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Article
Publication date: 26 February 2020

Vaseem Akram, Pradipta Kumar Sahoo and Badri Narayan Rath

This paper investigates the per-capita output club convergence in case of 120 countries for the period 1995–2015. Further, we disaggregate per-capita output into three…

Abstract

Purpose

This paper investigates the per-capita output club convergence in case of 120 countries for the period 1995–2015. Further, we disaggregate per-capita output into three broad sectors such as agriculture, industry, and service and investigate the convergence hypothesis.

Design/methodology/approach

The paper tests this hypothesis using the Phillips and Sul panel club convergence technique.

Findings

Our findings are as follows: (1) our results indicate the evidence of output divergence for the full sample; (2) when countries are divided into different clubs, the results exhibit the sign of per capita output club convergence both for aggregate and three major sectors. Further, this study confirms that industry's per capita output is the main driver for aggregate per-capita output club convergence in case of club 1. For club 2, agriculture's per capita output is a primary source for aggregate per capita output club convergence. Likewise, in the case of clubs 3 and 4, we find the service sector's per capita output is the main component for aggregate per-capita output club convergence; (3) both the service and industry sectors are major drivers for aggregate per-capita output club convergence.

Practical implications

This study suggests to the policymaker that sector-specific policies need to be adopted to boost the per-capita output growth by improving the performance of each of the sectors across the countries.

Originality/value

Notwithstanding, there are many studies that examine the output convergence using a notion of beta and sigma convergence, but studies regarding per capita output club convergence both at the aggregate and sectoral level are scanty.

Details

Journal of Economic Studies, vol. 47 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 December 1998

Rosa Capolupo

This paper reviews one of the crucial issues in the recent growth literature concerning the hypothesis of cross country convergence of levels and growth rates of income…

Abstract

This paper reviews one of the crucial issues in the recent growth literature concerning the hypothesis of cross country convergence of levels and growth rates of income per capita implied by the neo‐classical growth model, both in the Solow‐Swan and Rampsey‐Cass‐Koopmans versions. The alternative endogenous growth models, consistent with permanent income inequality, are considered. Convergence to a common income level versus divergence is discussed from a theoretical point of view. Then, empirical tests of the convergence property are presented. What emerges is that Barro type regressions and their findings about “conditional” convergence are questionable and cannot be used to give a definitive response on this issue.

Details

Journal of Economic Studies, vol. 25 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Content available
Article
Publication date: 13 December 2019

Shiyi Chen and Wang Li

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

China Political Economy, vol. 2 no. 2
Type: Research Article
ISSN: 2516-1652

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Article
Publication date: 1 March 2006

Roy Bahl and Sally Wallace

The impact of fiscal decentralization on equalization between regions has received significant attention but there has been much less research of the impact of…

Abstract

The impact of fiscal decentralization on equalization between regions has received significant attention but there has been much less research of the impact of decentralization on equalization within regions. Theory suggests that the tradeoff between local fiscal autonomy and equalization ought to be most pronounced at the sub-region level where rural-urban disparities in the level of development are substantial. This paper is an empirical analysis of the impact of fiscal decentralization on equalization within one Russian region, Leningrad (State). We show that the regional government uses a mixture of fiscal instruments to strike a balance between giving more budgetary autonomy to local governments and eliminating the disparities among them. We also develop a method for studying this tradeoff between decentralization and equalization when only limited data are available. Finally, we argue and demonstrate that without a detailed understanding of the institutional arrangement for intergovernmental fiscal relations, one cannot evaluate the equalization or decentralization implications.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 18 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 June 2001

Serge Coulombe and Jean‐François Tremblay

Proposes an empirical analysis of regional convergence in Canada based on the growth model of Barro et al. In an open economy with perfect capital mobility, if domestic…

Abstract

Proposes an empirical analysis of regional convergence in Canada based on the growth model of Barro et al. In an open economy with perfect capital mobility, if domestic residents cannot borrow abroad with human capital as collateral, the dynamics of human capital accumulation is the driving force of per capita income growth. Empirical results indicate that, as predicted by the theoretical model, various indicators of the stock of human capital did converge at the same speed as per capita income during the 1951‐1996 period. A substantial part of the relative growth of per capita income indicators across Canadian provinces since the early 1950s could be explained by the convergence process of human capital indicators based on the percentage of the population, both sexes and males, who have at least a university degree. The estimates of the human capital share in national income based on those indicators are in the neighbourhood of 0.5, a number consistent with other measures of the implicit income share of human capital. The convergence speed of per capita income at the regional level might have been two to three times faster, if all persons had invested in education at the same rate as the young.

Details

Journal of Economic Studies, vol. 28 no. 3
Type: Research Article
ISSN: 0144-3585

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Abstract

Details

Explaining Growth in the Middle East
Type: Book
ISBN: 978-0-44452-240-5

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Book part
Publication date: 11 August 2017

Maria Adelaide Pedrosa da Silva Duarte and Marta Cristina Nunes Simões

European Union (EU) central and eastern economies have gone through a process of structural change since 1989, when the post-communist transition started. This process was…

Abstract

European Union (EU) central and eastern economies have gone through a process of structural change since 1989, when the post-communist transition started. This process was afterwards reinforced by the three EU enlargement waves that took place in 2004, 2007 and 2013. Though exhibiting low levels of aggregate productivity, this group of countries joined the EU with higher levels of human capital than the southern member states, an advantage that should have accelerated real convergence towards the EU15. However, evidence to date suggests that the convergence process came to a halt in 2007–2008 when massive capital inflows stopped, highlighting the fragilities of the growth strategies implemented so far. In these peripheral countries, structural change has been characterised by an expanding services sector alongside growing income inequality. The two strands of literature on these issues highlight that: (a) an expanding services sector may not be detrimental for growth, quite the opposite, depending on services composition and on the capacity of services sub-sectors to incorporate information and communication technologies (ICTs); and (b) inequality is negatively related to growth through the fiscal policy, socio-political instability, borrowing constraints to investment in education and endogenous fertility channels and positively through the savings channel and incentives. We analyse the nexus between structural change, inequality and growth in this group of countries highlighting income inequality as a potential mechanism that connects the other two variables. We provide a descriptive quantitative analysis of the profiles of structural change and income inequality in our sample and apply dynamic panel methods to investigate the existence of causality among services sector expansion, inequality and aggregate productivity considering a maximum period between 1980 and 2010.

Details

Core-Periphery Patterns Across the European Union
Type: Book
ISBN: 978-1-78714-495-8

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Article
Publication date: 7 December 2015

John Bosco Nnyanzi

The purpose of this paper is to investigate the welfare gains from risk sharing among African countries and regional groupings in Africa that are planning to establish…

Abstract

Purpose

The purpose of this paper is to investigate the welfare gains from risk sharing among African countries and regional groupings in Africa that are planning to establish monetary unions either in the short or longrun.

Design/methodology/approach

The paper empirically tested two hypothesis; potential welfare gains and unexploited welfare gains. It uses a utility-based measure to quantify the gains that would accrue from joining a risk sharing arrangement such as a monetary union. The regional groupings considered include the African Union (AU), the Economic Community of West Africa (ECOWAS), the Southern African Development Community (SADC) and the East African Community (EAC).

Findings

The results provide support for both hypotheses. Overall, the average potential welfare for AU, EAC, ECOWAS and SADC groups under full risk sharing are found to be 1.9, 2, 3.4 and 1.6 percent, respectively, each higher than the 1 percent estimated for the OECD countries and 0.6 percent for the 14-EU countries. The average unexploited gains are, however, even bigger for AU at 3.5 percent, ECOWAS at 8.6 percent and for SADC at 2.6 percent.

Practical implications

The finding of enormous potential welfare gains could partly reinforce the desire of the African countries to establish monetary unions. On the other hand, the paper provides insights to policy makers in designing policies to promote risk sharing given the finding that the unexploited welfare gains are on average still too low – implying that many African countries or groups still have very low risk sharing.

Originality/value

Previous studies on welfare gains and risk sharing have basically left out the African regional groupings and never related the issue of gains to the monetary union projects. Besides, previous studies focus on unexploited welfare gains at the expense of total potential welfare gains. Considering the two types, however, presents a more complete picture of total gains from joining any risk sharing arrangement such as a monetary union.

Details

African Journal of Economic and Management Studies, vol. 6 no. 4
Type: Research Article
ISSN: 2040-0705

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Article
Publication date: 20 June 2019

Keshmeer Makun and Swastika Devi

Information and communication technology (ICT) appears to play an indispensable task in influencing and directing the growth process of several developing countries. The…

Abstract

Purpose

Information and communication technology (ICT) appears to play an indispensable task in influencing and directing the growth process of several developing countries. The spread of ICT in the South Pacific region including Fiji has facilitated faster and smother business in different sectors of the economy such as banking, education, transport and tourism. The purpose of this paper is to contribute to empirical literature and explore the effect of ICT on economic output, both in the short run and long run in the Fiji Islands.

Design/methodology/approach

The economic analysis was conducted using data from 1990 to 2016, improved framework of Solow (1956) and the autoregressive distributed-lag bounds approach to cointegration. Findings from the study and economic standpoint, the ICT is indeed important. The analysis shows an indication of long-run cointegration relationship among the variables for the two indicators of ICT. From the analysis, it is also observed that the two ICT indicators have a statistically significant and positive effect on output with coefficient ranging from 0.04 to 0.06.

Research limitations/implications

These results extend the ICT literature by providing support for it in case of a small developing island economy. The study highlights that while the two proxies of ICT are important for long term output growth, besides broad money and capital stock, the principal technology contributor is a mobile cellular subscription in Fiji Islands.

Practical implications

The policymakers need to work diligently to not only enhance ICT related infrastructure but also focus on better services and communication in different sectors of the economy. The efficient use of present technologies such as 3-G and 4-G is crucial and must be connected and made available to other smaller islands of Fiji.

Originality/value

The recent study has focused on the contribution of ICT on small island developing country, relative to large developing or developed countries. Furthermore, the author examined the contribution of two indicators of ICT using Solow (1956) augmented framework.

Details

International Journal of Development Issues, vol. 18 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

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Abstract

Details

Population Change, Labor Markets and Sustainable Growth: Towards a New Economic Paradigm
Type: Book
ISBN: 978-0-44453-051-6

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