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Article
Publication date: 9 August 2021

Bernard G. Hounmenou and Fabrice D. Degbedji

This paper aims to study the impact of municipalities’ own resources on their investments‘ expenditure.

Abstract

Purpose

This paper aims to study the impact of municipalities’ own resources on their investments‘ expenditure.

Design/methodology/approach

Panel data analysis. A sample of 34 municipalities in Benin. Econometrics tests for the panel data models – estimation of the fixed-effect and random-effect models. Hausman test to identify the best model to explain the impact of the explanatory variables on local investments’ expenditures. Heteroskedasticity, normality and autocorrelation tests.

Findings

The results establish a positive and significant impact of own resources, state transfers and demographic variables on local investments’ expenses.

Research limitations/implications

As an implication, the results show the importance of local resources’ mobilization for the municipalities’ investment capacity building. They also show that the central government transfers continue to play a major place in local investments’ finance, even in a decentralization context. Limitation: Available data do not allow to well evaluate the impact of the electoral variable on municipalities’ investments’ expenditure. This situation does not allow to well analyze the public choice considerations in local authorities’ behaviors.

Practical implications

Local mobilization of financial resources must be encouraged to raise municipalities’ investments’ capacities. Strategies must be developed to reinforce local capacities in local resources mobilization.

Social implications

The results show the importance of local resources in local investments. They show the importance of citizens’ participation in their well-being construction, through local resource mobilization (ex: local fiscality).

Originality/value

Many authors assert in the literature that financial autonomy has a real impact on local development. However, empirically, it was not demonstrated. This paper contributes to correct this lack.

Details

International Journal of Development Issues, vol. 20 no. 3
Type: Research Article
ISSN: 1446-8956

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Article
Publication date: 14 July 2021

Chukwuebuka Bernard Azolibe

The purpose of this study is to analyze the two-way causal nexus between macroeconomic factors such as foreign aid, industrialization, economic growth, population growth…

Abstract

Purpose

The purpose of this study is to analyze the two-way causal nexus between macroeconomic factors such as foreign aid, industrialization, economic growth, population growth, urbanization, control of corruption and the infrastructure development index of the top-ranking African countries from 2003 to 2018.

Design/methodology/approach

The study adopts various econometric tools such as cross-sectional dependence test, panel unit root and cointegration test and Dumitrescu and Hurlin panel Granger causality test in ascertaining the relevant relationships between the variables under consideration.

Findings

The main findings of the Granger causality test result revealed a bidirectional causal relationship between foreign aid and infrastructure and between urbanization and infrastructure. The study also found unidirectional causality running from population growth to infrastructure while a zero causal relationship existed between industrialization and infrastructure, economic growth and infrastructure and lastly, between control of corruption and infrastructure. The study concludes that the major macroeconomic factors that influence infrastructure development in these selected African countries are foreign aid, population explosion and urbanization. Also, their high infrastructure development index has causal influence in only attracting more foreign aid and also promoting urban expansion.

Originality/value

To the best of the author's knowledge, the study is unique as it is the first to determine the two-way causal nexus between macroeconomic factors and infrastructure development using a sample of the top ten African countries in infrastructure ranking. The findings reflect the current situation in Africa.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

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Book part
Publication date: 15 February 2021

Fernando Barreiro-Pereira

This chapter analyses some internal territorial and economic conflicts in Spain among its autonomous communities. The Basque country has a very favourable tax system from…

Abstract

This chapter analyses some internal territorial and economic conflicts in Spain among its autonomous communities. The Basque country has a very favourable tax system from 1878, which historically is stipulated in the Spanish constitution as a special case. This generates an asymmetry with respect to the other 18 Spanish communities including Catalonia, which would like to have a fiscal regime similar to that of the Basque country. After the Spanish state has built the fiscal balances for all autonomous communities, the Catalans argue that Spain steals them and they demand independence for Catalonia, which would affect the political and economic stability of the European Union. Specifically, this chapter attempts to describe a way to resolve territorial conflicts that have been exacerbated by the results of the fiscal balances in a context of fiscal decentralisation, since capital stock balances are not considered in the fiscal balances or in the inter-regional balance of payments. In this chapter, a production function approach, where the public capital production factor is separated into internal and imported capital stock, is used to calculate how the capital stock of the transportation infrastructure actually used can affect the labour productivity in each province or region. This study takes into account the direct effects of the capital stock of the road transport infrastructure of a region and the indirect effects that it receives from the use of infrastructures in other regions. Both types of public capital have been calculated by a network analysis, which allows us to calculate the stock of public capital effectively used in commercial activities, across 47 Spanish provinces during the period 1980–2007. The author estimates the spillover effects using spatial panel data techniques including spatial auto-correlation models with auto-regressive disturbances. In terms of labour productivity, the results indicate that the stock of imported capital is highly significant in all estimates while internal capital is not significant for all Spanish provinces, which classifies the Spanish provinces into users and used. This indicates that capital stock balances should be considered in some way into the inter-regional compensation fund to balance local fiscal balances, minimising some conflicts among regions.

Details

New Frontiers in Conflict Management and Peace Economics: With a Focus on Human Security
Type: Book
ISBN: 978-1-83982-426-5

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Book part
Publication date: 31 May 2016

Mikio Takebayashi

This chapter examines the airline performance effect arising from collaboration between airlines and high speed railway (HSR). The analysis presents scenario simulations…

Abstract

This chapter examines the airline performance effect arising from collaboration between airlines and high speed railway (HSR). The analysis presents scenario simulations using a bi-level model, which takes into account the effect of competition among airlines and HSR. Using real data, we examine the Japanese domestic market and the Japan-based international market: the markets consist of Tokyo Metropolitan Area, Osaka Metropolitan Area, Seoul/Korea, Frankfurt/Germany, Paris/France, London/United Kingdom, and Los Angeles/United States. Analysis of the domestic market assumes airlines and HSR compete against each other, and analysis of the international market assumes airlines only compete with each other. Initially, we conduct performance analysis using a simulation that mimics the current relationship between airlines and HSR. Then we present three scenarios for different combinations of collaboration between airline and HSR based on airline alliances. The results from this exercise are then used to examine the impact of the collaboration on the profits of airlines and HSR, passenger’s utility, and the network design of airlines. Last, we show the potential benefit to airlines – profitability, market share, and demand growth – from the airline-HSR collaboration. Our model shows that in Japan: (1) Airlines can improve their profitability in international operations by the collaboration with HSR when airlines set their hubs so they can connect to HSR; (2) The airline which has a lower unit operating cost than rivals and sets its hubs to connect to HSR can improve its joint profit with HSR through collaboration; (3) Airlines that don’t operate domestic flights and don’t set their hubs to connect to HSR encourage increased fare competition by coordinating with HSR, but their profit decreases. Whether these results are generalizable to other regions should be the subject of future study.

Details

Airline Efficiency
Type: Book
ISBN: 978-1-78560-940-4

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Article
Publication date: 11 February 2021

Mui-Yin Chin, Sheue-Li Ong, Chew-Keong Wai and Yee-Qin Kon

This study aims to delve deeply into the role of infrastructure on economic growth in 59 belt and road initiative (BRI) participating countries from various regions of the…

Abstract

Purpose

This study aims to delve deeply into the role of infrastructure on economic growth in 59 belt and road initiative (BRI) participating countries from various regions of the world as the main objective of BRI is to encourage the participating countries to improve investment and trade facilitation via infrastructure. Besides, the development of infrastructure is in line with the United Nations’ 2030 sustainable development goals (SDG).

Design/methodology/approach

This study encompasses all of the important physical infrastructure factors to compute a composite infrastructure index. Thereafter, this study used both the panel cointegration and the panel Granger causality tests to investigate the impact of the infrastructure index and other essential factors on economic growth.

Findings

The empirical results signify the importance of infrastructure development on economic growth in both the long-run and short-run. Besides, it is evident that capital, expenditure on health and education, as well as exports, will accelerate economic growth.

Originality/value

The findings of this study could contribute to the literature regarding BRI in two ways. First, it will provide insight to the policymakers of China and the BRI participating countries on whether infrastructure development is worthy of huge investment so as to enhance the success of the BRI. Second, the outcome of this study will give policymakers a better understanding of the determinants of economic growth, which, in turn, will help them in designing effective policies.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 14 no. 2
Type: Research Article
ISSN: 1754-4408

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Article
Publication date: 29 October 2020

Opeoluwa Adeniyi Adeosun, Philip Akanni Olomola, Adebayo Adedokun and Olumide Steven Ayodele

The increasing debate on the viability of broad-based productive employment in stimulating the participatory tendencies of growth makes it instructive to inquire how the…

Abstract

Purpose

The increasing debate on the viability of broad-based productive employment in stimulating the participatory tendencies of growth makes it instructive to inquire how the African “Big Five” have fared in their quests to ensure growth inclusiveness through public investment-led fiscal policy.

Design/methodology/approach

Time varying structures and nonlinearities in the government investment series are captured through the non-linear autoregressive distributed lag, asymmetric impulse responses and variance decomposition estimation techniques.

Findings

Study findings show that positive investment shocks stimulate growth inclusiveness by enabling access to opportunities through job creation and productive employment for the populace; this result is evident for Morocco and Algeria. However, there is a non-negligible evidence that shocks due to decline in the government investment manifest in insufficient capital stocks and limited investment opportunities, impede access to opportunities by the populace, hinder labour employability and make growth less inclusive. Furthermore, all short-run findings corroborate long-run results regarding the reaction of inclusive growth to positive investment shocks with the exclusion of South Africa; which, unlike its long-run finding, shows that shocks due to increases in investment can foster growth inclusiveness. Also, in respect to short-run negative investment shocks, Nigeria is the only country that does not align its long-run findings.

Practical implications

That public investment shocks make or mar inclusive growth effectiveness shows the need for appropriate fiscal policy consolidation and automatic stabilization guidelines to ensure buffers against shocks and to enhance government investment generation efficiency for a sustainable inclusive growth process that is more participatory in Africa.

Originality/value

This study is the first to accommodate possibilities of shocks in the inclusivity of growth analysis for the five biggest African economies which jointly account for over half of the recorded growth in the continent. As such, there is quantitative evidence that government investment is a potent determinant of growth inclusiveness and it is susceptible to structural changes and time variation of shocks.

Details

International Journal of Social Economics, vol. 47 no. 12
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 22 April 2020

Sasa Randjelovic

This paper evaluates the economic, political and institutional determinants of variation in public investment in emerging Europe.

Abstract

Purpose

This paper evaluates the economic, political and institutional determinants of variation in public investment in emerging Europe.

Design/methodology/approach

Panel econometrics (panel-corrected standard error, generalized least squares and the two-stage least squares) methods have been applied using annual data from 2000 to 2017 for 16 countries from Central and Eastern Europe (CEE).

Findings

Public investment was procyclical in relation to output and negatively associated with the level of public debt. Austerity episodes triggered a significant drop in public investment. Positive drifts in public investment during election periods and the negative impact of the number of cabinet seats held by left-wing parties have been captured. While no firm evidence on the impact of EU membership was found, the results show that arrangements with the IMF were strongly associated with lower public investment. Political factors were of greater importance in Central Europe and the Baltics, while institutional factors had a more significant impact in South Eastern Europe.

Practical implications

To foster public capital formation, it is necessary to: 1) strengthen the countercyclicality of public investment policy and to keep public debt at a low level; 2) adjust the fiscal criteria for EU membership in a manner that would enable countries to use the EU structural fund more effectively, while maintaining fiscal sustainability; 3) put a stronger emphasis on structural features of fiscal policy when designing country-level arrangements with the IMF.

Originality/value

The paper contributes to the literature on determinants of public investment policy by adding empirical evidence for emerging Europe countries.

Details

International Journal of Emerging Markets, vol. 16 no. 3
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 22 January 2020

Martin Grandes and Ariel Coremberg

The purpose of this paper is to demonstrate empirically that corruption causes significant and sizeable macroeconomic costs to countries in terms of economic activity and…

Abstract

Purpose

The purpose of this paper is to demonstrate empirically that corruption causes significant and sizeable macroeconomic costs to countries in terms of economic activity and economic growth. The authors modeled corruption building on the endogenous growth literature and finally estimated the baseline (bribes paid to public officials) macroeconomic cost of corruption using Argentina 2004-2015 as a case study.

Design/methodology/approach

The authors laid the foundations of a new methodology to account corruption losses using data from the national accounts and judiciary investigations within the framework of the Organisation for Economic Cooperation and Development (OECD) non-observed economy (NOE) instead of subjective indicators as in the earlier literature. They also suggested a new method to compute public expenditures overruns, including but not limited to public works.

Findings

The authors found the costs stand at a minimum accumulated rate of 8 per cent of gross domestic product (GDP) or 0.8 per cent yearly. These findings provided a corruption cost floor and were consistent with earlier research on world corruption losses estimated at 5 per cent by the World Economic Forum and with the losses estimated at between a yearly rate of 1.3 and 4 per cent and 2 per cent of GDP by Brazil and Peru’s corruption, respectively.

Research limitations/implications

The authors would need to extend the application of their new suggested methodology to further countries. They are working on this. They would need to develop the methodology in full to compute the public works overruns input to future econometric work.

Originality/value

In this paper, the authors make a threefold contribution to the literature on corruption and growth: first, they laid the foundations toward a new methodology to make an accounting of the corruption costs in terms of GDP consistent with the national accounts and executed budgets; on the one hand, and the OECD NOE framework, on the other. The authors named those corruption costs as percentage of GDP the “corruption wedge.” Second, they developed an example taking corruption events and a component of their total costs, namely, the bribes paid to public officials, taking Argentina 2004-2015 as a case study. Finally, they plugged the estimated wedge back into an endogenous growth model and calibrated the growth–corruption path simulating two economies where the total factor productivity was different, at different levels of the corruption wedge.

Details

Journal of Financial Crime, vol. 27 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Content available
Article
Publication date: 10 March 2020

Chukwuebuka Bernard Azolibe and Jisike Jude Okonkwo

The purpose of this study is to examine whether the state of infrastructure development in Sub-Saharan Africa actually stimulates industrial sector productivity, using a…

Abstract

Purpose

The purpose of this study is to examine whether the state of infrastructure development in Sub-Saharan Africa actually stimulates industrial sector productivity, using a panel data set of 17 countries spanning from 2003 to 2018.

Design/methodology/approach

The study used panel least square estimation technique to examine the relationship between the variables.

Findings

The result of the study indicates that the major factor that influences industrial sector productivity in Sub-Saharan Africa is their quantity and quality of telecommunication infrastructure. Analysis shows that the relatively low level of industrial sector productivity in Sub-Saharan Africa is largely due to their poor electricity and transport infrastructure and underutilization of water supply and sanitation infrastructure.

Practical implications

The government should partner with other developed countries of the world such as Germany, Japan, Sweden, Netherlands, Austria, Singapore, United States of America, United Kingdom, Switzerland and United Arab Emirates, which are the top ten countries in infrastructure ranking as currently released by the World Bank, to equally extend their quality infrastructure to their own country for enhanced industrialization.

Originality/value

The novelty of this research lies on the fact it is a cross-country study as against the few empirical studies that focused only on a single country. Also, the study made use of the four main indicators of infrastructure development in an economy, which are electricity infrastructure, transport infrastructure, telecommunication infrastructure and water supply and sanitation infrastructure, to examine its effect on industrial sector productivity in Sub-Saharan Africa.

Details

Journal of Economics and Development, vol. 22 no. 1
Type: Research Article
ISSN: 1859-0020

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Article
Publication date: 28 May 2020

Gonzalo Ruiz Díaz

The purpose of this paper is to assess the determinants of the early termination of infrastructure projects implemented under public–private partnerships (PPP)…

Abstract

Purpose

The purpose of this paper is to assess the determinants of the early termination of infrastructure projects implemented under public–private partnerships (PPP), concessions or privately managed divested assets.

Design/methodology/approach

Cross-section and duration model estimations were applied to a sample of 2,655 infrastructure projects implemented in Latin America and the Caribbean for the period 1993–2017. Estimation techniques consist of a logistic model and cox proportional hazards model (CPHM) applied to alternative specifications, including diverse causal factors.

Findings

Evidence is found that early termination of infrastructure projects is determined by intrinsic and extrinsic factors. Among the intrinsic factors, the main characteristics of projects that increase the likelihood of failure are the size or scale of the project, the sector in which the project is developed (transport and water and sanitation) and being investments in divested assets. Extrinsic factors that showed a negative impact on the risk of early termination are good regulatory quality and domestic macroeconomic stability. Likewise, external real and financial shocks also contribute importantly to explain the likelihood of early termination of infrastructure projects.

Practical implications

The results reveal that particular care must be put in design and supervision of large-scale projects, either in transport or water and sanitation. As well, risks associated with external shocks must be explicitly acknowledged in project design, with appropriate remedies and safeguards. The prevalence of relatively high rates of early termination in projects in divested assets in contrast with PPP suggests the importance of introducing simpler way out mechanisms for concessionaires. Finally, the results show the key importance of institutional factors like regulatory quality in determining project failure on economic performance of infrastructure projects.

Originality/value

In contrast to the previous literature, the analysis shows the decisive role played by financial external factors and institutional factors of Latin American and Caribbean countries in early termination of private participation in infrastructure projects. As well, the finding of a higher likelihood of failure in projects that involve investments in divested assets versus concession or PPP suggests the need of investigate further the tradeoffs regarding the balance that must exist among guarantees offered to investors in infrastructure projects and the need to keep contractual decisions in line with market signals.

Details

International Journal of Managing Projects in Business, vol. 13 no. 6
Type: Research Article
ISSN: 1753-8378

Keywords

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