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1 – 10 of over 7000Chakrangi Lenagala and Rati Ram
By using the World Bank's new poverty data that are based on the most recent International Comparison Program report, this research aims to revisit the response of poverty rate to…
Abstract
Purpose
By using the World Bank's new poverty data that are based on the most recent International Comparison Program report, this research aims to revisit the response of poverty rate to increase in real gross domestic product (GDP) per capita.
Design/methodology/approach
The response is summarized in terms of elasticity of poverty with respect to real GDP per capita, which is the ratio of annual percentage fall in poverty rate to annual percentage increase in real GDP per capita. The main calculations are done for the entire group of less‐developed countries (LDCs), poverty‐dense South Asia region, and India, which probably has the highest poverty rate. The periods studied are 1981‐1990, 1990‐1999, and 1999‐2005. The calculations are done for four different poverty measures.
Findings
Five major points are noted. First, the elasticities generally show a declining tendency over the period, indicating that poverty‐reducing impact of income growth has been weakening. Second, the elasticities show huge differences across the poverty lines, and generally decline with higher poverty lines. Third, while global elasticities for $1.00 poverty line bear some resemblance to those reported or used by many scholars, elasticities for $2.00 and 2.50 poverty rates are dramatically lower, and reinforce the view that many influential estimates show the effect of income growth on poverty to be much higher than the data indicate. Fourth, elasticities for poverty‐dense South Asia are again seen to be much lower than those for the entire LDC group. Fifth, for India, where $2.00 and 2.50 poverty rates are higher than even in Sub‐Saharan Africa, the elasticities are extremely low and have been declining despite an acceleration in income growth. The overall implication seems to be that income growth has generally been less pro‐poor during the globalization era of the 1990s and the 2000s than during the 1980s. In particular, income growth in India seems to have had an extremely small impact on poverty, and that impact, notably for $1.00 and 1.25 poverty lines, has been declining.
Originality/value
First, although there is a vast literature on growth elasticities of poverty, this seems to be the first study that uses World Bank's new poverty data to judge the impact of income growth on poverty. Second, this is the only study that directly estimates and compares elasticities for the four poverty lines of $1.00, 1.25, 2.00, and 2.50, and shows large differences in the elasticities for different poverty lines. Third, this is probably the only work that compares elasticities for the 1980s, 1990s, and the 2000s. Fourth, although some indication of very low elasticities for South Asia and India does exist in a recent study, $2.50 elasticities reported in the present work for India, and even South Asia, should constitute an eye‐opener for scholars, policy‐makers, and international organizations in regard to the potential role of income growth in poverty reduction. Fifth, the observed decline in most elasticities during the 1990s and 2000s, as compared with the 1980s, despite higher income levels and growth rates, may shed light on the likely role of globalization in reducing poverty.
Post reform India has generated high economic growth, yet progress in income poverty and many other key development outcomes has been modest. This chapter primarily examines how…
Abstract
Post reform India has generated high economic growth, yet progress in income poverty and many other key development outcomes has been modest. This chapter primarily examines how inclusive economic growth has been in India between 2005–2006 and 2015–2016 in reducing multidimensional poverty captured by the global multidimensional poverty index (MPI). The authors employ a constellation of elasticity and semi-elasticity measures to examine vertical, horizontal as well as dimensional inclusiveness of economic growth. Nationally, the authors estimate that a 1% annual economic growth in India during their study period is associated with an annual reduction in MPI of 1.34%. The association of the national growth to state poverty reduction (horizontal inclusiveness) is, however, not uniform. Some states have been successful in reducing poverty faster than the national average despite slower economic growth between 2005–2005 and 2015–2016; whereas, other states have been less successful to do so despite faster economic growth during the same period. The authors’ analyses and findings show how these tools may be used in practical applications to measure inclusive growth and inform policy.
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Ajay Chhibber and Gaurav Nayyar
The aim of this paper is to analyse the cross‐country variation in the growth elasticity of poverty across a sample of developing countries during the period from 1990 to 2000.
Abstract
Purpose
The aim of this paper is to analyse the cross‐country variation in the growth elasticity of poverty across a sample of developing countries during the period from 1990 to 2000.
Design/methodology/approach
In order to identify variables that may explain the cross‐country variation in the growth elasticity of poverty, the paper sets up a theoretical framework. Subsequently, the explanatory power of these variables is tested empirically by panel data econometric analysis.
Findings
For a sample of 52 low and middle income countries, it is found that the level of initial income inequality, credit available to the private sector, literacy, the extent of business regulations and trade openness are important determinants of the growth elasticity of poverty.
Practical implications
Countries that reduce regulatory burdens, improve literacy, increase access to finance, undertake land reforms (asset redistribution), and provide safety nets while liberalizing trade can create more growth and ensure that it is pro‐poor.
Originality/value
The paper identifies variables (at a cross‐country level) that may guide the conscious policies which create pro‐poor growth.
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In this paper, the author assesses if the effect of structural policies, macroeconomic indicators and demographic factors on employment elasticities over the period 2000–2017 can…
Abstract
Purpose
In this paper, the author assesses if the effect of structural policies, macroeconomic indicators and demographic factors on employment elasticities over the period 2000–2017 can distinguish the former French colonies from the Anglophone ones.
Design/methodology/approach
Using a panel of 44 countries taken from Africa and Middle East Area, elasticities are estimated in the first stage by rolling regression. Then, both static and dynamic panel models are investigated.
Findings
Results suggest big difference between the former French colonies and Anglophone ones. For the French colonies, product and labor market flexibility are found to have significant and positive impact on elasticities, while for Anglophone ones, only foreign direct investment and government size are found to have significant and positive impact. Besides, all reforms and/or economic measures need to be complemented by macroeconomic policies aimed to increase economic stability.
Originality/value
The results presented in this study highlight some of the factors that appear to drive the relationship between employment and some structural policies, macroeconomic indicators and demographic factors for two groups of former colonies. The paper provides policy conclusions based on these results for the two groups. This analysis may indeed help to inform future policy discussions, yet much additional work is needed to identify macroeconomic “best practices” for encouraging employment in the post-2019 covid crisis period.
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Vahid Mohamad Taghvaee, Lotfali Agheli, Abbas Assari Arani, Mehrab Nodehi and Jalil Khodaparast Shirazi
The purpose of this paper is to examine the effects of maritime and air transportation on the environment and economy of Iran. The authors specify two dynamic models of the…
Abstract
Purpose
The purpose of this paper is to examine the effects of maritime and air transportation on the environment and economy of Iran. The authors specify two dynamic models of the environmental pollution and the economic growth. Then, the authors estimate the environmental and economic elasticities of maritime and air transportation in short run and long run in Iran during 1978–2012.
Design/methodology/approach
The authors estimate the environmental and economic elasticities of maritime elasticities in short and long run, using simultaneous equations system.
Findings
The findings indicate that the short- and long-run environmental pollution elasticities of maritime transportation are higher than those of the air ones. In addition, the economic growth elasticities are greater in the air transportation compared to maritime one. As a result, the maritime transportation is more pollutant and less productive in Iran in comparison with the air transportation.
Originality/value
The policymakers are advised to improve the infrastructure of maritime transportation from both the environmental and economic point of views. Consequently, the air transportation is considered as a cleaner and more beneficial transportation mode in Iran, where geographical position limits the maritime transport as a widespread transportation mode.
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Winston Moore and Chrystol Thomas
Developing countries tend to be characterised by relatively high levels of indebtedness. The proceeds from debt can potentially have positive effects on growth, if the funds are…
Abstract
Purpose
Developing countries tend to be characterised by relatively high levels of indebtedness. The proceeds from debt can potentially have positive effects on growth, if the funds are employed to expand the productive capacity of the nation. The paper aims to investigate whether debt can be used to finance growth.
Design/methodology/approach
The paper utilizes meta‐analysis approach to address the issue. This approach allows researchers to combine the results from both published and unpublished research to gain insights regarding the directional and statistical significance of the relationship between the two variables.
Findings
The results suggest that there exist a positive relationship between debt and economic growth.
Research limitations/implications
The findings from the paper suggest that future research should be conscious of the effect model specification can have on the results on their studies. Indeed, when external debt, the fiscal balance, debt relief where included in the econometric specification the relationship between debt and growth was weakened.
Practical implications
Economic growth should be stimulated, if the proceeds from debt issues are utilized to finance investment in productive areas of economic activity.
Originality/value
While the relationship between debt and growth has stimulated a number of research papers, seminars and conferences, to date, however, no clear answer to the question is available. Through the use of meta‐analysis, this paper allows the reader to glean the main findings from this body of research.
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Nejib Hachicha and Amine Ben Amar
– The purpose of this paper is to investigate empirically the impact of the Islamic Bank Financing on Malaysia’s economic growth over the period 2000Q1-2011Q4.
Abstract
Purpose
The purpose of this paper is to investigate empirically the impact of the Islamic Bank Financing on Malaysia’s economic growth over the period 2000Q1-2011Q4.
Design/methodology/approach
A neoclassical production function augmented by some indicators of Islamic bank finance has been the theoretical framework for this paper’s empirical investigation. The unit root tests show that all the variables are integrated of order 1. The test of Johansen and Juselius (1990) has shown the existence of a single cointegrating relationship between the gross domestic product (GDP), the investment, the labor force and the indicator of Islamic bank finance. Hence, an error correction model has been constructed to estimate the economic growth elasticity with respect to the different Islamic bank finance indicators.
Findings
The estimated elasticities show that, in the long run, the GDP in Malaysia is not sensitive to the Islamic financing. The estimation of an error correction model shows that the elasticity of the Malaysian output with respect to the different Islamic financing indicators in the short run turn around 0.35. Thus, the effect of the different Islamic finance indicators on the economic growth in the long run is less important than their effect in the short run. This economic result can be explained by the structure of the Islamic bank financing that marginalizes the profit-and-loss sharing (PLS)-based instruments. This turns out to be consistent with the economic reality in Malaysia, as the Islamic banks engage much more in non-participatory activities whose impact is, generally, of short term.
Social implications
To improve the efficiency of the Malaysian Islamic banks as financial inter-mediaries that facilitate the capital accumulation and the economic growth, the paper suggests to strengthen the weight of the PLS-based instruments in the loan portfolios of the Malaysian Islamic banks. This may reduce inequalities and improve economic opportunities for people who have a high potential to contribute to the capital accumulation and the creation of the value-added.
Originality/value
The contribution of this paper is two-fold. On the one hand, it provides a further contribution to the rare empirical literature relative to the impact of the Islamic finance on growth by determining the elasticity of economic growth with respect to Islamic bank financing in Malaysia. On the other hand, and to the best of the authors’ knowledge, this paper remains the first to correctly resort to the error correction model in determining this elasticity.
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Although the importance of the elasticity of substitution between capital and labour (σ) has been recognized in many areas in economics, this parameter has not received enough…
Abstract
Purpose
Although the importance of the elasticity of substitution between capital and labour (σ) has been recognized in many areas in economics, this parameter has not received enough attention in economic growth. The purpose of this paper is to review the recent development in the importance of σ in economic growth.
Design/methodology/approach
This paper specifically reviews the possibility of perpetual growth and slowdown, and the asymptotic behaviour of the balanced growth path for different values of σ. It also reviews the determinants of the aggregate σ.
Findings
Based on the empirical evidence that the value of σ significantly departs from the Cobb‐Douglas value of unity, the paper recommends employing the constant elasticity of substitution (CES) production function in both theoretical and empirical growth research.
Originality/value
This paper offers a new perspective on the elasticity of substitution between capital and labour due to its evaluation of various factors, methods and approaches.
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This paper aims to test three hypotheses in city growth literature documenting the poverty reduction observed in Brazil and exploring a rich spatial dataset for 5,564 Brazilian…
Abstract
Purpose
This paper aims to test three hypotheses in city growth literature documenting the poverty reduction observed in Brazil and exploring a rich spatial dataset for 5,564 Brazilian cities observed between 1991 and 2010. The large sample and the author's improved econometric methods allows one to better understand and measure how important income growth is for poverty reduction, the patterns of agglomeration and population growth in all Brazilian cities.
Design/methodology/approach
The author identifies literature gaps and use a sizeable spatial dataset for 5,564 Brazilian cities observed in 1991, 2000 and 2010 applying instrumental variables methods. The bias-corrected accelerated bootstrap percentile interval supports the author's point estimates.
Findings
This manuscript finds that Brazilian data for cities does not support Gibrat's law, raising the scope for urban planning and associated policies. Second, economic growth on a sustainable basis is still a vital source of poverty reduction (The author estimates the poverty elasticity at four percentage points). Lastly, agglomeration effects positively affect the city's productivity, while negative externalities underlie the city's development patterns.
Originality/value
Data for cities in Brazil possess unique characteristics such as spatial autocorrelation and endogeneity. Applying proper methods to find more reliable answers to the above three questions is a desirable procedure that must be encouraged. As the author points out in the manuscript, dealing with endogenous regressors in regional economics is still a developing matter that regional scientists could more generally apply to many regional issues.
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Badi H. Baltagi, Georges Bresson and Jean-Michel Etienne
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…
Abstract
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.
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