Capital deepening

About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.

Rates of return on physical and human capital in Africa's manufacturing sector

Abstract: In this paper two sets of issues are addressed using panel data from the manufacturing sector of five African countries. First, how high are the returns to human relative to physical capital. Second, what is the relative importance of technology and endowments of human and physical capital in determining differences in earnings and productivity across the countries. Evidence from earnings functions shows that the private returns to both experience and education rise with the level of education. Private returns rise from 3 per cent at the primary level, to 10 per cent at the secondary level and 35 per cent for tertiary. Evidence from the production function gives lower returns on education than from the earnings function. Rates of return on physical capital exceed 20 per cent and greatly exceed the average return on human capital. Data is available on the stocks of human and physical capital across the countries. Productivity and earnings differentials are shown to be large between Cameroon and Ghana. These differences are due almost entirely to differences in physical, not human, capital endowments. (This abstract was borrowed from another version of this item.)

Capital account liberalization, free long-term capital flows, financial crises and economic development

Abstract: Trade Organization (WTO) in relation to foreign direct investment (FDI) flows. This paper focuses on developing countries and it considers policy from the perspective of (a) economic development and (b) the global rules of the game rather than the economic policy within individual countries. The paper essentially examines the question: what kind of global economic order in relation to capital flows can best serve the interests of developing countries? Capital account liberalization is an area where economic theory is the most disconnected from real-world events. In analyzing liberalization of capital flows, it is customary to distinguish between short-term (for example, portfolio flows and shortterm bank loans) and long-term flows (for example, FDI). Neoclassical theory suggests that free flows of external capital (including short-term capital) should be equilibrating and help smooth a country’s consumption or production paths. However, in the real world, exactly the opposite appears to happen. Liberalization of the shortterm capital account has invariably been associated with serious economic and financial crises in Asia and Latin America in the 1990s. The proponents of neoclassical theory argue that the case for free capital flows is no different from that for free trade; the former could simply be regarded as a form of inter-temporal trade. The first part of the paper addresses this central controversy in relation to developing countries and specifically asks the following questions:

Appraisal of Capital Market Efficiency on Economic Growth in Nigeria

Abstract: The paper is an appraisal of the impact of capital market efficiency on economic growth in Nigeria, using time series data on market capitalization, money supply, interest rate, total market transaction and government development stock that ranges between 1961 to 2004. The model specification for the analysis of data is multiple regression and ordinary lest squares estimation techniques. The result of the study shows that the capital market in Nigeria has the potentials of growth inducing, but it has not contributed meaningfully to the economic growth of Nigeria. This is as a result of low market capitalization, low absorptive capitalization, illiquidity, misappropriation of funds among others. The empirical test indicates that, these variables satisfied the economic apriori and are statistically significant except total transactions and money. Thus it was concluded and recommended that, the capital market remain one of the mainstream in every economy that has the power to influence economic growth, hence the organize private sector is encourage to invest in it. This will enable the capital market improve its illiquidity status for economic growth and development. Therefore the government must contribute in order to achieve these objectives through investing government securities in productive sectors and relaxing laws that spell threat to the capital market.

Government Expenditure on Human Capital Development: Implications for Economic Growth in Nigeria

Abstract: This study examines the relationship between human capital development efforts of the Government and economic growth in Nigeria. It seeks to find out the impact of government recurrent and capital expenditures on education and health in Nigeria and their effect on economic growth. The data used for the study are from secondary sources while the augmented Solow model was also adopted. The dependent variable in the model is the level of real output while the explanatory variables are government capital and recurrent expenditures on education and health, gross fixed capital formation and the labour force. The result shows that there exists a positive relationship between government recurrent expenditure on human capital development and the level of real output, while capital expenditure is negatively related to the level of real output. The study recommends appropriate channeling of the nation’s capital expenditure on education and health to promote economic growth.