Economies

25 pages, 1607 KiB

Open AccessArticle

An Empirical Investigation of Foreign Financial Assistance Inflows and Its Fungibility Analyses: Evidence from Bangladesh

by Muntasir Murshed

Economies 2019, 7(3), 95; https://doi.org/10.3390/economies7030095 - 16 Sep 2019

Cited by 11 | Viewed by 5858

Abstract

The external financing of fiscal deficit is key to bridging public revenue shortfalls within developing economies. However, the public expenditure responses to the incoming foreign financial assistances, as documented in the existing literature, depict ambiguity with respect to the nature of the assistances. [...] Read more.

The external financing of fiscal deficit is key to bridging public revenue shortfalls within developing economies. However, the public expenditure responses to the incoming foreign financial assistances, as documented in the existing literature, depict ambiguity with respect to the nature of the assistances. Against this milieu, this paper attempts to perform a comprehensive analysis of the dynamics adhering to the foreign financial inflows–government expenditure nexus in Bangladesh tapping annual data from 1985 to 2017. The vector error-correction model approach to short and long-run correlations and causality analyses, variance decomposition technique, and impulse response function exercises comprise the econometric methodologies considered in this paper. In a nutshell, the results from the analyses indicate toward foreign financial inflows crowding out public investments, and reducing the tax and non-tax efforts of the government, while diminishing the amount of local public borrowings in Bangladesh. Conversely, financial assistances in the form of concessional loans and those originating from multilateral sources are found to enhance government expenditure, while the foreign aids intended for the health sector are found to be fungible in nature. Thus, these contrasting findings are expected to generate crucial policy implications with regard to structuring appropriate public policies. Full article

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14 pages, 409 KiB

Open AccessArticle

How Domestic Firms Benefit from the Presence of Multinational Enterprises: Evidence from Indonesia and Philippines

by Joshua Akinlolu Olayinka and Sirinuch Loykulnanta

Economies 2019, 7(3), 94; https://doi.org/10.3390/economies7030094 - 16 Sep 2019

Cited by 2 | Viewed by 5418

Abstract

Incentives are provided to attract multinational enterprises (MNEs) to host countries, with the expectation that their technology will spread to domestic firms. The purpose of this study is to examine how domestic firms benefit from the spillover of technology from MNEs. Using balanced [...] Read more.

Incentives are provided to attract multinational enterprises (MNEs) to host countries, with the expectation that their technology will spread to domestic firms. The purpose of this study is to examine how domestic firms benefit from the spillover of technology from MNEs. Using balanced panel data obtained from the World Bank Enterprise Survey, this study examined the impact of technology spillover through three channels: demonstration, competition, and worker mobility on productivity of domestic firms in Indonesia and Philippines. This study also explored the importance of domestic firms’ absorptive capacity in capturing benefits from the three spillover channels. The Cobb–Douglas production model was used as the basis for the estimation model. A fixed-effect model for panel data analysis was used to analyze the data. The empirical outcome of this study revealed that worker mobility is the most viable channel of spillover in the two countries. It also showed that firms with high absorptive capacity were found to benefit from all the channels of spillover in both countries, while the firms with low absorptive capacity benefit differently in the two countries. Thus, this study validates the need for domestic firms to develop absorptive capacity in order to benefit from the technology spillover from MNEs. Full article

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23 pages, 411 KiB

Open AccessArticle

A Nonparametric Evaluation of the Optimality of German Export and Import Growth Forecasts under Flexible Loss

by Christoph Behrens

Economies 2019, 7(3), 93; https://doi.org/10.3390/economies7030093 - 09 Sep 2019

Cited by 3 | Viewed by 4481

Abstract

This study contributes to research on the nonparametric evaluation of German trade forecasts. To this end, I compute random classification and regression forests to analyze the optimality of annual German export and import growth forecasts from 1970 to 2017. A forecast is considered [...] Read more.

This study contributes to research on the nonparametric evaluation of German trade forecasts. To this end, I compute random classification and regression forests to analyze the optimality of annual German export and import growth forecasts from 1970 to 2017. A forecast is considered as optimal if a set of predictors, which models the information set of a forecaster at the time of forecast formation, has no explanatory power for the corresponding (sign of the) forecast error. I analyze trade forecasts of four major German economic research institutes, a collaboration of German economic research institutes, and one international forecaster. For trade forecasts with a horizon of half-a-year, I cannot reject forecast optimality for all but one forecaster. In the case of a forecast horizon of one year, forecast optimality is rejected in more cases if the underlying loss function is assumed to be quadratic. Allowing for a flexible loss function results in more favorable assessment of forecast optimality. Full article

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21 pages, 482 KiB

Open AccessArticle

Value Premium and Technical Analysis: Evidence from the China Stock Market

by Keith S. K. Lam, Liang Dong and Bo Yu

Economies 2019, 7(3), 92; https://doi.org/10.3390/economies7030092 - 09 Sep 2019

Cited by 4 | Viewed by 5336

Abstract

We find value premium in the Chinese stock market using a conventional buy-and-hold approach which longs the portfolio with the highest BM ratio and shorts the one with the lowest BM ratio. Based on the finding, we test a new strategy by combining [...] Read more.

We find value premium in the Chinese stock market using a conventional buy-and-hold approach which longs the portfolio with the highest BM ratio and shorts the one with the lowest BM ratio. Based on the finding, we test a new strategy by combining the value premium effect and technical analysis. During the sample period (1995 to 2015), we trade the objective portfolio or risk-free asset according to the moving average timing signals, and we find excess return from such a zero-cost trading strategy. We perform various robustness tests and find that the excess returns remain significantly positive after adjusting for risks (on three factor models) and transaction costs. In general, we find that the combined trading strategy can generate significant positive risk-adjusted returns after the transaction costs. Full article

(This article belongs to the Special Issue Efficiency and Anomalies in Stock Markets)

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23 pages, 2445 KiB

Open AccessArticle

A Review of the Main Issues on the Loan Contracts: Asymmetric Information, Poor Transparency, and Hidden Costs

by Francesco Rundo and Agatino Luigi Di Stallo

Economies 2019, 7(3), 91; https://doi.org/10.3390/economies7030091 - 04 Sep 2019

Cited by 1 | Viewed by 5361

Abstract

The well-known subprime mortgage crisis, which began to manifest in early 2007, since when the effects of the speculative bubble begin to become evident from the increase in default rates in residential mortgages, has triggered a global crisis that has pushed various legislations [...] Read more.

The well-known subprime mortgage crisis, which began to manifest in early 2007, since when the effects of the speculative bubble begin to become evident from the increase in default rates in residential mortgages, has triggered a global crisis that has pushed various legislations over time to implement a series of financial reforms with the specific objective of avoiding that similar phenomena could be repeated over time. The ability to repay a loan is strongly influenced by the amortization algorithm that the bank has decided to adopt. This appears even more evident in variable interest rate loans since, as the economic conditions of the indexation parameter change, the definition of the loan balance and the related portion of interest will be decisive in relation to the borrower’s ability to repay the loaned capital. A study of the main amortization algorithms and the related descriptions in the bank contracts will allow us to show which are the main issues due to an information asymmetry that, unfortunately, characterizes this type of contract and would seem to be one of the main reasons that lie at the root of the aforementioned crisis of subprime mortgages in the USA. Moreover, the authors will provide a clear analysis of the financial indicators usually reported in loan contracts and how often these indications are insufficient to characterize the actual cost of the loan. Furthermore, by highlighting the discretionary choice that banks often obtain following the contractual loan schemes commonly offered to retail and corporate clients, we will show how this often translates into greater cost to the borrower. Finally, we will propose two possible solutions to the problems highlighted, thus allowing us to reduce this information gap, which unfortunately translates into greater costs for customers with the associated increase in default rates, or the so-called nonperforming loan (NPLs) contracts. Therefore, the objective of this contribution is to show which are the most critical aspects of the bank contracts related to contractual transparency and to the presence or otherwise of hidden costs, i.e., not expressly shown in the contract. Specifically, we refer to the loan contracts issued in Italy both with reference to the local banking legislation and to the European one to which Italy must often refer. Full article

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13 pages, 5011 KiB

Open AccessArticle

CPEC’s Utility and Concerns under OBOR Initiative: A Pakistani Industrial Perspective

by Ghulam Abbas, Zhiming Liu, Shahbaz Hassan Wasti, Uzma Munir and Muhammad Abbas

Economies 2019, 7(3), 90; https://doi.org/10.3390/economies7030090 - 04 Sep 2019

Cited by 8 | Viewed by 9595

Abstract

This study emphasizes the utility and concerns of China Pakistan Economic Corridor (CPEC) on various sectors of Pakistan’s economy through the lens of real stakeholders. Specifically, this study focuses on three aspects: the beneficiary of CPEC; CPEC’s effects on employment, GDP, foreign direct [...] Read more.

This study emphasizes the utility and concerns of China Pakistan Economic Corridor (CPEC) on various sectors of Pakistan’s economy through the lens of real stakeholders. Specifically, this study focuses on three aspects: the beneficiary of CPEC; CPEC’s effects on employment, GDP, foreign direct investment and personal income in Pakistan; and the concerns regarding Pakistan’s sovereignty. A qualitative research approach was adopted to explore the objectives of the study. To analyze these aspect, in-depth interviews from different Pakistan’s business community are conducted. Our study finds that CPEC will not only beneficial for both Pakistan and China, but also for other neighbouring countries in the region. To validate these findings, interviewee’s data is analyzed in the light of semantic analysis approach. Our study illustrates that, the development along the corridor will produce employment opportunities that will raise the income level of a common person of Pakistan, and the industrial growth in Pakistan through CPEC will have a positive effect on the country’s GDP. Our study also concludes that CPEC doesn’t pose any threat to Pakistan’s sovereignty. The stakeholders of CPEC are concerned over the intentions of Pakistan government; that need to be clarified. This research study also suggests the maximum benefits out of this mega venture. Full article

(This article belongs to the Special Issue Industrial policy for growth)

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17 pages, 433 KiB

Open AccessArticle

The Perceived Impact of Public Sector Corruption on Economic Performance of Micro, Small, and Medium Enterprises in a Developing Country

by Eugene E. Ezebilo, Francis Odhuno and Philip Kavan

Economies 2019, 7(3), 89; https://doi.org/10.3390/economies7030089 - 27 Aug 2019

Cited by 9 | Viewed by 7206

Abstract

Micro, small, and medium enterprises (MSMEs) contribute to the economic development of most developing countries. However, the economic performance of the MSMEs is often restricted by several obstacles. This paper reports on a study of the impacts of public sector corruption on employment [...] Read more.

Micro, small, and medium enterprises (MSMEs) contribute to the economic development of most developing countries. However, the economic performance of the MSMEs is often restricted by several obstacles. This paper reports on a study of the impacts of public sector corruption on employment growth in MSMEs, as perceived by their managers/owners. The data originated from a nationwide survey that involved MSMEs managers/owners in Papua New Guinea (PNG) that were selected by a stratified random sampling technic. The data was analyzed using a two-stage least squares (2SLS) regression model. The results show that MSME managers/owners perceive that corruption in the public sector is generally linked to an increase in employment growth in their firms. Medium-size enterprises benefit most from corruption in the public sector, whereas small-size firms appear not to benefit. The findings indicate that other than corruption, there might be failures in the public institutions that are hampering the competitiveness, innovations and efficiency in MSMEs. Corrupt practices can precipitate the loss of revenue that would have accrued to the government from tax that could be used to provide facilities required by the public institutions. Corruption in the public institutions of developing countries such as PNG can be tackled by implementing strategies that promote zero-tolerance for corruption. These include promoting public awareness of the cost of corruption to the country’s economy, improvement in the quality of governance, and expanding the capacity of government agencies for effective and efficient service delivery. Increasing the penalty for engaging in corrupt practices could also be considered, while people who engage in practices that discourage corruption should be rewarded. The findings contribute to a potential strategy that could be used to promote ease of doing business in a country by considering the obstacles that MSMEs face. Full article

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14 pages, 513 KiB

Open AccessArticle

Self-Employment in Times of Crisis: The Case of the Spanish Financial Crisis

by Sergio A. Contreras

Economies 2019, 7(3), 88; https://doi.org/10.3390/economies7030088 - 27 Aug 2019

Cited by 1 | Viewed by 4564

Abstract

While some researchers have suggested that the self-employment (SE) sector is a haven during a financial crisis, others believe that SE is not necessarily the desired outcome, but an indicator that the labor market is tightening for some groups. Few researchers have compared [...] Read more.

While some researchers have suggested that the self-employment (SE) sector is a haven during a financial crisis, others believe that SE is not necessarily the desired outcome, but an indicator that the labor market is tightening for some groups. Few researchers have compared the SE sector before and after the occurrence of a significant financial crisis, especially in developed countries. This paper analyzes the determinants of entry into self-employment during the 2008 Spanish Crisis. Using data from the Encuesta de Presupuesto Familiar (EPF), results show that although the rate of SE did not experience a significant change during this time, the crisis affected people differently based on gender, with females being more affected than males. Results also suggest differences between Comunidades Autonomas in how the self-employment sector behaved during the crisis. Full article

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16 pages, 1044 KiB

Open AccessArticle

Can International Students in China Affect Chinese OFDI—Empirical Analysis Based on Provincial Panel Data

by Shaoming Chen, Yuheng Lin, Xinyi Zhu and Ahsan Akbar

Economies 2019, 7(3), 87; https://doi.org/10.3390/economies7030087 - 27 Aug 2019

Cited by 6 | Viewed by 4884

Abstract

The present study employs panel data of 29 provinces and municipalities in mainland China from 2003 to 2016 to empirically investigate the influence of international students on China’s outward FDI. The results show that international students in China can significantly promote outward FDI [...] Read more.

The present study employs panel data of 29 provinces and municipalities in mainland China from 2003 to 2016 to empirically investigate the influence of international students on China’s outward FDI. The results show that international students in China can significantly promote outward FDI in various Chinese provinces. Moreover, we observe a substitution effect with export scale and wage level, that is, attracting international students can offset the negative impact of insufficient export scale and low wages on regional OFDI (outward foreign direct investment). From a regional perspective, the growth in international students’ inflows in China has a significant positive impact on OFDI of provinces along “the 21st Century Maritime Silk Road”, but has no significant impact on the provinces along “the Silk Road Economic Belt”. The above conclusions not only elaborate the regional distribution mechanism of OFDI in China, but also provide a reference for each province to formulate more favorable policies to attract foreign talent to effectively implement the strategy of “going global”. Full article

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17 pages, 5345 KiB

Open AccessArticle

Public Transit Ridership and Car-Oriented Cities: The Case of the Dallas Region

by Ahmed Daqrouq and Ardeshir Anjomani

Economies 2019, 7(3), 86; https://doi.org/10.3390/economies7030086 - 27 Aug 2019

Cited by 1 | Viewed by 6478

Abstract

U.S. cities have invested large amounts of sums on public transit and urban rail in the last few decades, but the transit usage in most of these car-oriented cities is very low, and previous efforts to increase ridership have been mostly fruitless. This [...] Read more.

U.S. cities have invested large amounts of sums on public transit and urban rail in the last few decades, but the transit usage in most of these car-oriented cities is very low, and previous efforts to increase ridership have been mostly fruitless. This research examines the factors affecting transit ridership in a large car-oriented metropolitan setting and uses the Dallas region in the United States as a case for the study to identify factors that could help in increasing ridership. Most previous studies of transit ridership have not included many of the variables thought to influence transit ridership. Therefore, the disparities among the findings of empirical research completed to date point to the necessity for further study. This study addresses these shortcomings by exploring multiple factors, measuring population, technology, geography, and socioeconomic characteristics. Full article

(This article belongs to the Special Issue Selected Papers from 2019 IAC-MEM/IAC-MEBM Conferences)

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20 pages, 299 KiB

Open AccessArticle

Assessment of Economic Security of Households Based on a Scenario Analysis

by Marek Kośny and Maria Piotrowska

Economies 2019, 7(3), 85; https://doi.org/10.3390/economies7030085 - 26 Aug 2019

Cited by 4 | Viewed by 6180

Abstract

The article proposes a method to assess the level of economic security, based on the analysis of scenarios of future events. These scenarios cover realistically possible combinations of future events, both positive and negative, allowing for an assessment of their financial implications. The [...] Read more.

The article proposes a method to assess the level of economic security, based on the analysis of scenarios of future events. These scenarios cover realistically possible combinations of future events, both positive and negative, allowing for an assessment of their financial implications. The empirical part of the paper contains the results of applying the proposed method to the Polish data. In the scenarios considered, changes in the situation of individuals in the labour market and changes in the level of income and expenditure are taken into account. Full article

24 pages, 513 KiB

Open AccessArticle

Welfare Impact of Globalization in Developing Countries: Examining the Mediating Role of Human Capital

by Kehinde Oluseyi Olagunju, Adebayo Isaiah Ogunniyi, Kunle Francis Oguntegbe, Ibrahim Oluwole Raji and Kolawole Ogundari

Economies 2019, 7(3), 84; https://doi.org/10.3390/economies7030084 - 21 Aug 2019

Cited by 13 | Viewed by 17669

Abstract

Despite remarkable progress in the fight against poverty during the past few decades, the proportion of the poor living in developing countries is still on the high side. Many countries have promoted integration as an important development strategy; however, its impact on welfare [...] Read more.

Despite remarkable progress in the fight against poverty during the past few decades, the proportion of the poor living in developing countries is still on the high side. Many countries have promoted integration as an important development strategy; however, its impact on welfare of the poor is still unclear. In this study, we examine the roles of education and health dimensions of human capital in globalization and its impact on the poverty gap and the child mortality rate using cross-country panel data covering 110 developing countries between 1970 and 2015. We use a model based on system generalized method of moments (SGMM) to control for unobserved heterogeneity and potential endogeneity of the explanatory variables. The empirical results reveal that globalization reduces poverty gap and child mortality rate, and that an increase in the stock of human capital in developing economies improves welfare outcomes. The study also finds that human capital strengthens the negative impact of globalization on poverty gap and child mortality rate. For example, should enrollment in secondary school in Nigeria (in 2013) be increased from 39.2% to 61.6%, on average, it could translate into 2508 fewer under-five child deaths. We recommend that interconnectedness and promotion of human capital development should constitute a fundamental component of policy mix targeted at enhancing reduction of poverty and child mortality rate in developing countries. Full article

(This article belongs to the Special Issue Growth, Global Poverty Reduction and Income Distribution)

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17 pages, 1092 KiB

Open AccessArticle

Unemployment and Growth in the Tourism Sector in Mexico: Revisiting the Growth-Rate Version of Okun’s Law

by Fernando Sánchez López

Economies 2019, 7(3), 83; https://doi.org/10.3390/economies7030083 - 20 Aug 2019

Cited by 9 | Viewed by 12080

Abstract

In this paper, we analyze, by means of the difference version of Okun’s law, the relationship between tourism sector growth and unemployment in Mexico during the period 2000Q2–2018Q4. The results show that tourism growth is a palliative for unemployment, whereas unemployment reduces the [...] Read more.

In this paper, we analyze, by means of the difference version of Okun’s law, the relationship between tourism sector growth and unemployment in Mexico during the period 2000Q2–2018Q4. The results show that tourism growth is a palliative for unemployment, whereas unemployment reduces the growth of the tourism sector. The results also show that the relationship between the mentioned variables becomes stronger during an economic crisis and weaker during expansion periods. Full article

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20 pages, 1118 KiB

Open AccessArticle

A Comparison on Leading Methodologies for Bankruptcy Prediction: The Case of the Construction Sector in Lithuania

by Gintare Giriūniene, Lukas Giriūnas, Mangirdas Morkunas and Laura Brucaite

Economies 2019, 7(3), 82; https://doi.org/10.3390/economies7030082 - 17 Aug 2019

Cited by 9 | Viewed by 6254

Abstract

Different economic environments differ in their characteristics; this prevents the usage of the same bankruptcy prediction models under different conditions. Objectively, the abundance of bankruptcy prediction models gives rise to the idea that these models are not in compliance with the changing business [...] Read more.

Different economic environments differ in their characteristics; this prevents the usage of the same bankruptcy prediction models under different conditions. Objectively, the abundance of bankruptcy prediction models gives rise to the idea that these models are not in compliance with the changing business conditions in the market and do not meet the increasing complexity of business tasks. The purpose of this study is to assess the suitability of existing bankruptcy prediction models and the possibilities to increase the effectiveness of their application. In order to analyze theoretical aspects of the application of bankruptcy forecasting models and frame the research methodology, a systemic comparative and logical analysis of the scientific literature and statistical data, graphic data representation, induction, deduction and abstraction are employed. Results of the analysis confirm research hypotheses that bankruptcy prediction models based on macroeconomic variables are effective in identifying the number of corporate bankruptcies in a country and that the application of the model created on the grounds of macroeconomic indicators together with the traditional bankruptcy prediction model can improve the reliability of bankruptcy prediction. However, it was identified that models which are not specially adapted to companies in the construction sector are also suitable for forecasting their bankruptcies. Full article

(This article belongs to the Special Issue Computational Macroeconomics)

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24 pages, 1580 KiB

Open AccessArticle

Financial Stability Index for the Financial Sector of Pakistan

by Sadia Babar, Rashid Latief, Sumaira Ashraf and Sania Nawaz

Economies 2019, 7(3), 81; https://doi.org/10.3390/economies7030081 - 13 Aug 2019

Cited by 12 | Viewed by 9913

Abstract

This study aims to develop a financial stability index for the Pakistani financial sector by using the financial reports for the period of 2001–2011. Specifically, we constructed three different classes of indices in this study based on a variance-equal weighted approach, a linear [...] Read more.

This study aims to develop a financial stability index for the Pakistani financial sector by using the financial reports for the period of 2001–2011. Specifically, we constructed three different classes of indices in this study based on a variance-equal weighted approach, a linear probability approach, and a logistic approach. We also assessed the prediction accuracy of the financial stability index. All indices indicated that profitability, liquid liability to the liquid asset, non-performing loan, uncovered liabilities, interest spread and inter-fund to liquid liabilities variables contribute significantly to the determination of financial stress of commercial banks. We also compared the results of indices computed with different methodologies—among them was the index constructed by employing coefficients of the logistic model and which performed outstandingly in predicting distressed and non-distressed banks. Moreover, the findings of this study suggest that in regard to return on assets and return on equity, when employed in a stepwise manner for developing the financial stability index, the results are similar in the sense that both profitability indicators have the same behavior. Finally, we conclude that the financial stability indices developed in this study could help decision makers to detect and avoid instability in the future. Full article

(This article belongs to the Special Issue Macroeconomics and Monetary Policy)

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23 pages, 748 KiB

Open AccessArticle

An Empirical Study on the Determinants of an Investor’s Decision in Unit Trust Investment

by Sanmugam Annamalah, Murali Raman, Govindan Marthandan and Aravindan Kalisri Logeswaran

Economies 2019, 7(3), 80; https://doi.org/10.3390/economies7030080 - 06 Aug 2019

Cited by 11 | Viewed by 9856

Abstract

Unit trust is a convenient way of investing and a sensible way to build one’s wealth in the medium term and subsequently in the long-term. Investment specialists will manage the investments and spread the risks through careful diversification. The basic nature of the [...] Read more.

Unit trust is a convenient way of investing and a sensible way to build one’s wealth in the medium term and subsequently in the long-term. Investment specialists will manage the investments and spread the risks through careful diversification. The basic nature of the unit trust is that it carries a low-level of risks and accordingly determines a lower level of returns compared to other financial instruments. There is a lack of research that empirically investigates the factors that influence an investor’s decision in unit trust investment, particularly in a Malaysian setting. The purpose of this study is to analyse the factors that influence an investor’s investment decision in purchasing a unit trust. This paper aims to narrow this research gap, whereby financial status, risk taking behaviour, investment revenue and related information are hypothesized to exert statistically significant influences on the investor’s decision in unit trust investment. The empirical study uses a quantitative research approach whereby survey data have been sampled from 202 participants using a convenient sampling technique. This research is cross-sectional and uses primary data for analysis. Data analysis has been carried out using multiple regression analysis. The empirical research finds that financial status, risk taking behaviour, and sources of information significantly influence the investors’ investment behaviours in unit trusts. However, there was not enough evidence to support the claims that investment return and revenue have a statistical relationship to the investors investment behaviours regarding unit trusts. The findings from this research will have huge implications for investors and for financial institutions. This paper helps fund managers and brokers to understand the behaviours of an individual investor in response to a unit trust. On the other hand, this helps them to better target their customers, and persuade customers to make their investments in a unit trust effectively and efficiently, thereby helping them to manage their financial wealth with less risk but better future prospects. Full article

(This article belongs to the Special Issue Real Estate and Finance)

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14 pages, 256 KiB

Open AccessArticle

Effect of Economic Integration on Agricultural Export Performance in Selected West African Countries

by Olatunji Abdul Shobande

Economies 2019, 7(3), 79; https://doi.org/10.3390/economies7030079 - 06 Aug 2019

Cited by 11 | Viewed by 7519

Abstract

The paper investigates the effect of economic integration on agricultural export performance in West African economies using the gravity model of bilateral trade on the annual time series data straddling the period 1970 to 2016. The empirical evidence is based on the pooled [...] Read more.

The paper investigates the effect of economic integration on agricultural export performance in West African economies using the gravity model of bilateral trade on the annual time series data straddling the period 1970 to 2016. The empirical evidence is based on the pooled OLS and fixed effects estimator. We find that economic integration, as measured by trade openness, is a remarkably strong predictor of export performance in the region. We also examine the effect of geographical distance measured by effective nominal exchange rates and we find it has a negative effect on agricultural export performance. The paper recommends the adoption of a common currency to help mitigate exchange rate negativity that serves as resistance to trade in the region. Likewise, proactive agricultural research, extension and market driven strategies are strongly advocated for driven competition and economic efficiency within the regional agricultural sector. Full article

(This article belongs to the Special Issue Innovation and Socioeconomic Development)

20 pages, 868 KiB

Open AccessArticle

The Evolution of the Key Sectors in the Philippine Economy Using an AHP-Based Sector Prioritization Index

by Daryn Joy Go, Michael Angelo Promentilla, Kathleen Aviso and Krista Danielle Yu

Economies 2019, 7(3), 78; https://doi.org/10.3390/economies7030078 - 06 Aug 2019

Cited by 3 | Viewed by 7056

Abstract

Economic sectors play a vital role in ensuring that government’s goals are achieved. This study analyzes the evolution of the structure and key sectors of an economy through the use of a sector prioritization index. This methodology integrates input-output analysis and analytic hierarchy [...] Read more.

Economic sectors play a vital role in ensuring that government’s goals are achieved. This study analyzes the evolution of the structure and key sectors of an economy through the use of a sector prioritization index. This methodology integrates input-output analysis and analytic hierarchy process to determine the structural changes experienced by the economy, while accounting for the changes in the government’s priorities and concerns over time. Using the case of the Philippines from 1969 to 2012, this study shows a time-series analysis of the transformation that the economy underwent alongside with the government’s prioritization mechanism. We found that the manufacturing sector had consistently received high-priority rankings, while the agriculture sector had recently moved from a high- to mid-priority ranking, indicating the country’s shift towards a more industry-driven economy. These findings were supported by the private services and trade sectors’ high-priority rankings towards the latter half of the time period. Overall, our methodology was able to identify key sectors that reflect the country’s economic and political situation across different eras. Full article

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25 pages, 310 KiB

Open AccessArticle

A New Approach to Measuring Tax Effort

by Basil Dalamagas, Panagiotis Palaios and Stefanos Tantos

Economies 2019, 7(3), 77; https://doi.org/10.3390/economies7030077 - 05 Aug 2019

Cited by 4 | Viewed by 6209

Abstract

This paper attempts to extend the theoretical and empirical methodology employed in previous literature, by proposing a utility maximization process to estimate the optimal tax revenue from a sample of 30 countries. It is shown that an optimal tax system is defined solely [...] Read more.

This paper attempts to extend the theoretical and empirical methodology employed in previous literature, by proposing a utility maximization process to estimate the optimal tax revenue from a sample of 30 countries. It is shown that an optimal tax system is defined solely by two crucial determining factors: The productive capacity of the country (GDP) and consumers’ preferences (consumption spending). All the other variables can be disregarded, as macroeconomic determinants (GDP, consumption) tend to capture the impact of all the remaining factors on tax revenue. It is also shown that our utility maximization method generates tax-effort indices which do not differ significantly from those of IMF and World Bank studies. The actual tax burden for most of the sample countries is shown to be below its optimal level. As expected, the tax-effort performance of each of the sample countries appears to be affected by the variety of approaches employed throughout the text. Full article

22 pages, 707 KiB

Open AccessArticle

The Effects of the Chinese Imports on Brazilian Manufacturing Workers

by Lourenço S. Paz and Kul Prasad Kapri

Economies 2019, 7(3), 76; https://doi.org/10.3390/economies7030076 - 02 Aug 2019

Cited by 4 | Viewed by 5427

Abstract

This study examines the impacts of imports from China and from the Rest of the World (ROW) on the wages of Brazilian manufacturing workers during 2000–2012. In this period, import penetration in Brazil grew by 25 percent, and the Chinese share of it [...] Read more.

This study examines the impacts of imports from China and from the Rest of the World (ROW) on the wages of Brazilian manufacturing workers during 2000–2012. In this period, import penetration in Brazil grew by 25 percent, and the Chinese share of it increased from 3 to 20 percent. Using household survey data that encompass both formal and informal workers, we find that imports from China and from the ROW had different effects on manufacturing skilled and unskilled workers’ wages. Both the skilled and unskilled workers were negatively affected by an increase in the Chinese import penetration of intermediate inputs. For skilled workers, the ROW import penetration effect was negative for labor-intensive industries and positive for the other industries, while the Chinese import penetration had a positive effect on skilled workers’ wages. For the unskilled workers, we find that those in unskilled-labor intensive industries experienced positive impacts from both China and ROW import penetrations, whereas larger import penetrations reduced the wages for unskilled workers in the other industries. Full article

(This article belongs to the Special Issue International Trade and Its Intersection with Development, Labor, and Public Economics)

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13 pages, 257 KiB

Open AccessArticle

Gender, Intra-Household Discrimination and Cash Transfer Schemes: The Case of Indian Punjab

by Nadia Singh

Economies 2019, 7(3), 75; https://doi.org/10.3390/economies7030075 - 19 Jul 2019

Cited by 3 | Viewed by 5138

Abstract

For many years, the Punjab province of India has had the dubious distinction of having the worst sex ratio among all other states of India. In recent years, both the child sex ratio and the overall sex ratio has shown a marked improvement [...] Read more.

For many years, the Punjab province of India has had the dubious distinction of having the worst sex ratio among all other states of India. In recent years, both the child sex ratio and the overall sex ratio has shown a marked improvement in the state. This paper analyses whether the improvement in sex ratios has narrowed down gender discrimination against the girl child in Punjab. This paper examines the intra-household gender differences in indicators of nutrition and well-being by employing logistic regression analysis on the latest available data from the National Family Health Survey (NFHS) for the year 2015–2016. It also evaluates the cash transfer schemes currently being implemented in Punjab for the welfare of the girl child and analyses their relative efficacy. The key results from the study reveal that gender continues to have a significant impact on indicators of child well-being and nutrition such as the average duration of breastfeeding and intra-household food allocation. The paper also finds that cash transfer schemes do not have a statistically significant impact on indicators of child malnutrition in the state. Full article

(This article belongs to the Special Issue Gender and Economic Development: The South Asian Experience)

17 pages, 1487 KiB

Open AccessArticle

Lack of Global Convergence and the Formation of Multiple Welfare Clubs across Countries: An Unsupervised Machine Learning Approach

by Carlos Mendez

Economies 2019, 7(3), 74; https://doi.org/10.3390/economies7030074 - 17 Jul 2019

Cited by 3 | Viewed by 5791

Abstract

The cross-country convergence hypothesis is one of the central topics of long-run macroeconomics. This paper revisits this hypothesis in a context beyond GDP. It uses a novel welfare index that incorporates measures of consumption, leisure, life expectancy, and inequality. Based on a sample [...] Read more.

The cross-country convergence hypothesis is one of the central topics of long-run macroeconomics. This paper revisits this hypothesis in a context beyond GDP. It uses a novel welfare index that incorporates measures of consumption, leisure, life expectancy, and inequality. Based on a sample of 128 countries over the 1980–2007 period, the lack of global sigma and beta convergence is first documented. Next, the paper incorporates some recent developments from the unsupervised machine learning literature to evaluate the existence of local convergence. In particular, the application of a distribution-based clustering algorithm suggests the formation of three local convergence clubs. Under this classification, beta convergence is recovered for each club. However, only the core members of the richest club appear to be reducing their welfare differences in a way that is consistent with the strong notion of sigma convergence. Overall, these results re-emphasize the finding that beta convergence is necessary, but not sufficient for sigma convergence, even within convergence clubs and in a context beyond GDP. Full article

(This article belongs to the Special Issue Computational Macroeconomics)

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36 pages, 2745 KiB

Open AccessReview

Bioeconomy: Markets, Implications, and Investment Opportunities

by Manfred Kircher

Economies 2019, 7(3), 73; https://doi.org/10.3390/economies7030073 - 12 Jul 2019

Cited by 27 | Viewed by 11853

Abstract

In order to achieve the objectives of the Paris Climate Change Agreement, the conversion of our economy, which is still dominated by fossil carbon, to the bioeconomy model must be completed by 2050. This requires a shift from oil, gas and coal to [...] Read more.

In order to achieve the objectives of the Paris Climate Change Agreement, the conversion of our economy, which is still dominated by fossil carbon, to the bioeconomy model must be completed by 2050. This requires a shift from oil, gas and coal to agricultural, forestry and marine raw materials and will affect the global processing chains for energy, fuels and chemicals. However, the land required for the production of raw materials is competing with the production of food and animal feed. In addition, future land use must better take into account planetary boundaries and the preservation of ecosystem services. In order to achieve economic, ecological and societal sustainability, the necessary measures must therefore be geared towards the UN’s sustainability goals. Against this background, the future bioeconomy will have to concentrate on the food, chemical and heavy fuel sectors. Important sub-areas are alternative animal protein for nutrition, feedstock efficiency in the processing of bio-based raw materials, and the expansion of the raw materials spectrum. This requires enormous investment in industrial facilities, the integration of newly emerging value chains and the necessary infrastructure. The annual global investment requirements for renewable energy, bio-based chemicals and fuels, and ecosystem services is estimated at USD 1–2 trillion over the next three decades, equivalent to about 1.3–2.6% of global GDP. This article discusses the implications and guard rails of the bioeconomy model, as well as capital needs and possible sources. Full article

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14 pages, 1687 KiB

Open AccessArticle

Evaluation of a Population’s Migration Potential as an Important Component of Migration Policy

by Olha Ryndzak

Economies 2019, 7(3), 72; https://doi.org/10.3390/economies7030072 - 12 Jul 2019

Cited by 3 | Viewed by 4357

Abstract

Development of preventive migration state policy requires investigation of not only real but also prospective migration. This article provides the author’s methodological approach to the study of a population’s migration potential. The migration desires index (MDI), as one of the most important indicators [...] Read more.

Development of preventive migration state policy requires investigation of not only real but also prospective migration. This article provides the author’s methodological approach to the study of a population’s migration potential. The migration desires index (MDI), as one of the most important indicators of migration potential, was calculated for the unemployed urban population in Lviv, Ukraine, on the basis of the results of a monitoring sample survey (2013–2016, 2018). The MDI shows wave-like development dynamics. Generally, the share of “solid” migrants (persons who have firm plans to work abroad in the years ahead) grew from 14% in 2014 to 25% of the unemployed population in Lviv in 2018. Despite such a high level of migration desires, the respondents also showed a clear urge to be employed in Ukraine. Overall, the study results show that the improvement of employment opportunities in the national labor market and improvement of the wage system will contribute to a reduction of the level of migration potential and will thus slow the pace at which the working-age population is leaving. For those who still have a firm intention to go abroad, the state should provide an appropriate level of social and economic protection, primarily by establishing effective cooperation with countries that are most attractive for potential labor migrants. The author’s surveillance study shows that such countries are Germany, the USA, Canada, and Poland. Full article

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17 pages, 596 KiB

Open AccessArticle

The Nexus between Stock Returns of Oil Companies and Oil Price Fluctuations after Heavy Oil Upgrading: Toward Theoretical Progress

by Mojtaba Sedighi, Majid Mohammadi, Saeed Farahani Fard and Mehdi Sedighi

Economies 2019, 7(3), 71; https://doi.org/10.3390/economies7030071 - 10 Jul 2019

Cited by 8 | Viewed by 5878

Abstract

This study attempts to discover the nexus between crude oil price fluctuation after heavy oil upgrading and stock returns of petroleum companies in the U.S. Stock Exchange for the years 2008 to 2018. One of the methods of upgrading heavy crude oil is [...] Read more.

This study attempts to discover the nexus between crude oil price fluctuation after heavy oil upgrading and stock returns of petroleum companies in the U.S. Stock Exchange for the years 2008 to 2018. One of the methods of upgrading heavy crude oil is to extract asphaltene from crude oil. Considering the Asphaltene Removal (AR) as a factor in the nexus between oil price and the stock market is an innovation in the literature of energy finance. Asphaltenes cause many problems in the petroleum industry, which increases the cost of oil production and reduces the financial efficiency of oil companies. The AR is certainly one of the significant matters of the oil industry and can affect the price of oil. Therefore, changes in the price of oil can influence the price of oil company stocks. Hence, changes in stock prices will certainly affect the stock returns of oil companies. In an effort to solve this puzzle, the four financial models were employed to explore the nexus between oil price fluctuations and stock returns. The analysis of the results demonstrated that the oil price fluctuations caused by the removal of asphaltenes influence the stock returns of petroleum companies. Eventually, the theoretical hypothesis was confirmed by considering the USA as a case study. The outcomes of this investigation are a theoretical progression in areas related to the petroleum industry and the stock market that could lead to the adoption of new investment policies in the petroleum industry including investing in new procedures to manage and decrease the costs and time of the AR process, which would result in the advancement of petroleum companies. In fact, we have introduced a modern investment strategy in the oil industry aimed at reducing oil production costs, improving financial statements and increasing the stock returns of petroleum companies. Eventually, we will present new investment policies in the oil industry that can lead to economic growth and development of financial markets especially stock market, derivatives market, futures exchange, commodities exchange, as well as bond market. Full article

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22 pages, 1491 KiB

Open AccessArticle

Do Crude Oil Prices Drive the Relationship between Stock Markets of Oil-Importing and Oil-Exporting Countries?

by Manel Youssef and Khaled Mokni

Economies 2019, 7(3), 70; https://doi.org/10.3390/economies7030070 - 10 Jul 2019

Cited by 34 | Viewed by 7994

Abstract

The impact that oil market shocks have on stock markets of oil-related economies has several implications for both domestic and foreign investors. Thus, we investigate the role of the oil market in deriving the dynamic linkage between stock markets of oil-exporting and oil-importing [...] Read more.

The impact that oil market shocks have on stock markets of oil-related economies has several implications for both domestic and foreign investors. Thus, we investigate the role of the oil market in deriving the dynamic linkage between stock markets of oil-exporting and oil-importing countries. We employed a DCC-FIGARCH model to assess the dynamic relationship between these markets over the period between 2000 and 2018. Our findings report the following regularities: First, the oil-stock markets’ relationship and that between oil-importing and oil-exporting countries’ stock markets themselves is time-varying. Moreover, we note that the response of stock market returns to oil price changes in oil-importing countries changes is more pronounced than for oil-exporting countries during periods of turmoil. Second, the oil-stock dynamic correlations tend to change as a result of the origin of oil prices shocks stemming from the period of global turmoil or changes in the global business cycle. Third, oil prices significantly drive the relationship between oil-importing and oil-exporting countries’ stock markets in both high and low oil-stock correlation regimes. Full article

(This article belongs to the Special Issue International Financial Markets)

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5 pages, 179 KiB

Open AccessEditorial

Editor’s Introduction

by Franklin G. Mixon, Jr.

Economies 2019, 7(3), 69; https://doi.org/10.3390/economies7030069 - 08 Jul 2019

Viewed by 3592

Abstract

Interest in politics and the political process—topics that economists consider to be the purview of the sub-field of study known as public choice—appears to be as high as ever [...] Full article

(This article belongs to the Special Issue Public Choice)

14 pages, 858 KiB

Open AccessReview

Industry 4.0 for the Construction Industry: Review of Management Perspective

by Raihan Maskuriy, Ali Selamat, Petra Maresova, Ondrej Krejcar and Oladipo Olalekan David

Economies 2019, 7(3), 68; https://doi.org/10.3390/economies7030068 - 04 Jul 2019

Cited by 112 | Viewed by 17113

Abstract

Technology and innovations have fueled the evolution of the fourth industrial revolution (Industry 4.0). Industry 4.0 spurs growth and development through its efficiency capacity, as documented in the literature. The growth of the construction industry is a subset of the universal set of [...] Read more.

Technology and innovations have fueled the evolution of the fourth industrial revolution (Industry 4.0). Industry 4.0 spurs growth and development through its efficiency capacity, as documented in the literature. The growth of the construction industry is a subset of the universal set of the value of gross domestic product, and thus, industry 4.0 has a spillover effect on the engineering and construction industry. The aim of this paper is to map the state of Industry 4.0 in the construction industry from the point of view of manarial activities, such as investment management, project preparation, and an overall approach to the management of related activities. This study employed scoping review techniques to dissect the status quo for Industry 4.0 and the construction industry. The empirical results from the systematic and scoping review methods for the ten sampled publications revealed that information and communication technology (ICT)—Industry 4.0—has a significant positive impact on the growth of the construction industry. Therefore, construction practitioners should partner more with researchers in the ICT industry to enhance the automation of work processes and managerial activities in the engineering and construction industry. Full article

(This article belongs to the Special Issue Innovation and Socioeconomic Development)

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18 pages, 656 KiB

Open AccessArticle

The Cost of Overcoming the Zero Lower-Bound: A Welfare Analysis

by Gerhard Rösl, Franz Seitz and Karl-Heinz Tödter

Economies 2019, 7(3), 67; https://doi.org/10.3390/economies7030067 - 04 Jul 2019

Cited by 2 | Viewed by 4662

Abstract

To broaden the operational scope of monetary policy, several authors suggest cash abolition as an appropriate means of breaking through the zero lower-bound. We argue that the welfare costs of bypassing the zero lower-bound by getting rid of cash entirely are analytically equivalent [...] Read more.

To broaden the operational scope of monetary policy, several authors suggest cash abolition as an appropriate means of breaking through the zero lower-bound. We argue that the welfare costs of bypassing the zero lower-bound by getting rid of cash entirely are analytically equivalent to negative interest rates on cash holdings. Using a money-in-the-utility-function model, we measure in two ways the welfare loss consumers as money holders would be forced to bear once the zero lower-bound is broken: in terms of the amount needed to compensate consumers (compensated variation), and as excess burden (deadweight loss) imposed on the economy as a whole. We calibrated the model for the euro area and for Germany. Our findings suggest that the welfare losses of negative interest rates incurred by consumers as holders of cash and transaction balances (M3) are large and enduring, notably if implemented in the current low-interest rate environment. Full article

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25 pages, 1006 KiB

Open AccessArticle

Toward Sustainability or Efficiency: The Case of Smallholder Coffee Farmers in Vietnam

by Nguyen Hung Anh, Wolfgang Bokelmann, Do Thi Nga and Nguyen Van Minh

Economies 2019, 7(3), 66; https://doi.org/10.3390/economies7030066 - 04 Jul 2019

Cited by 18 | Viewed by 9449

Abstract

This study attempts to uncover the truth behind an increasing number of smallholder farmers participating in sustainable coffee farming in Vietnam. Using stochastic frontier and cost-benefit analysis, a sample of 316 smallholder farmers in Dak Lak was chosen to analyze the economic impacts [...] Read more.

This study attempts to uncover the truth behind an increasing number of smallholder farmers participating in sustainable coffee farming in Vietnam. Using stochastic frontier and cost-benefit analysis, a sample of 316 smallholder farmers in Dak Lak was chosen to analyze the economic impacts of sustainable and conventional coffee farming on farmers’ welfare. In addition, we conducted field observation and key informant interviews to describe several farming practices. The results highlight the fact that farmers’ decisions to participate in sustainable coffee farming are mainly driven by economic benefits. Sustainable farming is more cost-effective and profitable than conventional farming, despite the insignificant difference in production efficiency. Improvement of education, farming knowledge, and collective actions could mitigate negative effects of small-scale production for sustainable coffee farmers. Pesticide management, shade coffee encouragement, and reduction of excessive fertilization, over-irrigation, and unproductive coffee varieties are recommended for sustainable development of the sector. Full article

(This article belongs to the Special Issue Productivity and Efficiency Analysis)

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Economies, Volume 7, Issue 3 (September 2019) – 32 articles

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