Search results

This paper provides empirical evidence regarding the effect of fiscal management performance on local economic development in an emerging economy.

The authors performed a panel data analysis based on data from the 5,568 Brazilian municipalities from 2006 to 2015. To consider if the difference in the characteristics of the municipalities can affect the results, the authors used different samples: a total of municipalities, metropolitan, nonmetropolitan, urban and rural municipalities. Furthermore, to check the difference of the effect on economic development associated with good and bad fiscal management in the municipalities, the authors considered a sample of the 500 best and the 500 worst fiscal management performances.

The findings indicate that an improvement in fiscal management is an important strategy to stimulate local economic development. In particular, the relevance of fiscal management performance to stimulate economic development is more significant in metropolitan and urban municipalities.

This analysis is the first to use data that take into account all the Brazilian municipalities covering information of the 21st century. Moreover, different from the previous literature, which considered efficiency from the data envelopment analysis (DEA), the authors used a fiscal management index that allowed one to consider a time-varying fiscal performance of the Brazilian municipalities.

The purpose of this paper is to identify the causal effect of high-speed railways (HSRs) and investigate the affecting channels; the second purpose is to examine how HSRs change the distribution of economic activity across cities and sectors.

A difference-in-difference strategy is implemented to estimate the impact of recently built HSRs on local economic performance in China, exploiting the geography and time variations in HSR operations.

Using panel data from China’s City Statistical Yearbook 2001–2019, the authors find that HSRs lead to a significant increase in cities’ gross domestic product (GDP) and GDP per capita, but the authors do not find any significant change in GDP growth. This conclusion still holds true after the authors address the endogeneity problems. A mechanism analysis shows that HSRs improve local economic performance mainly by increasing fixed asset investment. The authors also find that the HSR investment is a policy that favors metropolitan areas due to the larger increase in the GDP for larger cities and with HSRs, the industrial and service sectors will further agglomerate in larger cities.

The authors contribute to the literature in several ways. First, this paper improves the estimation strategy in identifying the HSR impact on the local economic performance. Second, this paper investigates the affecting channels of HSRs. This paper proves that HSRs in China promote the cities’ economic performance mainly by increasing the fixed asset investment. Third, this study provides evidence for the new economic geography models pioneered by Krugman (1991).

The purpose of this paper is to analyze the potential of remote areas in Indonesia and find out the important variables that influence key success factors of Local Economic Regional Development (LERD) program in several areas.

A series of structured interviews were conducted with the chairman and staff of local government, academician, private sectors and locals who are induced to work together to improve quality of life, create new opportunities and fight poverty in Bau-Bau, Singkawang and Kupang. Subsequently, the results from the structured interviews were analyzed using qualitative analysis to arrive at the model of LERD in Indonesia.

The findings show that variables that influence the key success factors of LERD in this research are resources endowment, social capital and local support as independent variables; entrepreneurial strategy as moderating variable; and perceived performance as dependent variable.

This study was conducted only in Indonesia which focused on local economic regional development in Indonesia. Despite this limitation, the findings of this study enable the construction of a general model that highlights LERD in chosen areas. The model is also expected to give an idea of how to develop economic region.

The paper adds to the literature on LERD by enabling researchers and practitioners to understand the model of LERD in Indonesia.

There are numerous reasons that may explain why the U.S. economy has performed well during the past twenty‐five years. One likely reason is that local economic development practices have enhanced American competitiveness. The first section develops a game theoretic model that show how local economic practices can result in either negative or positive sum outcomes for the nation as a whole. The second section describes how local economic development practices towards practices that are likely to result in better aggregate economic performance. The strong performance of the U.S. economy roughly coincides with the more efficient practices. The final section examines further practices that may make local economic stimulus more efficient.

We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible “stewards” rather than “agents” of the state.

We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets.

Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform.

Economic reform without reforming the human resources policies at the executive level enables the autocratic state to exert political power on corporate decision making, so as to ensure that firms’ business activities fulfill the state’s political objectives.

As a powerful social elite, the state-steward managers in China have the same interests as the state (the government), namely extracting rents that should adhere to the nation (which stands for the society at large or the collective private citizens).

As China has been a communist country with a single ruling party for decades, the ideas of socialism still have a strong impact on how companies are run. The legitimacy of the elite’s privileged rights over private sectors is central to our question.

Chinese executive compensation stimulates not only the maximization of shareholder value but also the preservation of the state’s interests.

This study aims to investigate the external effect of the economic growth target pressure of local governments on establishment-level SO₂ emissions.

Based on manually collected panel data of 74,058 China's industrial establishments and more than 330 thousand observations from CIED and ESR, the authors use a firm-fixed effect model, instrumental variables estimation and heterogeneity tests to identify the environmental externality of economic growth target pressure.

The establishments in cities that meet or slightly exceed the economic growth target experience greater negative externality measured by SO₂ emission intensity. This external effect is more pronounced in regions: with a strict and overweighted target setting; with stronger officials' promotion incentives; with a low degree of marketization; and in firms with great economic importance. The authors identify the underlying mechanisms of dependence on dirty industry and the relaxation of environmental enforcement. And the environmental protection constraints in 2007 mitigate the negative externality.

The paper sheds light on to what extent economic growth target pressure has a negative externality of pollution in China and how this pressure may conflict with environmental protection.

This paper complements prior research on the economic effects of economic growth targets, expands the knowledge on the determinants of establishment-level pollution emission from the perspective of target pressure and provides insight into the environmental externality that results from political factors.

This chapter applies the five drivers of productivity framework to regional microdata for Egypt and extends it by introducing an index of industrial clusters as an explanatory factor of the productivity performance of local private sector firms. Applying structural equation models, the geographic concentration of sectoral economic activity is found to have a positive and statistically significant effect on labor productivity. The transmission mechanism is conjectured to be the positive spillovers that are created, which local firms can tap into. In contrast, a higher concentration of skilled workers in an industrial sector in a region is associated with lower levels of labor productivity – a finding that suggests there may be structural deficiencies in the allocation of skilled workers. Regional policy should focus on net investments in gross capital formation throughout the country, for which the national and regional governments should improve how public investments are managed and the institutional framework – including the rule of law, bureaucracy and red tape, conflict of interest, transparency, and governance – so that private investment (both local and foreign) may substantially increase.

This study aims to examine the relationship between the perceptions of local residents concerning political factors and support for tourism development in the Kashmir region.

Primary data have been collected (n = 650) from the residents of the top five tourist destinations (Pahalgam, Gulmarg, Srinagar, Sonamarg and Kokernag) through a pre-tested questionnaire by multistage sampling method. In presence of non-normal data, the partial least squares structural equation model is applied for analysis. The study is based on the theoretical framework of social exchange theory (SET) and institutional theory of political trust (ITPT).

Results suggest that trust in government, the perceived economic performance of government and level of power are negative determinants of support for tourism development, which nullifies SET for politically disturbed regions.

The results of this study are useful for the local government and tourism institutions in policy formation and fill the vast gap in tourism literature with a theoretical base. This study is also an addition to the existing literature on city tourism for the politically disturbed region.

The idea that a bank's overall performance is influenced by the regional economy in which it operates is intuitive and broadly consistent with historical bank performance. Yet, micro-level research on the topic has borne mixed results, failing to find a consistent link between various measures of bank performance and regional economic variables. This chapter attempts to reconcile the intuition with the micro-level data by aggregating bank performance, as measured by nonperforming loans, up to the state level. This level of aggregation reduces the influence of idiosyncratic bank effects sufficiently so as to examine more clearly the influence of state-level economic variables. We show that regional variables, such as employment growth and changes in real estate prices, are not particularly useful for predicting changes in bank performance, but that coincident indicators developed to track a state's gross output are quite useful. We find that these coincident indicators have a statistically significant and economically important influence on state-level, aggregate bank performance. In addition, the coincident indicators potentially contribute to the out-of-sample forecasts of the relative riskiness of state-level bank portfolios, which should be of interest to bankers and bank supervisors.

This paper investigates CEO turnover and the usefulness of relative performance evaluation (RPE) as a management incentive in an emerging economy lacking market-based competition.

In a sample of China’s listed state-owned enterprises (SOEs) from the period 2001 to 2005, we manually collect the data where a CEO has gone after being removed by reading the annual reports of the firms and searching the major news and business publications, and run OLS regressions to examine how various incentives provided by different CEO turnovers such as promotion, demotion, and rotation affect the firm performance.

We find that 41% of departing CEOs in SOEs is being promoted. The promotion is positively associated with preceding firm performance relative to peers in the same region and this association is more significant than that between the promotion and firm’s specific performance. Furthermore, the promotion outperforms other incentive schemes such as CEO demotions by 5–8% in terms of subsequent Tobin’s q in three years. These consequences persist in undeveloped regions where there are fewer firms listed on the stock market, a lower stock market capitalization, or a higher regional Herfindahl–Hirschman Index ( HHI ).

The findings imply that promotion based on RPE provides an important incentive by creating competitions.