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The purpose of this paper is to investigate the relationship between infrastructure development, rural–urban income inequality and poverty for BRICS economies.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between infrastructure development, rural–urban income inequality and poverty for BRICS economies.
Design/methodology/approach
Pedroni’s panel co-integration test and panel dynamic ordinary least squares (PDOLS) have been used to carry out the analysis.
Findings
The empirical findings confirm a long-run relationship among infrastructure development, poverty and rural–urban inequality. The PDOLS results suggest that both infrastructure development and economic growth lead to poverty reduction in BRICS. However, rural–urban income inequality aggravates poverty in these nations. The paper advocates for adopting policies aimed at strengthening infrastructure and achieving economic growth to reduce the current levels of poverty prevailing in the BRICS nations.
Originality/value
Significant limitations exist in the literature in terms of not clearly defining the nature of relationship and interlinkages between infrastructure development, poverty and inequality, with regard to the BRICS nations. The available studies mainly focus on the relationship between infrastructure and growth, with the universal agreement being that these two are positively related. However, it is still not right to assume that economic growth attributable to infrastructure development will, therefore, subsequently lead to a reduction in inequality. This forms the basis for this study, that is, to critically examine the relationship between infrastructure development, inequality and poverty for BRICS nations.
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This study aims to examine the influence of socioeconomic development on inflation in South Asia using the foreign exchange rate and money supply as control variables.
Abstract
Purpose
This study aims to examine the influence of socioeconomic development on inflation in South Asia using the foreign exchange rate and money supply as control variables.
Design/methodology/approach
The study uses annual panel data for five South Asian economies, namely, Bangladesh, India, Nepal, Pakistan and Sri Lanka over the period 1990–2018, applies cointegrating regression techniques, namely, the panel dynamic ordinary least square (OLS) and fully modified OLS estimators to examine the long-run relations and conducts the Toda-Yamamoto Granger causality test to detect the direction of causality among variables.
Findings
The cointegrating regression estimations have documented that the socioeconomic development proxied by the human development index (HDI) has no significant impact on inflation. Although economic development represented by gross domestic product (GDP) growth causes inflation, socioeconomic development represented by HDI has no impact on inflation and has demonstrated as a better macroeconomic indicator, and thus creates no inflationary pressure in the economy. The foreign exchange rate has a positive impact on inflation. The broad money supply has the usual positive effect on domestic inflation that endorses the monetarist view about prices. The Toda-Yamamoto Granger causality test has confirmed several unidirectional causalities: inflation causes HDI, money supply causes both inflation and HDI and the foreign exchange rate causes HDI.
Practical implications
The study has practical implications for policymakers in South Asia, to improve HDI, particularly GDP per capita, education and health-care facilities to realize continuous socioeconomic development, which will take care of inflation. Moreover, these counties may follow a conservative monetary policy to control inflationary pressure in their economies.
Originality/value
The study is original and claims to be the first to examine the impact of socioeconomic development on inflation. The findings have socioeconomic values regarding controlling inflation in South Asia.
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Nihar Ranjan Jena and Narayan Sethi
The purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the South Asian region from 1996 to 2017.
Abstract
Purpose
The purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the South Asian region from 1996 to 2017.
Design/methodology/approach
A sample of eight South Asian countries for the period 1996–2017 is being considered for this study. This study uses various econometrics tools such as Pedroni and Johansen–Fisher panel cointegration test, panel fully modified ordinary least square and panel dynamic ordinary least square (PDOLS) to ascertain the long-run and short-run dynamics among the variables under consideration.
Findings
The empirical results found that long-run, as well as the short-run relationship, exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the South Asian economies. The authors also found unidirectional causality running from foreign aid to economic growth. Both the long-run relationship as well as short-run causality between foreign aid and economic growth is unequivocally positive.
Originality/value
This study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in South Asian economies. Taking into account the diversity of level of growth experienced by the eight countries in the Asian region, this study uses an appropriate regression technique, i.e. PDOLS whose results are robust. Therefore, the policymakers in these countries are well-advised to implement suitable policy measures to ensure optimum utilization of foreign capital resources garnered by way of receipt of foreign aid and build on for stronger future economic growth.
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Muhammad Ali, Lubna Khan, Amna Sohail and Chin Hong Puah
The purpose of this study is to examine the effect of foreign aid (FA) on corruption in selected Asian countries (Pakistan, India, Srilanka and Bangladesh) using the panel data…
Abstract
Purpose
The purpose of this study is to examine the effect of foreign aid (FA) on corruption in selected Asian countries (Pakistan, India, Srilanka and Bangladesh) using the panel data from 2000 to 2014.
Design/methodology/approach
The author used Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests to check the stationary properties of the variables. The Pedroni’s and Kao panel cointegration approach was applied to analyze the variable’s long-run relationship. The author used panel dynamic ordinary least squares (PDOLS) and fully modified ordinary least squares (FMOLS) framework to estimate the coefficients of cointegrating vectors. Additionally, the panel granger causality test was performed to check the causal relationship between the variables.
Findings
The results from PDOLS and FMOLS indicate that FA has a significant negative impact on the level of corruption. This infers that the foreign assistance decrease the level of corruption perception index, hence, more corruption in the country.
Originality/value
Overall, the study fulfills the need to understand the aid-corruption nexus, particularly in the case of the Asian region.
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The purpose of this paper is to investigate the relationship between financial development indicators and human capital for Asian countries using the annual data from 1984-2013.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between financial development indicators and human capital for Asian countries using the annual data from 1984-2013.
Design/methodology/approach
The stationarity of the variables are checked by Levin-Lin-Chu, Im-Pesaran-Shin, Fisher-type augmented Dickey-Fuller and Philips-Perron panel unit-root tests. The Pedroni’s and Kao’s panel co-integration approaches are employed to examine the long-run relationship among the variables. To estimate the coefficients of co-integrating vectors, both panel dynamic ordinary least squares (PDOLS) and fully modified ordinary least squares (FMOLS) techniques are used. The short-term and long-run causality is examined by panel granger causality.
Findings
The Pedroni’s and Kao’s co-integration approaches support the existence of the long-run relationship among the indicators of financial development, economic growth and human capital. The PDOLS and FMOLS estimators revealed that both financial development indicators and economic growth variable act as an important driver for the increase in human capital. The results of panel granger causality indicate that causality runs from indicators of financial development, economic growth and public spending on education to human capital.
Originality/value
There is hardly any study that examine the impact of financial development indicators and economic growth on human capital in Asian economies, therefore the present study fill the research gap in the literature.
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Nihar Ranjan Jena and Narayan Sethi
The purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the sub-Saharan Africa (SSA) region from 1993 to…
Abstract
Purpose
The purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the sub-Saharan Africa (SSA) region from 1993 to 2017.
Design/methodology/approach
A sample of 45 SSA countries for the period 1993–2017 is considered for this study. The study uses various econometrics tools such as Pedroni and Kao’s cointegration test, Johansen-Fisher Panel cointegration test, FMOLS and PDOLS in order to ascertain the long-run and short-run dynamics among the variables under consideration.
Findings
The empirical results find that long-run and short-run relationships exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the SSA economies. The authors also find unidirectional causality running from foreign aid to economic growth. The policymakers in these countries are well-advised to implement suitable policy measures to build on the growth momentum created by foreign aid inflows.
Originality/value
The study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in the SSA region. Taking into account the diversity of level of growth experienced by the 45 countries in the region, the study uses an appropriate regression technique, i.e., panel dynamic OLS whose results are robust. The finding is also supported by the Granger-causality test and robust cointegration techniques.
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Narayan Sethi, Bikash Ranjan Mishra and Padmaja Bhujabal
The purpose of this paper is to empirically investigate whether market size and its growth rate, along with financial development indicators, affect human capital in selected…
Abstract
Purpose
The purpose of this paper is to empirically investigate whether market size and its growth rate, along with financial development indicators, affect human capital in selected south Asian economies over the time period from 1984 to 2015.
Design/methodology/approach
The stationarity of the variables are checked by LLC, IPS, ADF and Phillips–Perron panel unit-root tests. Pedroni’s and Kao’s panel co-integration approaches are employed to examine the long-run relationship among the variables. To estimate the coefficients of co-integrating vectors, both PDOLS and FMOLS techniques are used. The short-term and long-run causalities are examined by panel granger causality.
Findings
From the empirical results, the authors found that both the market size and financial development play an important role in the development of human capital in the selected south Asian economies. It is evident that a large market size and faster degree of financial development in the selected countries result in better human capital formation.
Originality/value
There are a number of studies on the impact of financial development indicators on human capital and economic growth, but there is hardly any study that considers market size and its growth rate along with financial development indicators with human capital in the context of south Asian economies. The study fills this research gap.
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The purpose of this paper is to investigate the possible co-integration and the direction of causality between financial development and economic growth in South-Asian Association…
Abstract
Purpose
The purpose of this paper is to investigate the possible co-integration and the direction of causality between financial development and economic growth in South-Asian Association for Regional Cooperation (SAARC) countries using annual data from 1994 to 2013.
Design/methodology/approach
The Carrion-i-Silvestre et al. (2005) stationarity test with structural breaks is used to check the stationarity. The Westerlund (2006) panel co-integration test is employed to examine the long-run relationship among the variables. To carry out tests on the co-integrating vectors, fully modified ordinary least squares (FMOLS) and PDOLS techniques are used and panel Granger causality test is used to examine the direction of the causality.
Findings
The Westerlund (2006) panel co-integration test confirms the existence of the long-run relationship between financial development and economic growth for SAARC countries. The coefficients of FMOLS and DOLS indicate that index of financial development (IFD) and trade openness supports economic growth in SAARC region. In the short-run, there is unidirectional causality running from IFD to economic growth.
Research limitations/implications
In the view of these findings it is recommended that countries in the region should adopt policies geared toward financial sector development to attain high economic growth.
Originality/value
To the best of the author’s knowledge, no studies have looked into SAARC countries to study the relationship between financial development and economic growth, this study is the first of its kind.
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Nihar Ranjan Jena and Narayan Sethi
The purpose of this paper is to empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017.
Abstract
Purpose
The purpose of this paper is to empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017.
Design/methodology/approach
The stationarity of the variables is checked by Levin, Lin and Chu t, Breitung t-stat., Im, Pesaran and Shin W-stat., ADF–Fisher and Philips–Perron–Fisher panel unit root tests. Panel Granger Causality is used to verify the short-run causality. Pedroni’s, Kao’s and Johansen–Fisher panel cointegration approaches are employed to examine the long-run relationship among the variables. Panel VECM is used to confirm the existence of a long-run relationship among the variables.
Findings
Panels FMOLS and DOLS show that remittance inflows have negatively impacted the export performance of the selected South Asian countries during the study period. Granger Causality and VECM test confirm the existence of short-run and long-run relationship among the variables. The authors conclude that inward remittance is affecting export performance negatively during the study period. Furthermore, inward remittances occupy a major source of development finance for selected South Asian countries.
Originality/value
The study uses a dynamic macroeconomic modeling framework to assess the inward remittance on export performance in South Asian countries. Taking into account the diversity of the level of growth experienced by the five countries in the Asian region, the study uses an appropriate regression technique, i.e. panel dynamic OLS whose results are robust. As exports are a proven way to further economic growth, this study fills a vital gap in the literature by ascertaining the degree of impact of remittances in influencing outbound exports from the South Asian region.
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Christopher A. Hartwell and Bryane Michael
The penetration of foreign banks into emerging markets has been linked with financial sector deepening and expansion of credit. However, there is little research into the…
Abstract
Purpose
The penetration of foreign banks into emerging markets has been linked with financial sector deepening and expansion of credit. However, there is little research into the interaction of financial sector institutions with broader transition and development dynamics. The purpose of this paper is to examine if the presence of foreign financial institutions helped to shape a better business environment over the long-run in emerging markets.
Design/methodology/approach
The authors use aggregate, country-level annual data for 107 developed and emerging market countries over a shifting 30-year time span (1983-2012). The authors use Prais-Winsten and System-GMM techniques on stationary variables to highlight linkages between foreign banks and the overall business environment. Where data were found to be non-stationary, the authors applied panel cointegration approaches, including Granger Causality and full-modified OLS, to research the same relationship.
Findings
The results show that foreign bank entry in emerging markets has had a positive effect in the broader business environment, with the biggest effects on legal protection, competitiveness, and time to import/export.
Research limitations/implications
This paper does not consider the broader effects of foreign bank entry on competition within emerging markets, an area that the authors are considering as fruitful for future research.
Originality/value
The issue of financial sector impact on broader business environment issues has not been studied in the extant literature. Moreover, this study makes an important contribution for policymakers who are grappling with issues related to financial sector regulation in the post-global financial crisis world.
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