Regional competitiveness, economic growth and stages of development

This paper positions the concept of regional competitiveness within theories concerning regional economic growth and stages of economic development. It examines the sources of regional competitiveness encompassing an analysis based on the particular stage of economic development that the nations within which regions are situated have reached. As a means to achieve this, the paper undertakes an empirical analysis of data stemming from the World Competitiveness Index of Regions, and identifies regional competitiveness as a dual concept that explains relative differences in rates of economic development across regions, as well as an understanding of the future economic growth trajectories of regions at a similar stage of economic development. As with endogenous growth and development theory, the notion of regional competitiveness presented here places knowledge, innovation and entrepreneurship at the forefront of conceptualisations of regional economic differentiation.

The Post-Growth Project:how the end of economic growth could bring a fairer and happier society

This book challenges the assumption that it is bad news when the economy doesn’t grow. For decades, it has been widely recognized that there are ecological limits to continuing economic growth and that different ways of living, working and organizing our economies are urgently required. This urgency has increased since the financial crash of 2007–2008, but mainstream economists and politicians are unable to think differently. The authors of this book demonstrate why our economic system demands ecologically unsustainable growth and the pursuit of more ‘stuff’. They believe that what matters is quality, not quantity – a better life based on having fewer material possessions, less production and less work. Such a way of life will emphasize well‑being, community, security and ‘conviviality’. That is, more real wealth. The book will therefore appeal to everyone curious as to how a new post-growth economics can be conceived and enacted. It will be of particular interest to policy makers, politicians, businesspeople, trade unionists, academics, students, journalists and a wide range of people working in the not-for-profit sector. All of the contributors are leading thinkers on green issues and members of the new think-tank Green House.

A survey of economic growth

Understanding the process of economic growth has been called the ultimate objective of economics. It has also been likened to an elusive quest – like the Holy Grail or the Elixir of Life (Easterly 2001). Taking on such a quest requires ingenuity and perseverance. Even small insights along the way can have major benefits to millions of people; small mistakes can do the reverse. Economies which achieve large increases in output over extended periods of time, not only enable rapid increases in standards of living, but also have dramatic changes in the economic, political and social landscape. For example, the USA is estimated to produce approximately 30 times as much in 1999 as it did in 1899. This sustained economic growth means that in 1999 the USA had an average income per capita of US$34 100. In contrast, sub-Saharan Africa had an average income of $490. Understanding these vast income differences, produced over many decades, is the elusive quest. The aim of this survey is to explain how economists try to understand the process of economic growth. To make the task manageable, the focus is on major issues and current debates. Models and conceptual frameworks are discussed in section III. Section IV summarises empirical studies, with a particular focus on econometric studies of groups of countries. This is not to say that case studies of single countries are not valuable, but space precludes covering everything. The following section sets out some facts about economic growth and, hopefully, motivates the further effort needed to tackle the theory and econometrics.

Regional growth and SMEs in Brazil:a spatial panel approach

Cravo T. A., Becker B. and Gourlay A. Regional growth and SMEs in Brazil: a spatial panel approach, Regional Studies. This paper examines economic growth for a panel of 508 Brazilian micro-regions for the period 1980-2004, using spatial econometrics and paying particular attention to the importance of small and medium-sized enterprises (SMEs). The findings indicate the presence of spatial dependence in the process of economic growth and the existence of two spatial regimes in Brazil. The human capital level of the whole population is an important growth determinant, but does not generate positive spillovers. Furthermore, human capital embodied in SMEs is more important than the size of this sector for regional growth and SME activity generates positive spatial spillovers. © 2014 © 2014 Regional Studies Association.

State advances and private retreats? Evidence from the decomposition of the Chinese manufacturing aggregate productivity decomposition in China

This paper is motivated by the recent debate on the existence and scale of China's 'Guo Jin Min Tui' phenomenon, which is often translated as 'the state sector advances and the private sector retreats'. We argue that the profound implication of an advancing state sector is not the size expansion of the state ownership in the economy per se, but the likely retardation of the development of the already financially constrained private sector and the issues around the sustainability of the already weakening Chinese economy growth. Drawing on recent methodological advances, we provide a critical analysis of the contributions of the state and non-state sectors in the aggregate Total Factor Productivity and its growth over the period of 1998-2007 to verify the existence of GJMT and its possible impacts on Chinese economic growth. Overall, we find strong and consistent evidence of a systematic and worsening resource misallocation within the state sector and/or between the state sectors and private sectors over time. This suggests that non-market forces allow resources to be driven away from their competitive market allocation and towards the inefficient state sector. Crown Copyright © 2014.

Military spending and economic growth in South Africa

This paper undertakes an empirical analysis of the economic effects of military spending on the South African economy. It estimates a neo-classical model common in the literature at the level of the macroeconomy and at the level of the manufacturing sector. An attempt is made to improve upon the model by allowing the data to determine the dynamic structure of the model through an ARDL procedure. No significant impact of military spending is found in aggregate, but there is a significant negative impact for the manufacturing sector. This suggests that the cuts in domestic military procurement that have occurred since 1989 could lead to improved economic performance in South Africa through their impact on the manufacturing sector.

Absorptive capability and economic growth:how do countries catch-up?

This paper investigates empirically the importance of technological catch-up in explaining productivity growth in a sample of countries since the 1960s. New proxies for a country's absorptive capability—based on data for students studying abroad, telecommunications and publications—are tested in regression models. The results indicate that absorptive capability is a factor in explaining growth, with the most robust finding that countries with relatively high numbers of students studying science or engineering abroad experience faster subsequent growth. However, the paper also indicates that the significance of coefficients varies across specifications and samples, suggesting caution in focusing on individual results.

Empirical analysis of human capital development and economic growth in Europe

Recent discussion of the knowledge-based economy draws increasingly attention to the role that the creation and management of knowledge plays in economic development. Development of human capital, the principal mechanism for knowledge creation and management, becomes a central issue for policy-makers and practitioners at the regional, as well as national, level. Facing competition both within and across nations, regional policy-makers view human capital development as a key to strengthening the positions of their economies in the global market. Against this background, the aim of this study is to go some way towards answering the question of whether, and how, investment in education and vocational training at regional level provides these territorial units with comparative advantages. The study reviews literature in economics and economic geography on economic growth (Chapter 2). In growth model literature, human capital has gained increased recognition as a key production factor along with physical capital and labour. Although leaving technical progress as an exogenous factor, neoclassical Solow-Swan models have improved their estimates through the inclusion of human capital. In contrast, endogenous growth models place investment in research at centre stage in accounting for technical progress. As a result, they often focus upon research workers, who embody high-order human capital, as a key variable in their framework. An issue of discussion is how human capital facilitates economic growth: is it the level of its stock or its accumulation that influences the rate of growth? In addition, these economic models are criticised in economic geography literature for their failure to consider spatial aspects of economic development, and particularly for their lack of attention to tacit knowledge and urban environments that facilitate the exchange of such knowledge. Our empirical analysis of European regions (Chapter 3) shows that investment by individuals in human capital formation has distinct patterns. Those regions with a higher level of investment in tertiary education tend to have a larger concentration of information and communication technology (ICT) sectors (including provision of ICT services and manufacture of ICT devices and equipment) and research functions. Not surprisingly, regions with major metropolitan areas where higher education institutions are located show a high enrolment rate for tertiary education, suggesting a possible link to the demand from high-order corporate functions located there. Furthermore, the rate of human capital development (at the level of vocational type of upper secondary education) appears to have significant association with the level of entrepreneurship in emerging industries such as ICT-related services and ICT manufacturing, whereas such association is not found with traditional manufacturing industries. In general, a high level of investment by individuals in tertiary education is found in those regions that accommodate high-tech industries and high-order corporate functions such as research and development (R&D). These functions are supported through the urban infrastructure and public science base, facilitating exchange of tacit knowledge. They also enjoy a low unemployment rate. However, the existing stock of human and physical capital in those regions with a high level of urban infrastructure does not lead to a high rate of economic growth. Our empirical analysis demonstrates that the rate of economic growth is determined by the accumulation of human and physical capital, not by level of their existing stocks. We found no significant effects of scale that would favour those regions with a larger stock of human capital. The primary policy implication of our study is that, in order to facilitate economic growth, education and training need to supply human capital at a faster pace than simply replenishing it as it disappears from the labour market. Given the significant impact of high-order human capital (such as business R&D staff in our case study) as well as the increasingly fast pace of technological change that makes human capital obsolete, a concerted effort needs to be made to facilitate its continuous development.

Openness and economic growth

The themes of this thesis are that international trade and foreign direct investment (FDI) are closely related and that they have varying impacts on economic growth in countries at different stages of development. The thesis consists of three empirical studies. The first one examines the causal relationship between FDI and trade in China. The empirical study is based on a panel of bilateral data for China and 19 home countries/regions over the period 1984-98. The specific feature of the study is that econometric techniques designed specially for panel data are applied to test for unit roots and causality. The results indicate a virtuous procedure of development for China. The growth of China’s imports causes growth in inward FDI from a home country/region, which in turn causes the growth of exports from China to the home country/region. The growth of exports causes the growth of imports. This virtuous procedure is the result of China’s policy of opening to the outside world. China has been encouraging export-oriented FDI and reducing trade barriers. Such policy instruments should be further encouraged in order to enhance economic growth. In the second study, an extended gravity model is constructed to identify the main causes of recent trade growth in OECD countries. The specific features include (a) the explicit introduction of R&D and FDI as two important explanatory variables into an augmented gravity equation; (b) the adoption of a panel data approach, and (c) the careful treatment of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to the volume of bilateral trade, while the geographical distance, exchange rate and relative factor endowments, has a negative impact. These findings lend support to new trade, FDI and economic growth theories. The third study evaluates the impact of openness on growth in different country groups. This research distinguishes itself from many existing studies in three aspects: first, both trade and FDI are included in the measurement of openness. Second, countries are divided' into three groups according to their development stages to compare the roles of FDI and trade in different groups. Third, the possible problems of endogeneity and multicollinearity of FDI and trade are carefully dealt with in a panel data setting. The main findings are that FDI and trade are both beneficial to a country's development. However, trade has positive effects on growth in all country groups but FDI has positive effects on growth only in the country groups which have had moderate development. The findings suggest FDI and trade may affect growth under different conditions.

Knowledge capital, endogenous growth and regional disparities in productivity:multi-level evidences from China

This paper examines the role of knowledge capital in persistent regional productivity disparities in developing countries. The hypotheses are tested using regional and firm level longitudinal data from China. It is found that inequalities in knowledge creation and transfer, both inter-generational and international, played a significant role in increasing regional disparities in productivity. These inequalities are exacerbated by the accumulative nature of knowledge capital. All this leads to self-perpetuating cycles of success and failure, particularly compounded with asymmetric financial and human capital between different regions.

Policy, economic federalism, and product market entry:the Indian experience

Productivity growth has long been associated with, among other things, contestability of markets which, in turn, is dependent on the ease with which potential competitors to the incumbent firms can enter the product market. There is a growing consensus that in emerging markets regulatory and institutional factors may have a greater influence on a firm's ability to enter a product market than strategic positions adopted by the incumbent firms. We examine this proposition in the context of India where the industrial policies of the 1980s and the 1990s are widely believed to be pro-incumbent and pro-competition, respectively, thereby providing the setting for a natural experiment with 1991 as the watershed year. In our analysis, we also take into consideration the possibility that the greater economic federalism associated with the reforms of the 1990s may have affected the distribution of industrial units across states after 1991. Our paper, which uses the experiences of the textiles and electrical machinery sectors during the two decades as the basis for the analysis, finds broad support for both these hypotheses.

Impact of FDI, ODA and migrant remittances on economic growth in developing countries:a systems approach

This article seeks to investigate the relative contributions of foreign direct investment, official development assistance and migrant remittances to economic growth in developing countries. We use a systems methodology to account for the inherent endogeneities in these relationships. In addition, we also examine the importance of institutions, not only for growth directly, but for the interactions between institutions and the other sources of growth. It is, we believe, the first article to consider each of these variables together. We find that all sources of foreign capital have a positive and significant impact on growth when institutions are taken into account. © 2013 European Association of Development Research and Training Institutes.

Innovation, intellectual property and economic growth

What drives innovation? How does it contribute to the growth of firms, industries, and economies? And do intellectual property rights help or hurt innovation and growth? Uniquely combining microeconomics, macroeconomics, and theory with empirical analysis drawn from the United States and Europe, this book introduces graduate students and advanced undergraduates to the complex process of innovation. By addressing all the major dimensions of innovation in a single text, Christine Greenhalgh and Mark Rogers are able to show how outcomes at the microlevel feed through to the macro-outcomes that in turn determine personal incomes and job opportunities. In four sections, this textbook comprehensively addresses the nature of innovation and intellectual property, the microeconomics and macroeconomics of innovation, and economic policy at the firm and macroeconomic levels. Among the topics fully explored are the role of intellectual property in creating incentives to innovate; the social returns of innovation; the creation and destruction of jobs by innovation; whether more or fewer intellectual property rights would give firms better incentives to innovate; and the contentious issues surrounding international treaties on intellectual property.