Government revenue and government expenditure nexus : evidence from developing countries

The relationship between government revenue and government expenditure has attracted a lot of interest given its policy relevance, particularly with respect to budget deficits. The goal of this paper is to investigate evidence for causality between government revenue and government expenditure within a multivariate framework by modelling them together with gross domestic product for 12 developing countries. Our application of the Toda and Yamamoto (1995) test for Granger causality reveals support for the tax-and-spend hypothesis for Mauritius, El Salvador, Haiti, Chile and Venezuela. For Haiti, there is evidence for the spend-and-tax hypothesis, while for Peru, South Africa, Guatemala, Uruguay and Ecuador there is evidence of neutrality.

Productivity differential and the relationship between exports and GDP in Fiji : an empirical assessment using the two sector model

This study uses a two-sector model to determine the productivity differential between the export and non-export sectors of Fiji, and the contribution of exports and investment to gross domestic product over the period 1962-2000. Amongst our key results, we find that the productivity differential between the export and non-export sectors is small and statistically insignificant; investment to GDP ratio and weighted exports positively contribute to economic growth in Fiji; and in the abnormal years (years of coups in Fiji) marginal productivity in capital in the non-export sector is lower than in normal years.

Biopharmaceutical innovation and industrial developments in South Korea, Singapore and Taiwan

South Korea, Singapore and Taiwan are well known as export-oriented developmental states which for decades employed industrial policy to target particular industries for government support. In the past fifteen years, these three countries all identified the biopharmaceutical industry as a strategic sector. This article explores, through economic analysis, the rationale for this decision and the strategies chosen for linking into the global bio-economy with the objective of catching up in biopharmaceuticals. The paper identifies three comparative advantages enjoyed by these countries in the biopharma sector: (1) public investments in basic research; (2) private investments in phase 1 clinical trials; and (3) a potentially significant contract research industry managing latter-stage clinical trials. Governments employ a range of industrial policies, consistent with these comparative advantages, to promote the biopharmaceutical industry, including public investment in biomedical hubs, research funding and research and development (R&D) tax credits. We argue that the most important feature of the biopharmaceutical industry in these countries is the dominant role of the public sector. That these countries have made progress in innovative capabilities is illustrated by input measures such as R&D expenditure as share of gross domestic product, number of patents granted and clinical trials, and volume of foreign direct investment. In contrast, output indicators such as approval of new chemical entities suggest that the process of catching up has only just commenced. Pharmaceutical innovation is at the stage of mainly generating inputs to integrated processes controlled by the globally incumbent firms.

Has international trade in saving improved US economic welfare?

Over the past decade international policy-makers have perceived the current account deficit of the world's largest foreign borrower economy, the United States, as a threat to global economic and financial stability. Yet, by bridging the US domestic saving-investment gap, capital inflow that matched the huge US current account deficit also enabled a faster rate of domestic capital accumulation than home saving alone would have permitted. Consistent with the theory of international capital movements, this study identifies and compares the respective contributions of domestic and foreign saving to US gross domestic product per worker over the two decades prior to the onset of the US banking crisis. By revealing that foreign borrowing contributed significantly to raising US output and hence living standards over this period, it adds a new dimension to the debate about global imbalances.

Multivariate granger causality between electricity consumption, exports and GDP : Evidence from a panel of Middle Eastern countries

This paper examines the causal relationship between electricity consumption, exports and gross domestic product (GDP) for a panel of Middle Eastern countries. We find that for the panel as a whole there are statistically significant feedback effects between these variables. A 1 per cent increase in electricity consumption increases GDP by 0.04 per cent, a 1 per cent increase in exports increases GDP by 0.17 per cent and a 1 per cent increase in GDP generates a 0.95 per cent increase in electricity consumption. The policy implications are that for the panel as a whole these countries should invest in electricity infrastructure and step up electricity conservation policies to avoid a reduction in electricity consumption adversely affecting economic growth. Further policy implications are that for the panel as a whole promoting exports, particularly non-oil exports, is a means to promote economic growth and that expansion of exports can be realized without having adverse effects on energy conservation policies.

Are output fluctuations transitory? New evidence from twenty four Chinese provinces

The fact that an occurrence of a unit root in real output is inconsistent with the notion that business cycles are stationary fluctuations around a deterministic trend makes this an important topic for empirical investigation. We examine this issue for 24 Chinese provinces using the recently developed Lagrange multiplier panel unit root test which allows for a structural break. Our main finding is that real gross domestic product (GDP) and real GDP per capita for Chinese provinces are stationary fluctuations around a deterministic trend.

Does tourism Granger causes economic growth in Fiji?

Tourism is Fiji's largest industry in terms of export earnings and employment. In this paper we investigate the nexus between tourism receipts and real gross domestic product (GDP) in Fiji. Specifically, we test whether the two variables are cointegrated and using Granger causality tests we establish the direction of causation between the two. We find that there is a cointegration relationship when real GDP is the dependent variable. On the direction of causation we find that in the short-run real GDP Granger causes tourism receipts while in the long-run tourism receipts Granger cause real GDP.

Trade liberalisation and economic growth in Fiji : an empirical assessment using the ARDL approach

This study investigates the effect of trade liberalization on economic performance in Fiji using a Cobb-Douglas production function, which is expanded to take into account political instability and trade liberalization. The long run results conform to theoretical expectations, except for the contribution of labour force, which is negatively related to real Gross Domestic Product. We attribute this to the rapid and consistent emigration of skilled labour following the 1987 coups. While human capital was found to be the most influential variable, exports and investment were found to be weakly related to Gross Domestic Product. The key finding is that the dummy variable for signing the IMF agreement in 1984 had a statistically significant positive effect on real Gross Domestic Product in the long run, but the short run effects of signing the agreement as well as the short run and long run effects of implementing the agreement in 1986 were statistically insignificant.

Demystifying the supply of capital and labour in a nation’s economic chain

Public capital has been considered to be the wheels of economic activity in a nation or region. The reverse effect, the contribution of economic growth to public capital, is also worth analysis. The non-structural vector auto-regression (VAR) approach is performed for the Australian economy using yearly data for the 1960-2008 period. The optimal lag is investigated to build the VAR model that is then tested for stability. The impulse response function is further employed to examine the response of one economic variable to the innovation of others and to determine the lagged terms for the maximum absolute value of the other variables’ responses. The results will provide historical evidence for the federal and regional governments of Australia to estimate the effects of these production variables, in particular, the effect of infrastructure spending on the gross domestic product.

It's the economy : the effect of macroeconomic variables of the rate of suicide

Background. There are a large number of factors mediating suicide. Many studies have searched for a direct causal relationship between economic hardship and suicide, however, findings have been varied.

Method. Suicide data was obtained from the Australian Bureau of Statistics for the period between January 1968 and August 2002. These were correlated with a suite of macroeconomic data including housing loan interest rates, unemployment rates, days lost to industrial disputes, Consumer Price Index, gross domestic product, and the Consumer Sentiment Index.

Results. A total of 51 845 males and 16 327 females committed suicide between these dates. There were significant associations between suicide rates and eleven macroeconomic indicators for both genders in at least one age range. Data was divided into male and female and five age ranges and pooled ages. Analyses were conducted on these 132 datasets resulting in 80 significant findings. The data was generally stronger for indices measuring economic performance than indices measuring consumers’ perceptions of the state of the economy. A striking difference between male and female trends was seen. Generally, male suicide rates increased with markers of economic adversity, while the opposite pattern was seen in females. There were significantly different patterns in age-stratified data, with for example higher housing loan interest rates having a positive association with suicide in younger people and a negative association in older age groups.

Conclusion. Macroeconomic trends are significantly associated with suicide. The patterns in males and females are very different, and there are further substantial age-related differences.

Pilot Study of clinician attitudes to insulin pump therapy: international differences and the need for a greater understanding of the patient perspective

OBJECTIVES: To identify and survey health care professionals (HCPs) attitudes to insulin pump therapy (CSII).

METHODS: Eight specialists were interviewed to explore the attitudes and beliefs about CSII. Responses were analysed thematically and used to inform the design of a new 22-item questionnaire: the Attitudes to Pump Therapy (APT) Survey. The APT was pilottested among 95 HCPs (54% male; 75.5% diabetologists/DSNs, 13.8% general practitioners) at the International Diabetes Federation (IDF) conference, 2006. Results were analysed using non-parametric statistics with bonferroni correction.

RESULTS: Analyses of interview data identified 9 themes: biomedical, perceived control of care/diabetes, technology, quality of life, financial resources, training, education & support, suitability, and evidence-base. Items were designed to reflect these themes with responses scored on a 5-point Likert scale (strongly agree—strongly disagree). No statistically significant differences
were found by gender, HCP speciality, country (and continent) of origin or proportion of patients using CSII. Most notable differences were found in relation to gross domestic product (GDP) and the potential for pump therapy to achieve tight blood glucose control (lower GDP = more agreement: p = 0.001), and result in diabetic ketoacidosis (DKA) (lower GDP = less agreement: p < 0.005). Ranked mean scores showed a split between biomedical/clinical items (N = 11) and items concerned with patient experience (N = 11). Attitudes about biomedical/clinical issues were generally clear (i.e. for 7/11 items, the mean score was “agree”) but less decisive about patient experience (i.e. for 8/11 items, the mean score was “neither agree nor disagree”).

CONCLUSION: Few subgroup differences existed, but those that did may be explained by lack of access to treatment (directly corresponding to GDP). Clinicians’ were generally clear in their attitudes regarding biomedical aspects but less so regarding patient experience. Research focusing on patient-reported outcomes is likely to offer clinicians a greater understanding of the patients’ perspective of insulin pump therapy.

Scaling-up foreign aid : will the 'big push' work?

International donors are substantially scaling-up aid programmes. At the same time, there are widespread reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This article demonstrates that a ‘big push’ in foreign aid will not lead to diminishing returns as long as donors get the inter-country allocation of aid right. This is true even if donors provide aid at levels equal to the well-known target of 0.7 per cent of their gross national income

An international survey of toric contact lens prescribing

To characterize toric contact lens prescribing worldwide. Up to 1,000 survey forms were sent to contact lens fitters in up to 39 countries between January and March every year for 5 consecutive years (2007–2011). Practitioners were asked to record data relating to the first 10 contact lens fits or refits performed after receiving the survey form. Only data for toric and spherical soft lens fits were analyzed. Survey data collected since 1996 were also analyzed for 7 nations to assess toric lens fitting trends since that time. Data were collected in relation to 21,150 toric fits (25%) and 62,150 spherical fits (75%). Toric prescribing ranged from 6% of lenses in Russia to 48% in Portugal. Compared with spherical fittings, toric fittings can be characterized as follows: older age (29.8 ± 11.4 years vs. 27.6 ± 10.8 years for spherical lenses); men are overrepresented (38% vs. 34%); greater proportion of new fits (39% vs. 32%); use of silicone hydrogel lenses (49% vs. 39%); and lower proportion of daily disposable lenses (14% vs. 28%). There has been a continuous increase in toric lens prescribing between 1996 and 2011. The proportion of toric lens fits was positively related to the gross domestic product at purchasing power parity per capita for year 2011 (r2 = 0.21; P=0.004). At the present time, in the majority of countries surveyed, toric soft contact lens prescribing falls short of that required to correct clinically significant astigmatism (≥0.75 diopters) in all lens wearers.

An international survey of daily disposable contact lens prescribing

The aim was to determine the extent of daily disposable contact lens prescribing worldwide and to characterise the associated demographics and fitting patterns. Up to 1,000 survey forms were sent to contact lens fitters in up to 40 countries between January and March every year for five consecutive years (2007 to 2011). Practitioners were asked to record data relating to the first 10 contact lens fits or refits performed after receiving the survey form. Survey data collected since 1996 were also analysed for seven nations to assess daily disposable lens fitting trends since that time. Data were collected in relation to 97,289 soft lens fits, of which 23,445 (24.1 per cent) were with daily disposable lenses and 73,170 (75.9 per cent) were with reusable lenses. Daily disposable lens prescribing ranged from 0.6 per cent of all soft lenses in Nepal to 66.2 per cent in Qatar. Compared with reusable lens fittings, daily disposable lens fittings can be characterised as follows: older age (30.0 ± 12.5 versus 29.3 ± 12.3 years for reusable lenses); males are over-represented; a greater proportion of new fits versus refits; 85.9 per cent hydrogel; lower proportion of toric and presbyopia designs and a higher proportion of part-time wear. There has been a continuous increase in daily disposable lens prescribing between 1996 and 2011. The proportion of daily disposable lens fits (as a function of all soft lens fits) is positively related to the gross domestic product at purchasing power parity per capita (r(2) = 0.55, F = 46.8, p < 0.0001). The greater convenience and other benefits of daily disposable lenses have resulted in this modality capturing significant market share. The contact lens field appears to be heading toward a true single-use-only, disposable lens market.

Revealing Australia’s Underground Economy

This study, using currency demand model, finds Australia’s underground economy to be around 2 to 3 per cent of gross domestic product. We extend the related literature (see, inter alia, Bajada, 1999 and Breusch, 2005) in three novel ways. First, we use Austrian levels of taxes and welfare payments as the minimum levels of taxes and welfare payments. Secondly, we employ the currency demand measurement as in Cagan (1958), i.e., cash and currencies as a proportion of total money supply. Third, we use Cagan’s original assumption regarding equalities of velocities of currencies in both the legal and illegal economies in order to estimate the underground economy.