Exports, Inward Foreign Direct Investment (FDI) and Regional Economic Growth in China

The relationship between exports and economic growth is strong in developing economies. Both externality effects of exports on the non-exports sector and higher marginal productivity in the exports sector in relation to the non-exports sector play an important role in promoting exports and GDP growth. The underlying theoretical model of FEDER, 1982, is used with the data on the Chinese provinces and it is shown that the economic structure, degree of openness and policy environment have a significant role in the relationship between exports and economic growth.

Publication bias in the economic freedom and economic growth literature

The impact of institutions on economic performance has attracted significant attention from researchers, as well as from policy reformers. A rapidly growing area in this literature is the impact of economic freedom on economic growth. The aim of this paper was to explore publication bias in this literature by means of traditional funnel plots, meta‐significance testing, as well as by bootstrapping these meta‐significance tests. When all the available estimates are combined and averaged, there seems to be evidence of a genuine and positive economic freedom – economic growth effect. However, it is also shown that the economic freedom – economic growth literature is tainted strongly with publication bias. The existence of publication bias makes it difficult to identify the magnitude of the genuine effect of economic freedom on economic growth. The paper explores the differences between aggregate and disaggregate measures of economic freedom and shows that selection effects are stronger when aggregate measures are used.

Economic freedom and economic growth: Does specification make a difference?

In this paper we apply meta-analytic techniques to the literature on the impact of economic freedom on economic growth and find an overall positive direct association between economic freedom and economic growth. A positive indirect effect of economic freedom on economic growth through the stimulation of physical capital is also identified. However, the literature is affected by specification bias with respect to controls for physical capital. The omission of physical capital results in larger estimates of the economic freedom–economic growth association. Further, the use of panel data leads to smaller estimates of the impact of economic freedom on economic growth. The meta-analysis is confirmed by primary cross-sectional and panel data analysis of 82 countries for the period 1970–1999.

Diminishing and negative welfare returns of economic growth : an index of sustainable economic welfare (ISEW) for Thailand

Thailand has achieved remarkable levels of economic growth over the last three decades. This sustained economic growth has played a major role in reducing absolute poverty levels from nearly one third of the population in 1975 to presently less than 10%, thus increasing the welfare of many Thais. This performance ranks Thailand as one of the world's most successful economies during this period. However, an increasing number of studies have begun to find that at a certain point achieving economic growth stops improving welfare and actually begins to diminish it due to the hidden and traditionally unreported costs of associated with this growth. With one exception, these new studies have focussed on high-income countries. This study will estimate an index of sustainable economic welfare (ISEW) for a developing country, Thailand, over a 25-year period, 1975–1999. This paper concludes that even low–middle income countries are beginning to approach the point in which economic growth produces both diminishing and, at times, negative welfare returns as the costs of achieving economic growth begin to outweigh the benefits. These results are important for policy makers and highlight the importance of implementing alternative welfare enhancing interventions that must be considered in place of simply achieving economic growth. The emphasis of this paper is not on the methodology of estimating the ISEW for Thailand, but rather on the policy implications for developing countries of diminishing and negative welfare returns brought about through the achievement of economic growth.

Economic growth and sustainability - an empirical study of the Thai development experience

Increasing economic growth has long been the dominant position within the public policies of all South East Asian countries. More recently, a new issue, sustainability, has emerged within development economic literature, which has significant implications for the continual pursuit of economic growth. Sustainability is concerned with ensuring the current generation meets their present needs without threatening future generations' ability to do likewise. This ability is dependent on a healthy and functioning socio-economic environmental (SEE) system. Economic growth can damage the SEE-system, though, through resource degradation, over-harvesting and pollution. Therefore, achieving economic growth and sustainability simultaneously may not be possible. This paper discusses these tensions between economic growth and sustainability by undertaking a number of SEE-based adjustments to GDP in order to measure sustainability. Thailand is used as a case study for a 25 year period, 1975-1999. The adjustments include the environmental costs caused by economic growth such as noise pollution, water pollution, the depletion of non-renewable resources, and deforestation. The results show a stark difference in terms of GDP per capita and the SEE-adjusted GDP per capita figure. The paper concludes that with increasing environmental costs of economic growth, pursuing high growth objectives without considerations to the environment threatens sustainability

Privatization and economic growth in Australia: the shorthand of a long process

The impact of privatization on economic growth has been little investigated relative to disaggregated approaches. A growth accounting framework is used here to investigate the impact of privatization on growth for the  Australian economy. The contribution of public capital to the private sector and whether the growth process is endogenous or Solow is evaluated. Separate measures of public and private capital are computed in order to estimate their impacts with labour on Australian gross domestic product (GDP) growth for the period 1960 to 2003. A simple growth rates version is found preferred by stationarity and other tests. Labour growth appears to strongly positively influence the growth of GDP. In contrast, public capital growth has no statistically significant effect on GDP growth, or on private capital productivity. The data are consistent with the hypothesis that the coefficients of the growth equation are the same before and during privatization.

Comparing Australias genuine progress to its economic growth performance

Australia has recorded consistently strong levels of economic growth in recent times. Under conventional considerations, the well-being experienced by Australians would also be considered to have increased in equal terms over this period. This is because aggregate standard national accounts have from their inception been assigned as proxy measures of well-being both within the economic literature and public debate. However, this approach fails to consider a number of important economic costs and non-welfaristic impacts on well-being associated with a growing economy. As a result, figures such as Gross Domestic Product (GDP) per capita over-estimate well-being. It is possible to adjust these estimates to overcome these limitations. Within this paper, the sustainable well-being of Australia will be reviewed by estimating a Genuine Progress Indicator (GPI) for the period 1986–2003. Policy implications following from this new analysis will also be discussed.

Making long-term economic growth more sustainable: evaluating the costs and benefits

Currently, traditional development issues such as economic stagnation, poverty, hunger, and illness as well as newer challenges like environmental degradation and globalisation demand attention. Sustainable development, including its economic, environmental and social elements, is a key goal of decisionmakers. Optimal economic growth has also been a crucial goal of both development theorists and practitioners. This paper examines the conditions under which optimal growth might be sustainable, by assessing the costs and benefits of growth. Key environmental and social aspects are considered. The Ecol-Opt-Growth-1 model analyses economic–ecological interactions, including resource depletion, pollution, irreversibility, other environmental effects, and uncertainty. It addresses some important issues, including savings, investment, technical progress, substitutability of productive factors, intergenerational efficiency, equity, and policies to make economic growth more sustainable—a basic element of the sustainomics framework. The empirical results support growing concerns that costs of growth may outweigh its benefits, resulting in unsustainability. Basically, in a wide range of circumstances, long term economic growth is unsustainable due to increasing environmental damage. Nevertheless, the model has many options that can be explored by policy makers, to make the development path more sustainable, as advocated by sustainomics. One example suggests that government supported abatement programs are needed to move towards sustainable development, since the model runs without abatement were infeasible. The optimal rate of abatement increases over time. Abatement of pollution is necessary to improve ecosystem viability and increase sustainability. Further research is necessary to seek conditions under which alternative economic growth paths are likely to become sustainable.

Democracy and economic growth : a meta-analysis

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This article challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. It applies meta-regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth. Using traditional meta-analysis estimators, the bootstrap, and Fixed and Random Effects meta-regression models, it derives several robust conclusions. Taking all the available published evidence together, it concludes that democracy does not have a direct impact on economic growth. However, democracy has robust, significant, and positive indirect effects through higher human capital, lower inflation, lower political instability, and higher levels of economic freedom. Democracies may also be associated with larger governments and less free international trade. There also appear to be country- and region-specific democracy-growth effects. Overall, democracy's net effect on the economy does not seem to be detrimental.

An econometric model of the determinants of private investment and a CGE model of the impact of democracy on investment and economic growth in Fiji

Purpose – The purpose of this paper is to construct an econometric model of the determinants of private investment with a particular focus on the impact of democracy on investment.

Design/methodology/approach – The first step was to econometrically derive the long-run elasticities; then to modify the Fiji computable general equilibrium (CGE) model to incorporate the investment function. Also the econometrically derived long run elasticities in the CGE model were used.

Findings – It was found that democracy has a positive and statistically significant impact on private investment in Fiji. The paper's simulation of Fiji becoming a fully democratic country on investment and other macroeconomic fundamentals, based on a CGE model, reveals that real gross domestic product and real national welfare increase by around 0.01 and 0.05 per cent, respectively; government savings and revenue performance improves; there is a trade balance surplus; and both private consumption and disposable income increase by around 0.05 and 0.12 per cent, respectively.

Originality/value – This is the first study that uses a CGE model to examine the impact of democracy, via investment, on other macroeconomic fundaments. No other study is known to have modelled democracy in a CGE framework.

The division of labor, capital, communication technology and economic growth : the case of China 1952–99

The implications of the division of labor, capital, and technology for economic growth have long been a fundamental issue in development economics. This paper employs the bounds testing approach to cointegration to examine the relationship between the division of labor, capital accumulation, communication technology, and economic growth for China over the period 1952–99. We find that in the long run, capital stock and the division of labor both have statistically significant positive effects on growth, while in the short run the effects are not significantly positive. Telecommunication technology, rather surprisingly, has a statistically insignificant impact on growth both in the long run and in the short run. Our findings indicate that there exists a long run equilibrium relationship between capital and the division of labor on the one hand, and economic growth on the other, thereby lending support to the division of labor theory of growth.

Modelling the relationship between defense spending and economic growth for the Fiji Islands

The goal of this paper is to examine the nexus between GDP and military expenditure. We model this relationship within a multivariate framework by including exports in the model. We use the recently developed bounds testing approach to cointegration and find that there is a long run relationship among the variables when GDP is the endogenous variable. Normalizing on GDP and using four different estimators, we find that in the long run both military expenditure and exports have a positive impact on GDP. Finally, using the Granger causality test, we find that there is evidence for military expenditure Granger causing exports and exports Granger causing GDP, implying that military expenditure indirectly Granger causes GDP in the short run. In the long run, we find that both military expenditure and exports Granger cause GDP for Fiji. Our findings are consistent with the Keynesian school of thought, leading us to derive some policy implications.