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Most current modeling approaches identify very small gains from trade reform. In this chapter, we examine recent developments in the literature to assess whether standard modeling approaches are mis-specifying, understating, or overstating the gains from trade reform. Key areas where the impacts of trade barrier reduction appear to be understated include the measurement of barriers; the aggregation of these barriers; process productivity gains, particularly those resulting from reallocation of resources between firms; product quality improvements and expansion of product variety; factor supply; and investment of gains from trade.

This chapter proposes semiparametric estimation of the relationship between growth rate of GDP per capita, growth rates of physical and human capital, labor as well as other covariates and common trends for a panel of 23 OECD countries observed over the period 1971–2015. The observed differentiated behaviors by country reveal strong heterogeneity. This is the motivation behind using a mixed fixed- and random coefficients model to estimate this relationship. In particular, this chapter uses a semiparametric specification with random intercepts and slopes coefficients. Motivated by Lee and Wand (2016), the authors estimate a mean field variational Bayes semiparametric model with random coefficients for this panel of countries. Results reveal nonparametric specifications for the common trends. The use of this flexible methodology may enrich the empirical growth literature underlining a large diversity of responses across variables and countries.

This paper explores the pattern of technical change in the Korean economy from 1970 to 2013 and investigates its determinants. We use the Classical growth-distribution schedule to show that the labor-saving and capital-using pattern has predominated. For the rationale behind this Marx-biased technical change, we focus on the relationship between technical change and real wage growth via the evolution of labor and capital productivity, and verify the historical direction of technical change against the rise and fall of the working class. Furthermore, we find that the deviation during the post-crisis period from the long-run trend of Marx-biased technical change is not attributable to the vitality of new technological innovations, but rather the reflection of class dynamics over extracting productivity under weaker capital deepening. The results suggest that the recent deterioration of labor share and labor unions in Korea is closely associated with low incentive for technological progress, which contributes to prolonged stagnation.

This paper applies the logic of economic calculation to the actions of autocrats. We model autocrats as stationary bandits who use profit-and-loss calculations to select institutions that maximize their extraction rents. We find in many cases autocrats achieve rent maximization through creating and protecting private property rights. This in turn yields high levels of production, with expropriation kept low enough to incentivize continued high production. Importantly, while this leads to increasing quantities of available goods and services over time, it does not lead to true development; that is, the coordination of consumer demand with producer supply through directing resources to their highest-valued uses. We apply our model to the authoritarian governments of Singapore and the United Arab Emirates, showing how they function as quasi-corporate governance organizations in the business of maximizing appropriable rents.

This paper aims to investigate whether empirical evidence for scale economies can be found across countries and if so, whether this evidence varies across the stage of development.

The paper uses statistical methods to make comparisons between countries.

The empirical results suggest overall evidence towards aggregate increasing returns across all samples. Within the Cobb‐Douglas framework, stronger evidence for aggregate increasing returns is found among samples depicting economies in the early stages of development. The CES framework in turn supports aggregate scale economies for advanced economies, while unitary elasticity of substitution cannot be rejected for less developed economies, giving further support for the Cobb‐Douglas estimates.

Given that evidence for scale economies is found within different estimation frameworks for different groups of economies, comparative judgment is prevented. The results nevertheless provide evidence on the overall relevance of scale economies within and across groups of economies, while also giving a clear indication of the relevance of stage of development in economic growth and development analysis.

The most fundamental insight of the empirical results presented in this paper is that there is no reason to assume that the determinants of growth or the parameters guiding economies' adjustments towards their steady states or growth paths will be similar for economies at different stages of development, given their significant structural differences, whether in terms of production structures and characteristics or consumption patterns.

The purpose of this paper is to examine the extent to which information technology (IT) and human capital accumulation have contributed to the recent rapid economic growth of the United Arab Emirates (UAE).

Well‐established prior theories suggest that both factors are key growth ingredients. Results from cointegration tests confirm these prior theories and support a strong long‐run (equilibrium) relationship linking real economic growth in the UAE with both IT (alternatively defined) and human capital. However, additional tests based on the Gonzalo and Granger technique reveal that human capital plays a particularly significant role in the growth process.

These results lend support to the notion that good education is a prerequisite before new technologies can produce economic benefits. In contrast with robust long‐run effects, results from error‐correction models indicate that neither IT nor human capital has any significant short‐run effect on real growth.

The paper is of value by demonstrating that efforts to invigorate the education system and the technological infrastructure in the UAE must persist over a long period of time, before they can produce their expected economic benefits.

This study investigates (1) the effect of foreign direct investment (FDI) on total factor productivity (TFP) and economic growth dynamics and (2) the relevance of value added from three economic sectors in modulating the established effect of FDI on TFP and economic growth dynamics.

The geographical and temporal scopes are respectively 25 Sub-Saharan African countries and the period 1980–2014. The empirical evidence is based on non-interactive and interactive generalised method of moments.

The following main findings are established. First, FDI has a positive effect on gross domestic product (GDP) growth, GDP per capita and welfare real TFP. Second, the effect of FDI is negative on real GDP and TFP while the impact is insignificant on real TFP growth and welfare TFP. Third, values added to the three economic sectors largely modulate FDI to produce negative net effects on TFP and growth dynamics.

Policy implications are discussed with particular emphasis on the need to complement added value across various economic sectors in order to leverage on the benefits of FDI in TFP and economic growth.

To the best of the authors’ knowledge, this is the first study to assess how value added from various economic sectors affect the relevance of FDI on macroeconomic outcomes.

In today's global economy, a country's level of competitiveness has emerged as an important policy tool for business leaders and the impact of many economic and institutional “hard” factors on competitiveness have been studied. The purpose of this paper is to examine the impact that diversity, a “soft” factor, has on a country's level of competitiveness.

Using a sample of 102 countries, a multiple regression analysis is performed in which the relationship between a country's competitiveness, as proxied by the global competitiveness index, and diversity, as proxied by ethnic, linguistic, and religious diversity, are tested while controlling for other factors known to affect competitiveness. Further, a cluster analysis is performed in an effort to illuminate global patterns in competitiveness.

The results indicate that greater levels of ethnic diversity negatively and significantly affect a country's competitiveness, but greater levels of linguistic diversity positively and significantly affect competitiveness while religious diversity has no effect.

The reasons behind for the analysis results still need further research. For example, why do greater levels of linguistic diversity positively affect country competitiveness?

The IMF, World Bank, and other investors of capital need to understand whether diversity will help or hinder aid and loan programs and corporations need to consider diversity when conducting global business and foreign investment.

This study is the first to examine the relationship between diversity and country‐level competitiveness and has value to global business managers and investors.