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1 – 10 of over 2000João Sousa Andrade and António Portugal Duarte
The main aim of this chapter is to analyse whether recent economic developments in Central and Eastern European countries have been subjected to a typical process of Dutch Disease…
Abstract
The main aim of this chapter is to analyse whether recent economic developments in Central and Eastern European countries have been subjected to a typical process of Dutch Disease (DD). We investigate the impact of foreign aid and other external inflows on the economies of these countries through their effect on the real exchange rate (RER).
After a review of the literature on the DD, we apply robust new generation augmented Dickey-Fuller (ADF) tests, and autoregressive distributed lag models following the methodology of Arellano and Bond (1991) and Blundell and Bond (1998) to establish the impact of capital inflows on output growth for the period 2003–2013.
We find no significant role for financial costs in the determination of the RER in the integration process of these countries. The evidence supports a positive influence of external capital inflows, and in particular European structural funds, on the determination of RER. This positive influence also extends to non-tradable goods and public investments.
In order to promote medium-long run sustainability, Central and Eastern European countries should carefully apply European funds in a way that does not bring about higher internal prices, or, if possible, control the nominal exchange rate in accordance. They must invest more in the higher qualification of human resources, research and development, innovation, entrepreneurship and industrial clusters, in view of the development of the tradable sector.
It is the first chapter that analyses the presence of DD originated by European structural funds and external inflows of funds for this group of countries.
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The assignment of targets to instruments in developing countries cannot satisfactorily follow any simple universal rule. Which approach is appropriate is influenced by whether the…
Abstract
The assignment of targets to instruments in developing countries cannot satisfactorily follow any simple universal rule. Which approach is appropriate is influenced by whether the economy is dominated by primary exports, by the importance of the domestic bond market and bank credit, by the extent of existing restriction in foreign exchange and financial markets, by the presence or absence of persistent high inflation, and by the existence or non‐existence of an active international market in the country's currency. Eighteen observations and maxims on stabilisation policy are tentatively drawn (pp. 64–8) from the material reviewed, and the maxims are partly summarised (pp. 69–71) in a schematic assignment, with variations, of targets to instruments.
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Despite the possession of considerable natural, financial and human resources, the Middle East and North Africa (MENA) region suffers low economic growth rates, high unemployment…
Abstract
Purpose
Despite the possession of considerable natural, financial and human resources, the Middle East and North Africa (MENA) region suffers low economic growth rates, high unemployment rates, high poverty rates and high illiteracy rates. The purpose of this paper is to find out the factors that hinder the development of economic activities in this region.
Design/methodology/approach
This study uses co-integration analysis and vector error correction model on a sample of 18 MENA countries, covering the period 2002–2016. It exploits gross domestic product (GDP) as a dependent variable, and public debt, trade balance, natural resources rents, importation of high technology, labour participation rate, military spending, population size, political instability and corruption as independent variables.
Findings
The paper finds that public borrowing, trade deficit, military expenditures, the low level of technological innovation, population, political turbulences and corruption, all hinder GDP in the long-run. Additionally, public debt, military spending and political instability obstruct GDP in the short run. The results also suggest the existence of Dutch diseases in both the short- and the long-run. On the other hand, labour market conditions do not seem to have any effect on the economic performance of the MENA countries.
Originality/value
In addition of examining an understudied sample of countries, this paper – unlike other studies on the MENA region that look at factors that boost economic growth – exploits factors that have possible negative impact on the economic situation of the region.
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The purpose of this paper is to contextualize a productivity contest between a local manufacturer versus a foreign one, both of whom sell an identical product in the local market…
Abstract
Purpose
The purpose of this paper is to contextualize a productivity contest between a local manufacturer versus a foreign one, both of whom sell an identical product in the local market, within the two companies' respective economies. The intent is to delineate the conditions under which one firm gains a competitive advantage over the other.
Design/methodology/approach
The purchasing power parity model is reformulated to account for differential rates of macroeconomic productivity gain in the two countries. The implications of these differential rates vis‐à‐vis the productivity contest between the local and foreign manufacturer are then explored.
Findings
To gain a competitive advantage over its foreign rival, the local firm must achieve a net productivity improvement relative to its (local) economy that surpasses the net productivity improvement of the foreign rival relative to its (foreign) economy. Thus, the local firm stands in a rivalrous relationship not solely with its foreign competitor but also with the average firm in its very own (local) economy and in a complementary relationship with the average firm in the foreign economy. The foregoing is shown to be a generalization of the Dutch disease phenomenon and to imply that national efforts to attain competitive advantage are self‐contradictory.
Practical implications
In its productivity contest with its foreign rival, the local firm's management should not focus myopically on a comparison of the two firms' rates of net productivity improvement. Rather, the focus should be on the two firms' differential rates of net productivity improvement relative to their respective economies.
Originality/value
The main conclusions of this paper, which derive from the effect of productivity changes on exchange rates, are both stark and original. A firm is engaged in a productivity contest with the average firm in its own economy. Thus, national efforts to enhance productivity are counter productive to a firm whose productivity improvement lags behind that of the average domestic firm.
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Fredrick Chege, Hassan F. Gholipour and Sharon Yam
Given the coincidental and sustained rise in house prices and foreign capital flows in Kenya, this study aims to understand whether a long-run relationship exists between real…
Abstract
Purpose
Given the coincidental and sustained rise in house prices and foreign capital flows in Kenya, this study aims to understand whether a long-run relationship exists between real diaspora remittances and real house prices.
Design/methodology/approach
This study uses data from 2004-Q1 to 2020-Q4 and applies an autoregressive distributed lag model for estimation.
Findings
The results indicate that a positive and significant relationship exists between real remittances and real house prices in Kenya in the long run.
Originality/value
To the best of the authors’ knowledge, there is no study exploring the relationship between real remittance inflows and house prices in Kenya, after controlling for other key macroeconomic determinants of house prices. This study addresses this research gap.
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Brendan O'Dwyer and Roel Boomsma
The purpose of this paper is to deepen and advance the understanding of the construction of accountability within the relationship between government funders and development…
Abstract
Purpose
The purpose of this paper is to deepen and advance the understanding of the construction of accountability within the relationship between government funders and development non-governmental organisations (NGOs).
Design/methodology/approach
The paper presents a case study examining the process through which an influential Dutch development NGO, Oxfam Novib, constructed its own accountability while simultaneously seeking to influence shifts in government funder accountability requirements. It enrols a combination of comprehensive archival data on the Dutch government’s financing scheme for NGOs from 1965 to 2012 and in-depth interviews with Oxfam Novib managers and Dutch government officials. The co-evolution in accountability within Oxfam Novib and the government funding scheme is conceptualised using the notions of imposed, felt and adaptive accountability
Findings
The case unveils the dynamics through which accountability within a major government funding scheme for NGOs was co-constructed by Oxfam Novib and the Dutch government’s development aid department. In particular, it reveals how this process was influenced by an internal evolution in Oxfam Novib’s organisational approach to accountability and an institutional context characterised by consensus-based economic and social policy making. The case also unveils the process through which Oxfam Novib’s influence declined as more demanding, narrowly focused government accountability requirements emerged in a setting that was increasingly critical of NGOs.
Originality/value
The paper presents a rare example of a context where development NGOs have proactively sought and secured influence over the accountability demands of a key donor. It is unique in combining consideration of the internal evolution of accountability within an individual NGO (conceptualised as an evolution from felt to adaptive accountability) with a progression in the form of accountability required by governmental funders. The paper unveils the conditions under which NGO-preferred conceptions of accountability may gain (and lose) influence among key funders.
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Hien Nguyen Phuc, Dung Nguyen Viet, Xuyen Le Thi Kim, Cuong Nguyen Van and Minh Nguyen Van
This paper aims to investigate whether official development assistance (ODA) inflows to developing countries (lower-middle and low income) can cause the symptoms of Dutch disease…
Abstract
Purpose
This paper aims to investigate whether official development assistance (ODA) inflows to developing countries (lower-middle and low income) can cause the symptoms of Dutch disease or not.
Design/methodology/approach
This study applies the methodology of dynamic panel data estimation with a one-step system generalized methods of moment (GMM) for the sample of 59 developing countries from 2001 to 2019.
Findings
The results indicate that ODA (as a percentage of gross domestic product (GDP)) rises by 1%, the real effective exchange rate (REER) appreciates by 0.252%. This finding reveals that these selected developing countries have faced the symptoms of Dutch disease. The countries with the higher ODA ratio have a higher effect of the Dutch disease, and the managed floating exchange rate regime is the lowest impacted, when compared to the fixed and flexible exchange rate.
Practical implications
The selected countries are recommended to use ODA inflows right and efficiently. These ODA inflows should be invested in productive sectors or support for production rather than in consumption. The managed float exchange rate regime is applied to reduce the symptom of Dutch disease for the selected countries. The good cooperation of monetary and fiscal policies is important to absorb the huge ODA inflow and sterilize the adverse effects of the disease.
Originality/value
The paper contributes to the literature and empirical of the Dutch disease. An adverse effect of the huge ODA inflow to the developing countries appreciated of the real exchange rate and caused the symptom of the dutch disease.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2022-0777
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Nayef Al-Shammari, Noura Al-Hossayan and Mariam Behbehani
The purpose of this paper is to empirically examine the phenomenon of natural resource curse in an oil abundant economy of Kuwait. The study estimates a behavioral equilibrium…
Abstract
Purpose
The purpose of this paper is to empirically examine the phenomenon of natural resource curse in an oil abundant economy of Kuwait. The study estimates a behavioral equilibrium exchange rate model for Kuwait during the period 1980-2014 to assess the impact of prices and productivity factors on real effective exchange rate.
Design/methodology/approach
It uses time series econometric techniques, such as unit root tests, Johansen cointegration test, Vector Error Correction Model, and Impulse Response Function, to estimate the model.
Findings
Unlike the results of the few other studies, the empirical results show a significant impact of the variables, such as balance of trade, economic growth, oil exports, interest rate, and inflation rate, on real effective exchange rate appreciation which indicates the existence of Dutch disease within the Kuwaiti economy. Similarly, the comparative analysis between changes in public expenditure and inflation rate shows the existence of Dutch disease in Kuwait during specific periods of time.
Originality/value
Natural resource curse or Dutch disease is a widely recognized phenomenon affecting the balance of economic activities in natural resource abundant countries. Symptoms of Dutch disease are perceived in several changes in the economy, particularly on price level, sectorial productivity, employment, and aggregate demand which in the long run worsen the country’s economic position and lower its international competitiveness. Dutch disease is not only a feature of natural resource abundant economies, but also can affect any economy with excessive revenue generating sector or high capital inflows which appreciates country’s exchange rate. However, the examination of Dutch disease in the economy is more important when investigating the impact on oil-producing countries (Apergis et al. 2014; Mohammadi and Jahan-Parvar, 2012; Jahan-Parvar and Mohammadi, 2011). Therefore, scholars studying Dutch disease phenomenon pay greater attention to cases of Dutch disease among oil-producing countries (i.e. Arezki and Ismail, 2013; Van der Ploeg and Venables, 2013; Jahan-Parvar, 2012; Cologni and Manera, 2013).
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This study aims to present an empirical investigation on the effect of natural resource rent on income inequality in Algeria over the period 1980–2020.
Abstract
Purpose
This study aims to present an empirical investigation on the effect of natural resource rent on income inequality in Algeria over the period 1980–2020.
Design/methodology/approach
The analysis is carried out by using the novel developed method dynamic autoregressive distributed lag (ARDL) simulation technique alongside the Kernel-based regularized least squares.
Findings
The bounds test revealed a long-run relationship between natural resource rent and income inequality. Our estimation results suggest that natural resource rent, GDP per capita and government expenditures are all associated with lower income inequality in the short and long term. Moreover, the author found that better institutional quality is more likely to reduce income inequality in Algeria. This empirical finding is further validated by the counterfactual shocks from the dynamic ARDL simulation, which reveal a significant decrease in predicted income inequality following a positive change in resource rents and a gradual, significant increase in inequality after a negative change in resource rents.
Originality/value
The present study is the first to use the dynamic ARDL model to investigate the impact of positive and negative changes in natural resource rent on income inequality in Algeria.
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Kwasi Dartey‐Baah, Kwesi Amponsah‐Tawiah and David Aratuo
The purpose of this paper is to examine the Ghanaian economy within the context of its macro‐economic indicators and the performance of the agricultural sector against the…
Abstract
Purpose
The purpose of this paper is to examine the Ghanaian economy within the context of its macro‐economic indicators and the performance of the agricultural sector against the backdrop of the exogenous economic explanation of the resource curse. This is aimed at equipping policy makers with the tools needed in identifying symptoms of the Dutch disease as it transitions from an agrarian to an oil economy.
Design/methodology/approach
This is a research paper, employing quantitative and qualitative data of the macro‐economic indicators in the last ten years (2000‐2010) and policy initiatives since the discovery of oil in commercial quantities in Ghana. Furthermore, it also examines theoretical perspectives of the Dutch disease as frames of analysis to gauge the existence of any symptoms of the latter.
Findings
The paper questions a previous World Bank (2009) report classifying the Ghanaian economy as already showing signs of the Dutch disease. The paper suggests that the macro‐economic indicators show resilience and stability of the economy which is necessary for growth. It is observed that various government policies are aimed at improving agriculture inspite of the emerging oil industry. The paper recognizes some areas of concern and recommends further studies to observe the changes in dynamics when the “petro‐dollars” begin to flow into the economy.
Originality/value
This is a pioneering work which seeks to provide early warning signals of the Dutch disease in an emerging oil economy.
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