Showing papers on "Economic sector published in 2009"

Structural change and growth accelerations in Asia and Latin America: a new sectoral data set

Abstract: Recent studies of economic growth have moved from explaining average trends in long-term growth to study growth accelerations and decelerations. In this paper we argue that the standard shift-share analysis is inadequate to measure the contribution of sectors to accelerations in productivity. We present a modified shift-share method, which takes account of surplus labour in agriculture and accounts for the contribution to growth from expanding sectors. We apply this novel methodology to the GGDC 10-sector database, which is a new data set with annual time series of value added and persons employed for the ten main sectors of the economy. The data set covers 19 countries in Asia and Latin America spanning the period from 1950 to 2005. We find that growth accelerations are explained by productivity increases within sectors, not by reallocation of employment to more productive sectors. Challenging conventional wisdom, productivity improvement in market services is more important than productivity growth in manufacturing.

Finance-growth-poverty nexus in South Africa: A dynamic causality linkage

Abstract: This paper attempts to examine the dynamic causal relationship between financial development, economic growth and poverty reduction in South Africa—using a trivariate causality model The study attempts to answer one critical question Which sector leads in the process of poverty reduction in South Africa—the financial sector or real sector? Using cointegration and error-correction models, the empirical results of the study show that both financial development and economic growth Granger—cause poverty reduction in South Africa The study also finds that economic growth Granger-causes financial development and, therefore, leads in the process of poverty reduction in South Africa This applies irrespective of whether the causality test is conducted in the short-run or in the long-run The study, therefore, recommends that policies geared towards increasing economic growth should be intensified in South Africa in order to make the economy more monetised, and to reduce the high level of poverty currently prevailing in the country

On the Adoption of Accrual Accounting in the Public Sector: A Self-Evident and Problematic Reform

Abstract: In this brief foreword, we comment on the nature and extent of the adoption of accrual accounting throughout the public sector of economies internationally, by focusing on two facets of this reform...

The Impact of the Financial and Economic Crisis on European Tourism

Abstract: As of the late winter season of 2009 it has become obvious that the Austrian tourism industry can no longer escape the effects of the slowdown in international demand. Consequent to lagging adjustments to negative income and labour market expectations, the steep decline in tourism demand is expected to be further exacerbated throughout 2009. In 2009, the effects of the international credit crunch and economic crisis and the resultant slump across all sectors of the economy will cause international demand for foreign travel in the EU 15 to drop by 4.5 percent in real terms, although the decline should slow down significantly in 1010 (–1 percent).

Do Workers’ Remittances Promote Economic Growth?

Abstract: Over the past decades, workers' remittances have grown to become one of the largest sources of financial flows to developing countries, often dwarfing other widely-studied sources such as private capital and official aid flows. While it is undeniable that remittances have poverty-alleviating and consumption-smoothing effects on recipient households, a key empirical question is whether they also serve to promote long-run economic growth. This study tackles this question and addresses the main shortcomings of previous empirical work, focusing on the appropriate measurement, and incorporating an instrument that is both correlated with remittances and would only be expected to affect growth through its effect on remittances. The results show that, at best, workers' remittances have no impact on economic growth.

Entrepreneurship and the Informal Sector: Some Lessons from India

Abstract: This paper evaluates critically the popular structuralist representation that those operating in the informal sector are marginalized populations working as dependent employees out of economic necessity and in the absence of alternative means of livelihood. Reporting an empirical study of 1,518 informal workers in India, the finding is not only that a large proportion work on an own-account basis as informal entrepreneurs but also that not all work informally purely out of economic necessity and as a last resort. The paper concludes by calling for wider recognition that many operating in this sector are engaged in entrepreneurial endeavour and that not all are necessity-driven.

Strategies for creative industries: an international review

Abstract: The paper presents the findings from an international survey of public policies and strategic plans to promote and support the development of the creative industries at city-regional level. The rationales and mechanisms employed, the shifting definitions of the cultural and creative economy and sectors adopted, are discussed in the context of the grand narrative of the ‘creative city’. Case studies of Barcelona, Berlin and London are presented, confirming spatial concentration across the creative industries, but also the continuing dependency on public intervention in what is projected as a growing economic sector worldwide. Policy emulation, but also confusion over classification and social objectives, is evident. At the same time, creative industry employment growth has begun to falter in key creative cities leading to the suggestion that the creative industries are now subsumed into a more substantial and wider knowledge economy.

Entrepreneurship and Regional Culture: The Case of Hamamatsu and Kyoto, Japan

Abstract: Aoyama Y. Entrepreneurship and regional culture: the case of Hamamatsu and Kyoto, Japan, Regional Studies. Successful entrepreneurship today must respond to the demands from global market forces. Yet, simultaneously, entrepreneurs must also respond to local social contexts, shaped by historical and regional economic conditions. This paper illustrates how regional culture plays an important role in shaping entrepreneurship, even in a new economic sector. By taking two ‘entrepreneurial regions’ of Japan, Hamamatsu and Kyoto, it is shown how historical legacy and lead firms strongly influence business practices of information technology entrepreneurs. Results of this qualitative research show how entrepreneurship is an integral aspect of evolving and complex regional systems. Aoyama Y. L'esprit d'entreprise et la culture regionale: etudes de cas de Hamamatsu et Kyoto, au Japon, Regional Studies. De nos jours, un esprit d'entreprise reussi doit repondre aux forces du marche mondial. Neanmoins, les entrepreneu...

Implications of climate change for economic development in northern Canada: energy, resource, and transportation sectors.

Abstract: Northern Canada is projected to experience major changes to its climate, which will have major implications for northern economic development. Some of these, such as mining and oil and gas development, have experienced rapid expansion in recent years and are likely to expand further, partly as the result of indirect effects of changing climate. This article reviews how a changing climate will affect several economic sectors including the hydroelectric, oil and gas, and mining industries as well as infrastructure and transportation, both marine and freshwater. Of particular importance to all sectors are projected changes in the cryosphere, which will create both problems and opportunities. Potential adaptation strategies that could be used to minimize the negative impacts created by a climate change are also reviewed.

Public and Private Sector Wages Interactions in a General Equilibrium Model

Abstract: This paper develops a dynamic general equilibrium model in which the public and the private sector interact in the labor market. Previous studies that analyze the labor market effects of public sector employment and wages have mostly assumed exogenous rules for public wage and public employment. We show that theories that equalize wages with marginal products in the private sector can rationalize the interaction of public and private sector wages when extended to accommodate a non-trivial government sector/public sector union that endogenously determines public employment and wages. Our model suggests a positive correlation between public and private sector wages. Any increase in tax revenues, coupled with the existence of a positive public-private sector wage gap, makes working in the public sector an attractive option. Thus, a positive neutral productivity shock increases public and private sector wages. More interestingly, even a private-sector specific productivity shock spills-over to the public sector, increasing public wages. These facts lend some support to the wage leading role of the private sector. Nevertheless, at the same time, a positive shock to public sector wages would lead to an increase in private sector wages, via the flow of workers from the private to the public sector.

The role of agriculture education and training on agriculture economics and national development of Bangladesh

Abstract: This article analyses the prevailing situations of the agricultural sector in Bangladesh using both secondary and primary data. Findings show that agriculture was the main economic sector with an employment of 95% of total population with a share of 78% of Gross Domestic Product (GDP) in 1971. After the first few years of independence, education policy was concentrated for the development of agriculture education from secondary to tertiary level because government considered agriculture as potential to economy. Currently, 75% of the populations’ professions are agriculture industry and contribution towards GDP is only 22%. While the decline of employment is not notably dropped, contribution towards GDP shared by agriculture sector is dramatically descended. The article examined the probable underpinning reasons causing agriculture as a less productive industry. With many reasons, it is noted that education system is not currently supporting the development of agriculture industry. With narrations, this article proposes a policy change towards agriculture education aiming an improvement of agriculture economics of the country which ultimately will bring national development. Key words: Agriculture education, agriculture economics, education and development, national development, GDP sharing.

Human resource development in Gulf countries: an analysis of the trends and challenges facing Saudi Arabia

Abstract: The objective of this study is to highlight the challenges of human capital development in the Gulf Arab countries in general and in Saudi Arabia in particular. A literature review and an analysis of the Saudi government's formal documents show that Saudi Arabia is facing several challenges in its economy system and human resource development (HRD) programmes. The main challenges are: high dependence on oil and the petrochemical industry; high dependence on foreign labour; a low rate of female participation in employment; and a weak link between educational system output and the needs of the economic sectors, especially those of the private sector, which requires skilled and professional labour. Recent studies related to HRD programmes in the private sector especially in small and medium size companies (SMEs) show that these programmes are not developed structurally or functionally. However, the case is different in large government and private companies. As illustration of human capital development in th...

Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review

Abstract: This paper reviews the theoretical and empirical literature on the role of financial sector development, with a view to deepening understanding of the rationale of development assistance to the financial sector of developing countries. The review leads to the following broad conclusions: (i) there are convincing arguments that financial sector development plays a vital role in facilitating economic growth and poverty reduction, and these arguments are supported by overwhelming empirical evidence from both cross-country and country-specific studies; (ii) there are however disagreements over how financial sector development should be sequenced in developing countries, particularly the relative importance of domestic banks and capital markets and, in developing the banking sector, the relative importance of large and small banks; (iii) while broadening the access to finance by microenterprises, small and medium-sized enterprises (SMEs), and vulnerable groups is recognized as critically important for poverty reduction, it is also widely believed that microfinance and SME credit programs need to be well designed and targeted to be effective. In particular, these programs need to be accompanied by other support services such as provision of training and capacity building, assistance in accessing markets and technologies, and addressing other market failures; and (iv) financial sector development and innovation will bring risks, and it is therefore essential to maintain sound macroeconomic management, put in place effective regulatory and supervisory mechanisms, and carry out structural reforms in developing the financial sector. The paper argues that these conclusions provide a strong justification for development assistance to target financial sector development as a priority area, and that, like any public sector intervention, such assistance should be designed to address market and nonmarket failures. The paper also highlights several areas where more research is urgently needed, in particular, how to sequence financial sector development, how to balance the need for financial innovation and that for economic and financial stability, and how to make microfinance and SME credit programs work better to reduce poverty.

Natural Disasters and Growth - Going Beyond the Averages

Abstract: There has been a steady increase in the occurrence of natural disasters. Yet their effect on economic growth remains unclear, with some studies reporting negative, and others indicating no, or even positive effects. These seemingly contradictory findings can be reconciled by exploring the effects of natural disasters on growth separately by disaster and economic sector. This is consistent with the insights from traditional models of economic growth, where production depends on total factor productivity, the provision of intermediate outputs, and the capital-labor ratio, as well as the existence of important intersector linkages. Applying a dynamic Generalized Method of Moments panel estimator to a 1961-2005 cross-country panel, three major insights emerge. First, disasters affect economic growth - but not always negatively, and differently across disasters and economic sectors. Second, although moderate disasters can have a positive growth effect in some sectors, severe disasters do not. Third, growth in developing countries is more sensitive to natural disasters - more sectors are affected and the magnitudes are non-trivial.

Structural Reforms and Economic Performance in Advanced and Developing Countries

Abstract: Economic policy agendas in member countries - even as they have been dominated over the past year by the response to the global financial crisis - will, going forward, increasingly need to refocus on core issues related to strengthening medium-run economic performance, including both average growth and resilience to shocks. This paper examines the contribution of structural policies - that is, policies that increase the role of market forces and competition in the economy, while maintaining appropriate regulatory frameworks to deal with market failures - to economic performance. The results are based on a new dataset covering reforms of domestic product markets, international trade, the domestic financial sector, and the external capital account, in 91 developed and developing countries.

Public and private sector entrepreneurship: similarities, differences or a combination?

Abstract: Purpose – While the term “entrepreneurship” is not exclusively a private sector phenomenon, it is usually associated with private sector business activity and more specifically with small to medium enterprises. However, over the last two decades it has appeared in the public administration literature with increasing frequency. The recent research in public sector entrepreneurial activity makes an exploratory comparative analysis of the key components that are applicable from private sector entrepreneurship timely as the topic is emerging as an area of academic inquiry and research. The purpose of this paper is to provide a comparative analysis of private and public sector entrepreneurship using an analytical model from private and public sector entrepreneurship.Design/methodology/approach – A clear understanding of the research issues involved requires an appreciation of the nexus between private sector entrepreneurship and the more limited research field of public sector entrepreneurship. The paper ident...

Aid, economic freedom, and growth

Abstract: 1. INTRODUCTION Donors have multiple objectives in providing foreign assistance to poor countries. Aid is motivated in part by donors' foreign policy objectives; for example, much U.S. aid goes to Egypt and Israel to maintain peace in the region. Aid is also motivated by commercial concerns and is often granted conditional on the funds being used to purchase goods or services from firms in the donor country. Whether or not aid is successful in achieving these objectives can be assessed relatively easily. It is more difficult to determine aid's effectiveness in attaining other objectives, however, such as democracy promotion, building institutional capacity, market liberalization, and economic growth. One must control for numerous other determinants and correct for the possibility that aid is endogenously determined. The bulk of the evidence suggests skepticism concerning donors' ability to influence these processes to a substantial degree in most developing countries through aid programs. Evidence is mixed on links between aid and growth, and there is certainly no robust positive relationship, even for countries with better institutional and policy environments (Easterly, Levine, and Roodman, 2004; Ovaska, 2003). Boone (1996) found that aid did not increase investment or benefit the poor as measured by human development indicators but that it did increase the size of the government. Using the Freedom House and Polity democracy indexes measured over long periods of time, Knack (2004) finds that aid has no impact on democratization in developing countries. Even worse, higher aid levels are associated with significantly larger declines in institutional capacity over time, using measures of corruption, bureaucratic quality, and rule of law from the International Country Risk Guide (Knack, 2001). Both these studies correct for the possibility of reverse causation, as aid spuriously could appear ineffective if donors tend to direct it toward countries with deteriorating conditions. In fact, that is not how most donors allocate aid, and two-stage least squares tests confirm that the exogenous component of aid--aid predicted by country size, initial levels of infant mortality, literacy, and so forth--is associated with declining quality of governance and is unrelated to democratization (Knack, 2001, 2004). More recently, foreign aid has often been intended by donors to entice recipient nations into policy and institutional reforms favorable to private sector economic development. Several studies have recently shown that increases in "economic freedom" contribute positively to national growth (Adkins, Moomaw, and Savvides, 2002; Dawson, 1998; Gwartney, Lawson, and Holcombe, 1999). Aid, therefore, can be used as a means to further the end of growth, if donors are successful in using it as a carrot to induce market-oriented reforms. Aid could sometimes have unintended and less favorable effects on economic freedom, however. Friedman (1958) long ago argued that because most foreign aid goes to governments, it tends "to strengthen the role of the government sector in general economic activity relative to the private sector." The availability of aid funds can further rent-seeking activity (Bauer, 1984) or serve to bail out governments from crises that might otherwise be forced to adopt liberalizing reforms (Rodrik, 1996). In this study, we investigate the relationship between aid and changes to economic freedom in recipient nations over the 1990-2000 decade. The evidence is mixed. We find that aid does not significantly increase economic freedom overall. A similar conclusion is reached by Boockmann and Dreher (2003) in the case of International Monetary Fund (IMF) and World Bank loans. However, when we disaggregate economic freedom into five separate categories, we find that they have differing effects on growth. Arguably, if growth is the ultimate objective of aid, analyses of aid's impact on economic freedom should differentiate among the five categories by the strength of their links to growth. …

Rebuilding Government for the 21st Century: Can China Incrementally Reform the Public Sector?*

Abstract: After three decades of spectacular economic successes, China is facing a significant challenge. The string of recent scandals – environmental degradation, melamine-tainted milk powder, fake drugs and chemicals – have all pointed to government weakness in protecting public safety, exposing an enormous gap between China's growing economic prowess and its capacity to govern. With the leadership now focused on improving the regulatory regime, will China “catch up” and build the public institutions needed? This article argues that the reactive, incremental retrenchment of government in the 1980s and 1990s, combined with inadequate finance, had broken the intergovernmental fiscal system and created large distortions in the incentive structure facing government agencies and public institutions (shiye danwei 事业单位). Until the intergovernmental fiscal system is repaired and incentives are fundamentally reformed for the public sector, the top-down programme to redirect China's development and build a service-oriented government will have limited effect.

Does financial development affect growth

Abstract: This article contributes to the literature on the relationship between financial development and economic growth in three ways: it utilizes recently developed techniques for generalized methods of moments (GMM) one-step estimation with dynamic panel models, it focuses exclusively on a sample of developing countries and it uses as proxies for financial development variables which capture both banking sector and stock market effects. The results provide evidence, based on a panel of annual data for 30 developing countries, that while the stock market variables are positively and significantly related to growth, their presence results in the standard banking sector variables, credit to the private sector and liquid liabilities, having negative effects on growth.

Labour Regulation and Employment Dynamics at the State Level in India

Abstract: Over the past decade, labour market outcomes have improved in India, with net employment rising markedly for the economy as a whole. However, these gains have arisen primarily in the unorganized and informal sectors of the economy, where productivity and wages are generally much lower than in the formal organized sector. It is only India’s organized sector that is subject to labour market regulation, and here employment has fallen. The role of employment protection legislation in affecting employment outcomes is controversial both in the OECD area and in India. This paper looks at the impact of employment protection legislation and related regulation on the dynamics of employment in the organized sector of the economy, using newly constructed measures of national regulation and state labour reforms. We find that while reforms have taken some of the bite out of core labour laws, more comprehensive reforms are needed to address the distortions that have emerged. This working paper relates to the 2007 Economic Survey of India (www.oecd.org/eco/surveys/india).

An Aggregate Import Demand Function: An Empirical Investigation by Panel Data for Latin American and Caribbean Countries

Abstract: The present paper empirically investigates the validity of the question whether financial sector's development contributes to economic growth in a small developing economy like Pakistan. The paper employs a relevant measure of financial development that meets the requirements of the finance-growth theory. The dynamic relationship between per capita GDP and financial development is investigated by employing two advanced techniques, 'FMOLS' and 'DOLS' to test the robustness of the long-run relationship after testing the order of integration of the variables. Empirical findings suggest existence of stable relationship between per capita GDP and financial development. Regression results of FMOLS reveal that financial sector's development improves the performance of the economy in the long run, but declines economic growth in the short run. Credit to private sector as a share of GDP, used as a proxy for financial development, is a good predictor of economic growth in the long run, in case of Pakistan. The results reveal that rise in exports also boosts economic growth in the long run, and investment stimulates economic growth both in the long run as well as short run, through its direct and indirect channels. Inflation and imports both reduce economic growth. And finally, high economic growth is found to be associated with small size of the government. (ProQuest: ... denotes formulae omitted.) Introduction An efficient financial sector allocates funds with ease to the entrepreneur or corporation for their sound projects, that in turn stimulate the economic growth. Thus, a developed financial sector is a must for providing broader access to finance at lower costs. The empirical literature in a cross-country framework employing different statistical procedures and dataset has demonstrated positive effects of financial development on economic growth. Goldsmith (1969), using correlation between financial development and economic development, first tested the relationship between finance and economic growth. He utilized the ratio of the value of financial intermediary assets to Gross Domestic Product (GDP) as the only measure of financial development. Studies by Rajan and Zingales (1998) and Levine et al. (2000) have reexamined the relationship between financial development and economic growth on two fronts. First, they have used more appropriate measures of financial development such as the liquid liability to GDP ratio, the credit to private sector as a share of GDP, the level of stock market turnover, and the quality of accounting standards as a measure of a firm's ability to raise funds. Second, they went beyond the simple correlation between finance and growth by using, multiple regression models, dynamic panel estimation, and finally, instrumental variables method. The link between financial development and economic growth can also be found in country case studies. The most influential work was done by McKinnon (1973), who studied the relationship between financial systems and economic growth in Argentina, Brazil, Chile, Germany, Indonesia, Korea and Taiwan in the post World War II period. He concluded that better functioning of financial system supports faster growth.1 Pagano (1993) suggested that financial sector affects economic growth by increasing the productivity of investment, lowering the transaction cost, and also affects savings. Some explored theoretical models describe that financial markets and institutions improve the quality of investment projects, which in turn boost economic growth (Greenwood and Jovanovic, 1990; and Saint-Paul, 1992). Hussein (1999) confirmed the importance of financial sector for economic growth and concluded that a rise in the ratio of private credit to total credit leads to economic growth. Interest rates may have a positive impact on savings, but the overall effect of interest rate on growth is ambiguous (Hussein, 1999). McKinnon (1973) and Shaw (1973) argued that liberalization from restrictions such as interest rate ceilings, high reserve requirements and selective credit programs, facilitates economic growth. …

The Political Economy of Agricultural Biotechnology Policies

Abstract: This article develops a political-economy framework to analyze the formation of agricultural biotechnology policies. Going beyond accounts that largely attribute differences between US and European regulatory environments to consumer attitudes, we consider the impact of what amounts to a Schmpeterian process of “creative destruction” across the entire range of relevant economic sectors and interests. The analysis suggests that in Europe and in some developing countries a “strange bedfellows” constellation of concentrated economic interests (including incumbent agrochemical manufacturers, certain farm groups, and environmental protest activists) act in rational selfinterest to negatively characterize GM technology in the public arena and to seek regulations that block or slow its introduction. In contrast, those interests most likely to experience welfare gains from biotechnology are the more diffused and less informed—including consumers and small farmers. The most profound implications of overregulation of agricultural biotechnology are (1) delays in the global diffusion of proven technologies, resulting in a lower rate of growth in the global food supply and higher food prices, and (2) disincentives for investing in further R&D, resulting in a slowdown in innovation of second generation technologies anticipated to introduce broad consumer and environmental benefits.

Knowledge for Development Economic Science, Economic Policy, and Economic Advice

Abstract: expressed in this paper are entirely those of the author. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.

Revisiting the Informal Sector: A General Equilibrium Approach

Abstract: During the last 50 years with unprecedented population growth and urbanization, economic development, particularly in developing countries failed to generate adequate employment and income opportunities in the modern sector, compelling the surplus labour force to generate its own means of employment and survival in the informal sector. The main characteristics of the informal sector are easy entry for the new enterprises, reliance on indigenous resources, family ownership of enterprises, small scale of operations and low productivity, labour-intensive and adapted technology, reliance of workers on informal sources of education and skills, unregulated and competitive markets and lack of governmental support. The earlier contention that the informal sector epitomizes the ‘residual’ sector or a sector of last resort has been belied by a plethora of evidences indicating its dynamic character and its instrumental role in ameliorating unemployment and propelling the developing economies towards growth and prosperity. This conceptual metamorphosis regarding the informal sector has stimulated revived interest in the phenomenon among development economists, with quite a few books dealing with the sector analytically or empirically. However, the theoretical analysis of the different aspects of the sector is equally important, especially for formulation of appropriate policy prescriptions. Comparative static results, in many cases, diverge from the conventional wisdom. We noticed that although various authors have published theoretical papers in different journals, there are very few books that try to understand the informal sector in a theoretical framework. This lacuna inculcated in us an interest to write this book. It is mainly targeted towards postgraduate students of development economics with interest in the informal sector and researchers who are pursuing theoretical research on informal sector. In this book we endeavour to give an insight into the diverse aspects of the ‘multidimensional’ informal sector, its role in the context of unemployment, child labour, globalisation, environment, etc. and its multi-faceted interaction with the other sectors of the economy. Most importantly, we give an outline of the earlier doctrines, elucidate on the newer ones and critically review the contradictions within them to trace the nature and direction of desirable policy parameters that may be relevant in the present scenario. We have stylized the informal sector within different established general equilibrium frameworks. We have incorporated the informal sector in the traditional Heckscher-Ohlin model; considered the dualistic approach within the Harris-Todaro framework and also embraced the theories of dependency and/or underdevelopment where the focus shifts from marginalization to the structural linkages that exist between the informal and formal sectors in the form of subcontracting. We have considered situations, albeit in different models, where the informal sector produces internationally traded final commodity, non-traded final commodity, and traded and non-traded intermediate goods. Thus, although not exhaustive, we have tried to deal with most of the dimensions of the sector.