Showing papers on "Physical capital published in 2020"
TL;DR: In this paper, the authors developed a dynamic general equilibrium model incorporating SIS epidemiology dynamics, where households choose how much to invest in human and physical capital, as well as in controlling the risk of infection.
Abstract: Stylized facts show there is a clustering of countries in three balanced growth paths characterized by differing income/growth, human capital and incidence of infectious diseases. To explain this, we develop a dynamic general equilibrium model incorporating SIS epidemiology dynamics, where households choose how much to invest in human and physical capital, as well as in controlling the risk of infection. In the decentralized economy, households do not internalize the externality of controlling infection. There are multiple balanced growth paths where the endogenous prevalence of the disease determines whether human capital is accumulated or not, i.e., whether there is sustained economic growth or a poverty trap. We characterize the optimal public health policy that internalizes the disease externality and the subsidy that decentralizes it. Perversely, for countries in a poverty trap and most afflicted with diseases, the optimal subsidy is lower than for growing economies. We also study the quantitative effects of better control of diseases, and of increasing life expectancy on countries in a poverty trap.
65 citations
TL;DR: In this paper, the authors evaluate the direct effect of resources on developmental outcomes vis-a-vis their indirect effect through the weakening of political institutions using a 3SLS instrumental variable setup that simultaneously estimates development outcomes and institutions.
44 citations
TL;DR: In this article, the authors empirically analyzed the endogenous driving force of China's PV industry output growth by constructing an expanded Cobb-Douglas technology production function and showed that the output elasticity of research and development (RD The contribution rate of R&D input to output growth exceeds physical capital and labour factors) has changed from factor-driven to technological innovation-driven.
39 citations
TL;DR: In this paper, the authors show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity in India and develop a novel method to use natural experiments to bound the effect of changes in misallocations on treated industries' aggregate productivity.
Abstract: We show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity in India. The staggered liberalization of access to foreign capital across disaggregated industries allows us to identify changes in firms' input wedges, overcoming major challenges in the measurement of the effects of changing misallocation. For domestic firms with initially high marginal revenue products of capital (MRPK), liberalization increases revenues by 25%, physical capital by 57%, wage bills by 27%, and reduces MRPK by 35% relative to low MRPK firms. There are no effects on low MRPK firms. The effects of liberalization are largest in areas with less developed local banking sectors, indicating that foreign capital partially substitutes for an efficient banking sector. Finally, we develop a novel method to use natural experiments to bound the effect of changes in misallocation on treated industries' aggregate productivity. Treated industries' Solow residual increases by 4-17%.
36 citations
TL;DR: In this article, the authors examined the nonlinear relationship between financial development and economic growth in Pakistan using the threshold regression model for the period 1980-2017 and employed quantile regression with 0.25, 0.50, and 0.75 quantiles of conditional distribution.
Abstract: This study examines the nonlinear relationship between financial development and economic growth in Pakistan using the threshold regression model for the period 1980-2017. We also employed quantile regression with 0.25, 0.50, and 0.75 quantiles of conditional distribution. The quantile regression is based on minimizing of sum of squared residuals. The result indicates that economic growth responds positively to financial development when the level of financial development surpasses the threshold value of 0.151. However, when financial development lies below the threshold value (that is, 0.151), its impact on economic growth is negative. Thus, when financial development of Pakistan surpasses the threshold level, it contributes more towards economic growth since greater level of financial development contributes more to boosts economic growth. This finding reveals that economic growth reacts differently to financial development, and the relationship between financial development and economic growth is U-shaped in Pakistan. Among the other variables, physical capital, labor force, and government expenditure exert a positive effect on economic growth. Furthermore, inflation rate and trade openness have an insignificant impact on economic growth. The results of quantile regression also confirm the non-linear relationship between financial development and economic growth in Pakistan. The finding of this study suggests revamping of financial sector policies in Pakistan.
34 citations
TL;DR: In this paper, a typology of community flood resilience capacity based on community characteristics and five capitals (human, financial, natural, physical, and social) is developed and four distinct clusters to investigate the relationship between flood resilience and prevailing development conditions.
Abstract: Flood risk is increasing worldwide and there is a growing need to better understand the co-benefits of investments in disaster resilience. Utilizing a multinational community flood resilience dataset, this paper takes a systems approach to understanding community-level flood resilience. Using a cluster analysis and bivariate correlation methods, we develop a typology of community flood resilience capacity based on community characteristics and five capitals (human, financial, natural, physical, and social). Our results reinforce the importance of context-specific policymaking and give recommendations of four distinct clusters to investigate the relationship between flood resilience and prevailing development conditions. We especially find that communities with higher interactions between their capital capacities tend to have higher flood resilience levels. Additionally, there are indications that stronger interactions between community capacities can help to induce multiple co-benefits when investing in disaster resilience. Our results also have important policy implications on the individual community level. For example, based on our results, we suggest that communities with lower flood resilience capacities and interactions can best build resilience on leveraging their relatively higher human capital capacities to strengthen the financial and social capitals. Negative effects might happen for urban communities when co-benefits of natural and physical capital are not fully integrated. The highest flood resilience capacity is found in communities with a well-balanced household income distribution which is likely a contributing factor to the importance of financial capital for this cluster. Our results emphasize the importance of an integrative approach to management when implementing systematic flood disaster resilience metrics and development measures.
30 citations
TL;DR: In this article, the authors investigated the determinants of economic growth in Ghana over the period from 1975 to 2014 and investigated the impact of physical capital, human capital, and human capital on economic growth.
Abstract: This article deals with an investigation into the determinants of economic growth in Ghana over the period from 1975 to 2014. In particular, we investigated the impact of physical capital, human ca...
27 citations
TL;DR: In this article, the real effects of losing political capital by exploiting exogenous shocks from the sudden deaths of politically connected independent directors in Chinese firms were studied, and they found that private firms use physical capital investment as a substitute for political capital.
26 citations
TL;DR: This article revisited the debate on the benefits of financial integration in a two-country neoclassical growth model with aggregate uncertainty and showed that gains from integration are quantitatively small, even for riskier and capital scarce emerging economies.
25 citations
TL;DR: The findings revealed that, first, FDI has an insignificant influence on environmental quality in the long run but aids in financing physical capital deficits but there exists the presence of the pollution halo hypothesis.
Abstract: The purpose of this paper is to investigate the impact of foreign direct investment (FDI) on sustainable development (SD) in China by using a regression model. Based on a panel date ranging from 1996 to 2016, this study makes an assessment of how development is sustained by means of an impose response function model. The findings revealed that, first, FDI has an insignificant influence on environmental quality in the long run but aids in financing physical capital deficits. Second, there exists the presence of the pollution halo hypothesis. In addition, in the short-term, pollution variables (sulfur dioxide and smoke and dust) cause significant variances on the amount of FDI inflows into China. However, they significantly lose their variation effect to FDI inflows in the long run due to the utilization of advanced technologies. Lastly, it is recommended that stricter environmental policies and strategies are implemented to curtail foreign investors from defaulting.
22 citations
TL;DR: In this article, the long-run effects of the structural stance of monetary policy and of inflation, in the context of a monetary growth model where R&D is complemented with physical capital accumulation, are studied.
Abstract: We study the real long‐run effects of the structural stance of monetary policy and of inflation, in the context of a monetary growth model where R&D is complemented with physical capital accumulation. We look into the effects on a set of real macroeconomic variables that have been of interest to policymakers—the economic growth rate, real interest rate, physical investment rate, capital‐to‐labor ratio, R&D intensity, and velocity of money. These variables have been previously analyzed from the perspective of different, separated, strands of the theoretical and empirical literature. Additionally, we analyze the long‐run relationship between inflation and both the effectiveness of real industrial‐policy shocks and the market structure, assessed namely by average firm size. We present novel cross‐country evidence on the empirical relationship between the latter and long‐run inflation.
TL;DR: In this paper, the authors examined the effects of total, mineral, natural gas and oil rents on the public total, education, health, and infrastructure expenditures using the dynamic panel estimation methods and data for more than 100 countries for the 1980-2015 period.
Abstract: This paper examines the effects of total, mineral, natural gas, and oil rents on the public total, education, health, and infrastructure expenditures using the dynamic panel estimation methods and data for more than 100 countries for the 1980–2015 period. Our results indicate that total resource rents do not have a significant impact on the public total and infrastructure expenditures. However, they provide a robust evidence for the adverse effect of resource rents on the public education and health expenditures. Our results lend a substantial evidence for the conclusion that the notorious resource curse can be also explained by its adverse effect on the human capital accumulation. We then test whether the democracy level matters in investigating the effects of resource rents on the public expenditures. Interestingly, we find that total resource rents exert a negative impact on the education expenditures only in autocratic countries. These results clearly indicate that policy makers should take necessary steps to remove the adverse effects of resource rents on the public education and health expenditures to increase human capital formation.
TL;DR: In this article, the relationship between human capital and economic growth for the case of Mexico for the 1971-2010 period was estimated using an ordinary least squares model and also an OLS model with structural change, and it was found that the independent variables used in the model explain up to 50% of the variability of GDP per worker.
Abstract: In this article, we estimate the relationship between human capital and economic growth for the case of Mexico for the 1971–2010 period. Using an ordinary least squares model and also an ordinary least squares model with structural change, it was found that the independent variables used in the model explain up to 50% of the variability of GDP per worker. The results of the estimated regressions indicated that a 1% change in the gross enrollment ratio at the secondary level leads to a 1.08% increase in GDP per worker. Similarly, a 1% increase in the differences in capital investment as a percentage of GDP leads to a 0.39% increase in GDP per worker. These results show that the impact of human capital on Mexico’s economic growth is significantly greater than that of physical capital, since the estimated coefficients of human capital are almost three times of those of physical capital. Also, the results of the Granger causality test indicated the existence of a bidirectional causality between human capital and economic growth in Mexico.
TL;DR: In this paper, the authors collected data by surveying 130 households from the Koshi River basin (KRB) of Nepal, including: the Kavre district in the mid-mountain area, the Sindhuli district in Siwalik Hill, and the Saptari district in Terai Plains.
14 Jun 2020
TL;DR: In this article, the effect of innovation on economic growth using the neoclassical economic growth model is investigated using time series techniques, and the authors find that the crucial impact of quality innovation rather than quantity concern is revealed.
Abstract: This study empirically investigates the effect of innovation on economic growth using the neoclassical economic growth model. Embarking from the traditional labour growth, physical capital and human capital framework, innovation is postulated to be the main driver for robust economic growth. Using time series techniques, we discover very attention-grabbing findings that highlight the impact of innovation on economic growth for Malaysia. First, the innovation measured by the quantity of a total number of a patent application is statistically insignificant. The result is robust for various innovation measurements, including total local patent application and total foreign patent application. Interestingly, switching to total patent grant instead of a total number of patent application (local or foreign), the empirical result shows a significant impact on economic growth. The finding indirectly reveals the crucial impact of quality innovation rather than the quantity concern. Neglecting both quality and the commercialisation process of these new technologies may not solve the rigidity of knowledge commercialisation paradox. Finally, we test for the prominent institutional quality in mediating economic growth under a knowledge-based economy. The interaction between institutional quality and the total patent grant has significantly accelerated the role of innovation channel to economic growth. The empirical findings imply that inadequacy of innovative technology flow over the long term has a detrimental effect on national innovative capacity. Thus, the innovation-economic growth nexus needs to be complemented with a good institutional quality framework, skilled human capital and broader networking to commercialise the innovative product to ensure that the innovation activities promote economic growth.
TL;DR: In this article, Mereine Berki et al. examined the role of social capital in the alleviation of segregation and extreme poverty, and examined how notions of solidarity and integration relate to social capital.
Abstract: IntroductionSocial capital is a less concrete and measurable type of capital compared to human or physical capital. Therefore, its analysis and conscious application in development policies is yet immature. However, it is even more often seen as a missing link which is able to serve as a tool for strengthening or weakening the effects of human and physical capital and for understanding and redressing deeper structural problems (Woolcock and Narayan 2000).As a rather relevant factor in understanding the problems of marginalized populations and the frequent failure of anti-poverty policies, social capital is able to both open up spaces for social mobility and poverty alleviation and to contribute to the conservation of given social structures for generations. Although the significance of social capital concerning poverty alleviation and social mobility has been recognized in the special literature for decades (Granovetter 1973, Putnam 1993, Woolcock and Narayan 2000), this is still neglected in the Hungarian development policy (Mereine Berki et al. 2017).Despite some numerous efforts on detailed typology, social capital does not have any unified conceptual definition (Esser 2008, Csizmadia 2015). In general, social capital is understood as a non-material resource appearing as connections between individuals and formal and informal social groups, which interweaves the political and economic life of societies (Hanifan 1916, Ben -Porath 1980, Bourdieu 1986, Coleman 1998). Social capital plays an important role in the economic research and especially in strategic planning and development (Fuzer et al. 2005, Savanya 2013, Schvab et al. 2015, Schvab 2016). International development organizations (e.g. the World Bank, OECD and UN) put an outstanding emphasis on social capital in relation to international development projects (Fuzer et al. 2005). Social capital has also been becoming an even more influential concept in the Hungarian development policy planning - it is included in the Hungarian City Development Handbook (NFGM 2012), which serves as the main background document of the major Hungarian local development planning documents of Urban Development Concepts (UDP) and Integrated Urban Development Strategies (IUDS).Social capital is able to have an influence on many other forms of capital. Its neglect might lead to impolitic development interventions (Mereine Berki et al. 2017), as social capital is the key for the operability of democracy (Putnam 1995). Moreover, social capital might influence the situation of individuals, groups and settlements. It influences the opportunities of individuals to participate in development processes. It might play a role in the coming into being of formal and informal institutions and might be a key factor in different bottom-up initiatives. It might play a bridging but also a bonding role: it might encourage or set back the social integration of individuals and groups or the social cohesion in general and it can even give a new meaning to these notions (Lockwood 1964, Putnam 1995, Castel 2000, Woolcock and Narayan 2000). Therefore, social capital is extremely relevant in understanding extreme poverty and segregation. In order to examine the role of social capital in the alleviation of segregation and extreme poverty, we first examine how notions of solidarity and integration relate to the concept of social capital.The notion of "integration" frequently appears as an unquestioned and undebated goal of poverty alleviation efforts. Examples are the earlier introduced UDCs and IUDSs of major Hungarian cities, the included local antisegregation plans, and Hungarian local development policies in general (Mereine Berki et al. 2017). However, the notion of integration is by far not a simple one. Questions such as: "Why and with whom do we formulate connections?" and "What inward and outward forces keep certain communities together?", and the meaning of social integration in relation to these is by far not evident. …
TL;DR: In this paper, the authors provide a careful treatment of aggregation, and to a lesser extent, capital heterogeneity in the investment CAPM, which fits well the value, momentum, investment, and profitability premiums simultaneously, and partially explains the positive stock-investment return correlations.
Abstract: This paper provides a careful treatment of aggregation, and to a lesser extent, capital heterogeneity in the investment CAPM. Firm-level investment returns are constructed from firm-level variables, and then aggregated to the portfolio level to match with portfolio-level stock returns. Current assets form a separate production input besides physical capital. The model fits well the value, momentum, investment, and profitability premiums simultaneously, and partially explains the positive stock-investment return correlations, the procyclical and short-term dynamics of the momentum and profitability premiums, as well as the countercyclical and long-term dynamics of the value and investment premiums. However, the model fails to explain momentum crashes.
TL;DR: This article analyzed the relationship between economic growth and financial depth and showed that the relation is non-monotonic and eventually bell-shaped, and empirically assessed their results in a framework that allows to distinguish between long-run and short-run effects.
Abstract: We analyze the simplest possible model of endogenous growth to account for the role of financial development. In our setting, financial development affects productivity and determines the amount of resources subtracted to capital investment. We show that under very general assumptions, the relation between economic growth and financial depth is nonmonotonic, and eventually bell-shaped. We empirically assess our results in a framework that allows to distinguish between long-run and short-run effects. We establish a cointegrating relation and derive the long-run elasticities of per capita gross domestic product (GDP) with respect to employment, the physical capital stock, and financial depth–relying on linear as well as nonlinear models for the finance-growth nexus. We employ the results of the first step estimation to specify an error–correction model and find that there is strong evidence for a nonlinear relationship between financial depth and per capita GDP, consistently with what was predicted by our theoretical model.
TL;DR: In this article, the authors developed a general equilibrium framework to quantify the importance of intermediated capital reallocation in affecting macroeconomic fluctuations and asset returns, and showed that low productivity firms with excess capital and high productivity firms who need credit.
TL;DR: In this article, the authors assessed local livelihood assets in Kampong Phluk Community before and after the introduction of the community-based ecotourism (CBET) governance system, where it was previously under the private company management system.
TL;DR: In this paper, the authors explored how intangible capital affects the growth of ICT-intensive sectors in China by examining 29 sectors in 30 regions for the years 2003-2015 and found that the value added in ICT intensive sectors will grow faster in regions with faster development of intangible capital.
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TL;DR: McIntosh et al. as discussed by the authors used a randomized experiment to compare a workforce training program to cash transfers in Rwanda and found that the training program was successful in improving a number of core outcomes (productive hours, assets, savings, and subjective well-being).
Abstract: Author(s): McIntosh, Craig; Zeitlin, Andrew | Abstract: We use a randomized experiment to compare a workforce training program to cash transfers in Rwanda. Conducted in a sample of poor and underemployed youth, this study measures the impact of the training program not only relative to a control group but relative to the counterfactual of simply disbursing the cost of the program directly to beneficiaries. While the training program was successful in improving a number of core outcomes (productive hours, assets, savings, and subjective well-being), cost-equivalent cash transfers move all these outcomes as well as consumption, income, and wealth. In the head-to-head costing comparison cash proves superior across a number of economic outcomes, while training outperforms cash only in the production of business knowledge. We find little evidence of complementarity between human and physical capital interventions, and no signs of heterogeneity or spillover effects.
TL;DR: In this paper, the effect of transport infrastructure investments on economic growth is investigated in CPEC and the authors conclude that focusing on a good legal environment for private investors seems to be a good option for promoting growth in Pakistan.
TL;DR: In this article, the authors developed a model encompassing two major paradigms: an earlier one, emphasizing the role of integration in preventing the dissipation of knowledge, and a more recent one, stressing the importance of firm boundaries in mitigating underinvestments into relationship-specific assets in the face of contractual incompleteness.
TL;DR: In this article, the performance of time-varying capital controls on cross-border bank borrowing is studied in an open-economy, dynamic stochastic general equilibrium model with financial frictions and imperfect capital mobility.
TL;DR: In this article, the effect of intellectual capital (IC) on the financial performance (FP) of Indian banks is inspected. But, the study results are only restricted to Indian banks and the data of only 58 banks are used for drawing the inferences.
Abstract: The purpose of this paper is to inspect the effect of intellectual capital (IC) on the financial performance (FP) of Indian banks.,The study uses the data of 58 Indian banks, namely, 20 nationalised banks, 17 private Indian banks and 21 private foreign banks, for the period between 2009 and 2018. A modified value-added intellectual coefficient methodology was used for measuring the efficiency of the IC.,The efficiency of IC significantly enhances the profitability and productivity of the Indian banks. Overall, human capital is the most substantial component of IC in augmenting the profitability and productivity of the Indian banking industry. Structural capital and physical capital are vital only for improving profitability while the contribution of relational capital towards the banks’ FP is nominal. The result also shows that amongst the three categories of Indian banks, private foreign banks are most efficient in leveraging their IC.,The study results are only restricted to Indian banks and the data of only 58 banks are used for drawing the inferences.,The paper fills the void in the existing literature of IC and corporate FP by using the data set of Indian banks divided into the public sector, private Indian and private foreign banks.
TL;DR: It is suggested that agricultural ODA is necessary to accelerate agricultural investments and achieve food security and institutions particularly those designed to control corruption and strengthen rule of law, do matter for agricultural aid inflows to SSA.
TL;DR: In this article, the authors conducted an exploratory study of government support for social enterprises at the local and central government level and empirically examined the relationship between social entrepreneurship and regional economic development by using time sequential panel data collected over an eight-year period from 2007 to 2014.
Abstract: Although many discussions of regional economic development have been made to this day, the regional economic development sector is constantly looking for new models to address the many challenges of each region in a sustainable way. This study aims to empirically examine the relationship between social entrepreneurship and regional economic development, focusing on government-driven social enterprises in South Korea. I conduct an exploratory study of government support for social enterprises in South Korea at the local and central government level and empirically examine the relationship between social entrepreneurship and regional economic development by using time sequential panel data collected over an eight-year period from 2007 to 2014. Results from panel regression (fixed-effect and random-effect) models indicate that social entrepreneurship measured as the number of government-driven social enterprises has a positive relationship with regional economic development. As claimed in numerous previous studies on regional economic development, the fixed-effect regression results of this study also indicate that physical capital, human capital, knowledge capital, and entrepreneurship are all significant and important factors shaping regional economic output. The results of this study suggest a new direction for policy that focuses on instruments to promote social entrepreneurship. Thus, governments of each region need to make efforts to promote job creation in social enterprises because they possess the ability to efficiently respond to the immediate needs of local social enterprises. These government-driven social enterprises can contribute to regional economic development through creating new jobs in South Korea.
TL;DR: In this article, the authors explore the potential food and security contribution of inclusive agribusiness in Makueni county, Kenya, based on a mixed method research approach, and explore the extent to which these are addressed by such purported pro-poor approach.
Abstract: Food and nutrition security remain at the top of development priorities in low income countries. This is especially the case for smallholder farmers who derive their livelihood from agriculture yet are often the most deprived. Inclusive agribusinesses have been championed as a key strategy to address local constraints that limit smallholders’ participation in regional and global value chains, thereby enhancing their livelihood, and food and nutrition security, accordingly. In this paper, based on a mixed method research approach, we explore the potential food and security contribution of inclusive agribusiness in Makueni county, Kenya. We focus on the smallholders’ constraints and needs, exploring the extent to which these are addressed by such purported pro-poor approach. First, using independent sample t-tests and a probit regression model, we explore who are able to participate in an ongoing intervention. We compare how participants and non-participants differ in terms of key socio-economic characteristics and establish which of these attributes are associated with successful integration into the business. Second, we again use independent sample t-tests to determine how the participants and non-participants compare in terms of their food and nutrition security. The household food and nutrition security is assessed with the conventional measurement tools: the household food insecurity access scale and the household food dietary diversity score. We find that participation in the inclusive agribusiness favors smallholder households with relatively higher production capacity in terms of better physical capital (land and number of mango trees, financial capital), access to loans, and human capital (age, education, and family size). Following income improvement, the participants’ household food security situation is significantly better than for non-participants. However, participation does not improve household dietary diversity, implying that improvement in income does not necessarily lead to better household nutrition security. To address the limitations of inclusive agribusiness, we propose policymakers and development actors to critically explore the contextual background prior to intervention design and implementation, and accordingly devise a broader approach for more inclusivity of the very poor and marginalized, and better food and nutrition security outcomes as a result. Given that not every smallholder could benefit from inclusive agribusiness for their food needs due to resource scarcity, alternative livelihood supports, including social protection programs and safety net plans, should be considered.
TL;DR: In this article, the role of public and private capital stock in the energy intensity of 21 Latin American and Caribbean (LAC) countries from 1970 to 2014 was analyzed based on three methodologies, namely, the panel autoregressive distributed lag (P-ARDL) model; the log t regression test method and the club clustering algorithm, and 3) the ordered-logit regression model.