Journal ArticleDOI
On exports and economic growth
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In this article, the authors analyzed the sources of growth in the period 1964-1973 for a group of semi-industrialized less developed countries and developed an analytical framework, incorporating the possibility that marginal factor productivities are not equal in the export and non-export sectors of the economy.About:
This article is published in Journal of Development Economics.The article was published on 1983-02-01. It has received 1714 citations till now. The article focuses on the topics: Economic sector & Export performance.read more
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Government and growth: Cross-sectional evidence*
TL;DR: This article developed a model that differentiates the two effects and empirically tested the model for a sample of forty-eight countries and found that the net effect of government on growth is positive, but that the negative effects are not insignificant.
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What causes economic growth in Portugal: exports or inward FDI?
TL;DR: In this paper, the authors analyze possible causal relationships between exports, inward foreign investment and economic growth in Portugal and identify their direction, and reveal that exports and FDI foster growth in the long-run while in the short-run there is a bi-directional causal relationship between FDI and growth and a univariate causal relationship running from FDI to exports.
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Foreign direct investment and economic performance in transition economies: evidence from China
TL;DR: In this paper, the authors test the hypothesis that FDI contributes to the economic growth of less developed, transition economies via technology updating, using data for 30 Chinese provinces from 1985 to 2000.
Public Spending and Economic Growth: Empirical Investigation of Sub-Saharan Africa
Abstract: Existing studies on the relationship between government spending and economic growth provide inconclusive empirical evidence. This paper re-examines the effect of government spending on economic growth using panel data set from Sub-Saharan Africa. The model is derived from an aggregate production function in which government spending, foreign assistance for development and trade-openness are explicitly specified as input factors. Fixed-effects and random-effects estimation techniques were applied to the model. The results from both estimation techniques indicate that government spending, trade-openness, and private investment spending all have positive and significant effect on economic growth. Foreign development assistance and the growth rate in population are statistically insignificant. A test of a restricted version of the model indicates that the contributions of foreign development assistance and the growth rate in population on economic growth are statistically zero. INTRODUCTION The effect of government spending on economic growth is still an unresolved issue theoretically as well as empirically. Although the theoretical positions on the subject are quite diverse, the conventional wisdom is that a large government spending is a source of economic instability or stagnation. Empirical research, however, does not conclusively support the conventional wisdom. A few studies report positive and significant relation between government spending and economic growth while several others find significantly negative or no relation between an increase in government spending and growth in real output. An extensive review of literature, presented in the next section, clearly indicates that empirical evidence on the effect of government spending on economic growth is at best mixed. The purpose of this study is to empirically re-examine the effect of government spending on the growth rates of real domestic products of some SubSaharan African countries. Though the goal of the study is similar to those of previous studies in this area of research, the method of analysis is different at least in two ways. First, the study examines the effects of two types of public spending: domestic government spending on capital formation and foreign receipts for development assistance. The main interest of the study is to investigate the effect of each type of public spending separately. Second, the model uses panel data, rather than simple cross-section data, and has been estimated by fixed-effects and randomeffects estimation techniques, which are fairly new and advanced estimation methods of panel data. Another difference between this study and the previous ones is that the countries included in this study are similar in economic structure, background, stage of development, and have similar institutional arrangements and culture. These Southwestern Economic Review 60 similar characteristics of the sample countries are expected to make the inferences derived from the empirical results more valid. At a minimum, the study will contribute to the methodology of cross-section analysis as it is applied to the economies of developing countries in this area of research. REVIEW OF EMPIRICAL LITERATURE Numerous studies have been conducted to investigate the relation between government spending and economic growth. This section provides a brief review of the various empirical models, specifications, and conclusions of existing studies on the topic. Using an endogenous growth model of the U.S. economy in which government purchases directly affect both the utility of consumers and the productivity of firms, Knoop [15] finds that reducing the size of government reduces economic growth and welfare. Devarajan, et al. [7] examine the relation between the share of total government expenditure in GDP and the growth in per capita real GDP and find negative and significant relationship between the two. Ghura [9] tests the relation between government consumption as a percent of GDP and economic growth using data from developing countries. He finds significantly negative relation between government consumption and the growth in per capita real GDP. Nelson and Singh [19] examine the effect of overall government size, measured by the central government revenue as a percent of GDP, on the average growth rate of GDP. They find no relation between growth in government spending and the growth rate in GDP. Lindauer and Velenchik [18] conclude that there is no significant direct relation between government expenditure and economic growth. However, they argue that government spending may positively affect economic growth indirectly through its influence on the efficiency of the private sector allocation of inputs. Khan and Reinhart [14] develop a growth model that examines separately the effects of public sector and private sector investments. Using cross-section data from a sample of 24 developing countries, they find that public investment has no direct effect on economic growth. Barro [3] defines the government's productive expenditure alternatively as a ratio of gross domestic product and as a ratio of the sum of private and public investments. He finds insignificant relation in both specifications. In another similar study, Barro [4] regresses the average annual growth rate in real per capita GDP on the ratio of real government consumption to real GDP. In this study, he finds significantly negative relation between economic growth and government consumption. Aschauer [1] reports positive and significant relation between government spending and the level of output. In a similar study, Aschauer [2] specifies real output as a function of employment, stock of capital, productivity, and government expenditure. He concludes that the additions to nonmilitary structures increase the overall economic productivity. Grier and Tullock [10] define the government variable as a growth rate in the share of government consumption in GDP and test the model using 30-year data from 24 OECD countries and 20-year data from developing countries. They report negative and significant relation between the share of government consumption in GDP and the growth in GDP in both samples. Conte and Darrat [6] examine the effect of government spending on output using one-sided Granger-causality analysis. Their findings are mixed but indicate no significant relation between government spending and growth in output for most of the countries. Public Spending and Economic Growth: Empirical Investigation of Sub-Saharan Africa 61 Ram [20,21] derives the empirical model from a production function that explicitly includes both private and public sectors. He reports that public investment is more productive than private investment in both studies. Saunders [22] tests the effect of government expenditure on the economy by regressing the percentage change in real GDP on the share of the total government spending in GDP. Using data from OECD countries, he finds negative relation between average economic growth and average share of total government expenditure in GDP. Landau [16] reports a negative relation between growth in government spending and the growth rate in real per capita GDP. In another paper [17], he defines government consumption as a ratio of GDP and the real output as an average rate of growth in real per capita GDP, and tests the model using cross-section data from developed and developing countries for several sub-periods. His results show that an increase in government consumption significantly reduces the growth rate in real per capita GDP. In summary, the empirical evidence regarding the effect of government spending on economic growth is clearly mixed. Furthermore, the literature review indicates that the empirical results are specification-dependent. In other words, the results seem to depend on how the government spending is specified in the empirical model. Based on the empirical review, it can be concluded that the relationship between government spending and economic growth is generally negative if the government spending is expressed as percent of GDP and is generally positive if it is expressed as an annual percentage change in the estimating equation. THE EMPIRICAL MODEL The neoclassical production function is used as the basis for specifying the empirical model for this study. Ignoring the level of technology (A), the standard aggregate production function is written as:
Journal ArticleDOI
Export Led Growth vs. Growth Led Exports: LDCs Experience
TL;DR: In this paper, the authors considered the relation between exports and economic growth to be a long-run phenomenon and applied Johansen's cointegration technique to establish the long run relationship between export and output and relied upon weak exogeneity tests proposed by Johansen to establish exogeneity of exports or output.
References
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Journal ArticleDOI
Exports and economic growth: Further evidence
Bela Balassa,Bela Balassa +1 more
TL;DR: In this article, the relationship between exports and economic growth in 11 developing countries that have already established an industrial base was analyzed, adjusting for domestic and foreign investment and for increases in the labor force that affect total exports.
Journal ArticleDOI
Growth and export expansion in developing countries: Some empirical evidence
TL;DR: In this article, the empirical relationship between economic growth and export expansion in developing countries as observed through an intercountry cross-section was analyzed, and the results indicated that export performance was important, along with capital formation, in explaining the intercountry variance in GDP growth rates during the 1960-1977 period.
ReportDOI
Trade Policy as an Input to Development
TL;DR: In this article, the authors focus on the question: what difference does the set of commercial policies chosen by a developing country make to its rate of economic growth, and the empirical evidence overwhelmingly indicates that there are important links between them.