial development among selected economies in Africa.

The paper examines the impact of foreign direct investment (FDI), either greenfield investment or cross-border mergers and acquisitions (M&As), on domestic entrepreneurship.

This paper uses a panel dataset of 104 countries over ten years from 2006 to 2015 and multiple econometric techniques to control for potential endogeneity bias.

FDI, both in the form of greenfield investment and cross-border M&As, exerts positive spillover that encourages domestic entrepreneurial activities. While the benefit of greenfield investment in entrepreneurship is more pronounced in countries with higher levels of market capacity and institutional support, that of cross-border M&As is not influenced by these factors. On the other hand, human capital is important in promoting the positive effects of both types of FDI, and unless the level of human capital in the host economies reaches a certain threshold, greenfield investment can adversely affect domestic entrepreneurship.

Policies toward FDI need to focus on promoting the driving forces behind FDI spillover to counteract the potential negative crowding-out effect of FDI.

The paper contributes to the existing literature investigating the impact of FDI on domestic entrepreneurship by distinguishing between the two FDI modes of entry and taking into account the moderating effects of sociopolitical characteristics of the host economies.

The effectiveness of fiscal policy is an interesting field in literature of macroeconomics. The purpose of this paper is to investigate the effects of fiscal policy on economic growth under contributions from the differences in institutions and external debt levels.

The authors use panel data from 2002 to 2014 from 20 emerging markets and use GMM estimators for unbalanced panel data.

The results show positive growth effects of fiscal policy across emerging markets in the examined periods. Notably, the improvement in institutions promotes higher crowding-in effects of fiscal policy. In addition, this paper finds interesting evidences that the external debt has non-linear effects on economic growth, whereas the heterogeneous effects of fiscal policy on economic growth as positive effects in low indebted level and negative effect in high indebted level may explain the mechanism of this non-linear relationship.

This study proposes the non-linear relationship of fiscal growth effects in emerging economies under the dynamic of debt levels.

The purpose of this paper is to assess both short and long-term influences of public investment on economic growth and test the hypothesis that whether public investment promotes or demotes private investment in Vietnam.

The authors use the approach of autoregressive distributed lag model and Vietnam’s macro data in the period of 1990-2016, to evaluate the short and long-term effects of public investment on economic growth and private investment. The model evaluates the impact of public investment on economic growth and private investment based on the neoclassical theories. The public investment which strongly affects economic growth is also reflected by aggregate supply and demand. Public investment directly impacts aggregate demand as a government expenditure and aggregate supply as a production function (capital factor).

The results from this research indicate that public investment in Vietnam in the past period does affect economic growth in the pattern of an inverted-U shape as of Barro (1990), with positive effects mostly occurring from the second year and negative effects of constraining long-term growth. Meanwhile, investment from the private sector, state-owned enterprises, and FDI has positive effects on short-term economic growth and state-owned capital stock has positive impacts on economic growth in both the short and long run. The estimated influence of public investment on private investment also shows a similar inverted-U shape in which public investment have crowding-in private investment short-term but crowding-out in the long run.

The empirical findings in this study can be used for conducting a more efficient policy in restructuring the state sector investment in Vietnam.

The main contributions in this study are: to evaluate the impacts of public investment on economic growth and private investment, the authors extracted public investment in infrastructure from aggregate investment of state sector (as previous studies used); the authors also uses state-owned capital stock variable including cumulative public investment and state-owned enterprises investment suggesting that this could control for the different orders of integration between the stock and flow variable and improve the experimental characteristics of the equation to a higher degree.

This paper analyses how firm births and deaths are influenced by previous firm births and deaths in related and unrelated sectors. Competition and multiplier effects are used as the theoretical lens for this analysis.

This paper uses 2008–2016 Irish business demography data pertaining to 568 NACE 4-digit sectors within 20 NACE 1-digit industries across 34 Irish county and sub-county regions within 8 NUTS3 regions. A three-stage least squares (3SLS) estimation is used to analyse the impact of past firm deaths (births) on future firm births (deaths). The effect of relatedness on firm interrelationships is explicitly modelled and captured.

Findings indicate that the multiplier effect operates mostly through related sectors, while the competition effect operates mostly through unrelated sectors.

This paper's findings show that firm interrelationships are significantly influenced by the degree of relatedness between firms. The raw data used to calculate firm birth and death rates in this analysis are count data. Each new firm is measured the same as another regardless of differing features like size. Some research has shown that smaller firms have a greater propensity to create entrepreneurs (Parker, 2009). Thus, it is possible that the death of differently sized firms may contribute differently to multiplier effects where births induce further births. Future research could seek to examine this.

These findings have implications for policy initiatives concerned with increasing entrepreneurship. Some express concerns that public investment into entrepreneurship can lead to “crowding out” effects (Cumming and Johan, 2019), meaning that public investment into entrepreneurship could displace or reduce private investment into entrepreneurship (Audretsch and Fiedler, 2023; Zikou et al., 2017). This study’s findings indicate that using public investment to increase firm births could increase future firm births in related and unrelated sectors. However, more negative “crowding out” effects may also occur in unrelated sectors, meaning that public investment which stimulates firm births in a certain sector could induce firm deaths and crowd out entrepreneurship in unrelated sectors.

This paper is the first in the literature to explicitly account for the role of relatedness in firm interrelationships.

With China’s economic growth slowing down and the growth rate of fiscal revenue decreasing, the pressure on local government debts is further increasing. Under this background, it is of great significance to clarify the relation between local government debts and China’s economic growth in order to give full play to the positive role of local debts in stabling growth. The paper aims to discuss this issue.

Therefore, this paper explores the impact of Chinese local government debt on economic growth from theoretical and empirical aspects, respectively, and compares the regional differences between different debts and economic growth dynamics.

In the theoretical model part, this paper constructs a three-sector dynamic game model, under the two circumstances of whether local government is subject to debt constraints, and examines the relation between local government debt and economic growth and other variables through numerical simulation. Research shows that when the government is not constrained by debt, there is an inverted “U” relation between government debt and economic growth. When the government is constrained by debt, the economic growth rate gradually decreases as the government debt increases.

In the theoretical analysis part, this paper tries to estimate the amount of local debts under different calibers and examines the impact of different types of local government debts on China’s economic growth and their regional differences. The results show that excessive accumulation of government hidden debts in the eastern region is not conducive to economic growth, while explicit debts in the central and western regions significantly contribute to local economic growth. The results of empirical analysis are basically consistent with the predictions of the theoretical model.

This paper aims to analyze the effectiveness of aid in stimulating investment using different measures of aid and up-to-date panel time-series techniques. This study controls for endogeneity by using dynamic ordinary least squares (DOLS) and minimizes the risk of running a spurious long-run relationship by using series that are cointegrated. This paper finds evidence that aid promotes investment in countries with good institutional quality and gain interesting insights on the influence of country characteristics and the amount of aid received. Aid is ineffective in countries with unfavorable country characteristics such as a colonial past, being landlocked and with large distances to markets. Aid can boost investment in regions that receive high (above-median) amounts of aid such as Africa and the Middle East but not in regions that receive low amounts of aid. Investment-targeted aid is effective but non-investment-related aid can also enhance investment.

Regressions on the aid-investment nexus are based on either a rather simple (115 countries) or an extended/augmented investment model (91 countries). The data covers the period of 1973–2011 and 1985–2011 if the institutional quality is included. This study estimates the relationship between aid and investment by applying the DOLS/dynamic feasible generalized least squares technique which is based on a long-run relationship of the regression variables (cointegration). In this framework, this paper incorporates country-fixed effects, control for endogeneity, autocorrelation and take heteroscedasticity and cross-country correlation of the residuals into account.

This study finds empirical evidence that aid promotes investment in countries with good institutional quality and gain interesting insights on the role played by country characteristics and the amount of aid received. Aid is ineffective in countries with unfavorable country characteristics such as the colonial past, being landlocked, distant from markets. Aid can boost investment in regions that receive high (above-median) amounts of aid such as Africa and the Middle East. Investment-targeted aid is effective but non-investment-related aid also able to enhance investment.

The study looks at the investment to gross domestic product (GDP) ratio (including domestic investment and foreign direct investment (FDI)) and, hence does not disentangle these factors. It looks at the net effect (positive and negative impact together) and, therefore does not allow to identify the direct crowding out the impact of aid. Of course, if this paper finds that aid has a negative impact on investment, it is clear that aid must have crowded out either domestic investment or FDI or both.

The authors think that it is relevant to have identified the circumstances and settings in which foreign aid can be particularly effective and in which foreign aid needs accompanying measures that improve the effectiveness of aid. Also, it is relevant that the relative amount of aid received (aid-to-GDP ratio) must be quite high so that aid can increase investment.

This study sees that the least developed, low-income countries and (in terms of regions) the sub-Saharan Africa countries benefit from aid. This is very desirable. This paper further sees that higher relative amounts of aid do help more and that it is helpful to care about a better institutional quality in developing countries. Hence, this study provides some support for the desirability of aid.

The paper was done very diligently, and this study is very confident that the results are robust. This paper is also confident that this study has studied the long-run (which is of special importance) nexus between aid and investment. The estimation technique used is original, as it combines regular DOLS with corrections for autocorrelation and cross-section dependence.

This study explored how institutional quality influences the relationship between military spending and education in Africa.

This study used data from 43 African countries spanning the years 2000–2021. Two estimation methods were employed to address various issues: Fixed Effects with Driscoll-Kraay standard errors and the Two-Step System Generalised Method of Moments. The Fixed Effects with Driscoll-Kraay standard error method was used to obtain reliable standard errors and inferences from the estimated coefficients of the fixed effects model. Meanwhile, the problem of endogeneity between military spending and education was addressed using the Two-Step System Generalized Method of Moments (GMM).

The results indicated that military spending negatively impacts both the quality and quantity of education. However, both institutional quality and the interaction term (institutional quality*military spending) have positive effects on both measures of education, suggesting that better institutional quality mitigates the negative effect of military spending on education outcomes.

This study shows that institutional quality dampens the negative effect of military spending on education, especially the quality of education. Hence, African countries should prioritize strengthening their institutions to ensure optimal allocation and utilization of government funds for the benefit of their citizens.

This is the first study to examine the moderating role of institutional quality in the relationship between military spending and education, focusing on both the quantity and quality of education.