A model of economic growth with saturating demand

This study presents a model of economic growth based on saturating demand, where the demand for a good has a certain maximum amount. In this model, the economy grows not only by the improvement in production efficiency in each sector, but also by the migration of production factors (labor in this model) from demand-saturated sectors to the non-saturated sector. It is assumed that the production of a brand-new good will begin after all the existing goods are demand-saturated. Hence, there are cycles where the production of a new good emerges followed by the demand saturation of that good. The model then predicts that should the growth rate be stable and positive in the long run, the above-mentioned cycle must become shorter over time. If the length of cycles is constant over time, the growth rate eventually approaches zero because the number of goods produced grows.

Economic Development under Alternative Trade Regimes

How does openness affect economic development? This question is answered in the context of a dynamic general equilibrium model of the world economy, where countries have technological differences that are both sector-neutral and specific to the investment goods sector. Relative to a benchmark case of trade in credit markets only, consider (i) a complete restriction of trade, and (ii) a full liberalization of trade. The first change decreases the cross-sectional dispersion of incomes only slightly, and produces a relatively small welfare loss. The second change, instead, decreases dispersion by a significant amount, and produces a very large welfare gain.

Management for a Variety of Environmental Pollution and North-South Trade

A simple static model incorporating a variety of environmental pollution is developed. An autarky model shows that a developing country regulates fewer types of pollution by income-induced environmental policy. As income grows, the types of regulated pollution increase and also introduced regulations become tougher.Then the model incorporates international trade between a developed country and a developing country. The model gives a new interpretation for the pollution haven hypothesis. Some types of pollution abated with inefficient technology are emitted more in a developing country but other types necessarily increase in a developed country in order to meet the trade balance.

Sustainable Development and Poverty Reduction under Mubarak's Program

This paper describes and analyzes the major features of economic development and poverty reduction in Egypt during its transition to a market Economy. It focuses on the changes in the situation of poverty and economic policies pursued as remedies by the government of Egypt and the ruling NDP. Sustainable development and poverty reduction is the core of the President Mubarak’s election campaign for his fifth term for the presidency. We attempt to explain the obstacles encountered by the Egyptian economy in terms of adjustments and general economic arguments on poverty. Finally, we refer to the necessity for enhanced accountability in the society to accomplish the goal.

Determinants of government consumption expenditure in developing countries : a panel data analysis

The paper focuses on the recent pattern of government consumption expenditure in developing countries and estimates the determinants which have influenced government expenditure. Using a panel data set for 111 developing countries from 1984 to 2004, this study finds evidence that political and institutional variables as well as governance variables significantly influence government expenditure. Among other results, the paper finds new evidence of Wagner's law which states that peoples' demand for service and willingness to pay is income-elastic hence the expansion of public economy is influenced by the greater economic affluence of a nation (Cameron1978). Corruption is found to be influential in explaining the public expenditure of developing countries. On the contrary, size of the economy and fractionalization are found to have significant negative association with government expenditure. In addition, the study finds evidence that public expenditure significantly shrinks under military dictatorship compared with other form of governance.

Descriptive analysis of the knowledge network formation in East Asia

This paper shows descriptively how the knowledge network in East Asia has been formed. In addition, the correlation between the knowledge network and economic growth is also examined. Evidence is provided to show that plugging into the knowledge network of developed countries could be a key for increasing innovativeness in a country.

Monetary Policy Effects in Developing Countries with Minimum Wages

Using a Dynamic General Equilibrium (DGE) model, this study examines the effects of monetary policy in economies where minimum wages are bound. The findings show that the monetary-policy effect on a binding-minimum-wage economy is relatively small and quite persistent. This result suggests that these two characteristics of monetary policy in the minimum-wage model are rather different from those in the union-negotiation model which is often assumed to account for industrial economies.

Foreign Direct Investment Relations between Myanmar and ASEAN

Myanmar highly appreciates foreign direct investment (FDI) as a key solution reducing the development gap with leading ASEAN countries. Accordingly, it is welcomed by the government. Myanmar's Foreign Investment Law was enacted in 1988 soon after the adoption of a market-oriented economic system to boost the flow of FDI into the country. Foreign investors positively responded to these measures in the early years and FDI inflow into Myanmar gradually increased during the period from 1989 to 1996. However, after 1997, FDI inflow was dramatically reduced and markedly declined until 2004. In 2005, FDI inflow increased at an unprecedented rate and reached the highest level in the country's history. However, this growth was not sustainable in the subsequent years, as it declined again and turned stagnant at the previous level. In terms of source regions, ASEAN is a major investor in Myanmar, which investment is significantly exceeds the combined investment of other regions of the world. Among top ten countries, Thailand's investment alone is significantly more than combined total investments of the other nine countries. Next to Thailand in terms of investments in Myanmar are Singapore and Malaysia among ASEAN, at second and third places, respectively. The combined total FDI inflows into the power and oil and gas sector represent about 65 percent of the total investment. There are many opportunities for foreign investment in other sectors, which are not, yet exploited. ASEAN countries will certainly be source countries of Myanmar FDI in the future, and Myanmar should expand to other Asian countries like Japan, India, China, Korea, and Hong Kong where its FDI portfolio is concerned. To effectively attract FDI into the country, Myanmar needs to minimize the effect of policy while opening and encouraging other potential sectors of FDI to foreign investors in ASEAN and Asian countries.

How has financial deepening affected poverty reduction in India? : empirical analysis using state-level panel data

This paper examines empirically whether financial deepening has contributed to poverty reduction in India. Using unbalanced panel data for 28 states and union territories between 1973 and 2004, we estimate models in which the poverty ratio is explained by financial deepening, controlling for international openness, inflation rate, and economic growth. From the dynamic generalised method of moments (GMM) estimation, we find that financial deepening and economic growth alleviate poverty, while international openness and the inflation rate have the opposite effect. These results are robust to changes in the poverty ratios in rural areas, urban areas, and the whole economy.

Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.

The Long Run Demand for Lighting: Elasticities and Rebound Effects in Different Phases of Economic Development

25 p.

Industrialization and industrial policy in Colombia: a tale of economic development

This paper analyzes the main features and historical factors that played a central role for the industrialization process in Colombia during the twentieth century. The document surveys the legislation and policy instruments used in the programs of import substitution industrialization, nontraditional export promotion, and economic openness

Growth, disequilibrium and disparities: interpretation of the process of economic development

Includes bibliography

Social dimensions of economic development and productivity: inequality and social performance

Includes bibliography