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Economies
Volume 8
Issue 2
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Economies, Volume 8, Issue 2 (June 2020) – 26 articles

Cover Story (view full-size image): This study analyzes the current debate around central bank-backed digital currency (CBDC). The conclusion was that there are opposite tendencies between defenders and detractors of establishing a CBDC. However, today—considering the positions of many banking institutions on establishing (at least in the short term) a CBDC—it seems that large-scale implementation is still far off. On the contrary, the Chinese Central Bank and other banking systems seem to go against the trend of rejection and are seriously considering its implementation. Although this matter has been dealt with in the theoretical field, more pilot tests such as the one carried out by Uruguay are necessary to understand specific effects on the economy, on one hand, and acceptance of its use by the population, on the other. View this paper
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14 pages, 574 KiB  
Article
Research on Property Income Inequality Effect of Fiscal Finance
by Xiaozhun Peng and Hongyou Lu
Economies 2020, 8(2), 50; https://doi.org/10.3390/economies8020050 - 17 Jun 2020
Cited by 2 | Viewed by 3117
Abstract
“Creating conditions for more people to have property income” has become a national policy after the 17th National Congress of the Communist Party of China. Based on the micro survey data from Chinese Family Panel Studies (CFPS) in 2010, 2012, 2014, 2016 and [...] Read more.
“Creating conditions for more people to have property income” has become a national policy after the 17th National Congress of the Communist Party of China. Based on the micro survey data from Chinese Family Panel Studies (CFPS) in 2010, 2012, 2014, 2016 and the macro panel data at the provincial level, a logarithmic linear equation was built to estimate the impact of micro and macro factors on property income. Furthermore, the contribution of fiscal expenditure and financial development on property income equality can be recognized using the regression-based inequality decomposition method. This research revealed that fiscal expenditure improves residents’ property income and slightly reduces the inequality of property income distribution. With respect to financial development, it improves residents’ property income but aggravates the inequality of property income distribution. However, there is a significant difference between the different regions. In eastern and central regions, inequality of property income distribution greatly benefits from fiscal expenditure, while in northwest regions, fiscal expenditure makes property income inequality even worse. Therefore, the focus of financial sustainable development is to reduce property income inequality through the establishment of an effective government and the improvement of the rule of laws. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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23 pages, 2396 KiB  
Article
Model Selection Procedures in Bounds Test of Cointegration: Theoretical Comparison and Empirical Evidence
by Waqar Badshah and Mehmet Bulut
Economies 2020, 8(2), 49; https://doi.org/10.3390/economies8020049 - 08 Jun 2020
Cited by 7 | Viewed by 3553
Abstract
Only unstructured single-path model selection techniques, i.e., Information Criteria, are used by Bounds test of cointegration for model selection. The aim of this paper was twofold; one was to evaluate the performance of these five routinely used information criteria {Akaike Information Criterion (AIC), [...] Read more.
Only unstructured single-path model selection techniques, i.e., Information Criteria, are used by Bounds test of cointegration for model selection. The aim of this paper was twofold; one was to evaluate the performance of these five routinely used information criteria {Akaike Information Criterion (AIC), Akaike Information Criterion Corrected (AICC), Schwarz/Bayesian Information Criterion (SIC/BIC), Schwarz/Bayesian Information Criterion Corrected (SICC/BICC), and Hannan and Quinn Information Criterion (HQC)} and three structured approaches (Forward Selection, Backward Elimination, and Stepwise) by assessing their size and power properties at different sample sizes based on Monte Carlo simulations, and second was the assessment of the same based on real economic data. The second aim was achieved by the evaluation of the long-run relationship between three pairs of macroeconomic variables, i.e., Energy Consumption and GDP, Oil Price and GDP, and Broad Money and GDP for BRICS (Brazil, Russia, India, China and South Africa) countries using Bounds cointegration test. It was found that information criteria and structured procedures have the same powers for a sample size of 50 or greater. However, BICC and Stepwise are better at small sample sizes. In the light of simulation and real data results, a modified Bounds test with Stepwise model selection procedure may be used as it is strongly theoretically supported and avoids noise in the model selection process. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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15 pages, 640 KiB  
Article
Quadruple Helix Models for Sustainable Regional Innovation: Engaging and Facilitating Civil Society Participation
by Mona Roman, Henry Varga, Vladimir Cvijanovic and Alasdair Reid
Economies 2020, 8(2), 48; https://doi.org/10.3390/economies8020048 - 08 Jun 2020
Cited by 34 | Viewed by 11404
Abstract
Prior research has emphasized the importance of bringing together quadruple helix (QH) actors (academia, industry, government and civil society) to strengthen regional innovation. The QH model forms an integral part of European innovation policy, which aims to create sustainable and inclusive growth in [...] Read more.
Prior research has emphasized the importance of bringing together quadruple helix (QH) actors (academia, industry, government and civil society) to strengthen regional innovation. The QH model forms an integral part of European innovation policy, which aims to create sustainable and inclusive growth in Europe. As part of this policy, European Union (EU) regions are to design and implement research and innovation strategies for smart specialization (RIS3) through the participatory entrepreneurial discovery process (EDP). Despite the strong emphasis on the QH model, the model is still far from a well-established concept in innovation research and policy, and civil society participation in RIS3 has remained low. Our paper aims to support regional governments to engage with and facilitate the participation of civil society in a territorial EDP based on two case studies from Finland and Sweden. It contributes to the literature on regional innovation systems through identifying mechanisms to foster the QH model and suggests lessons learnt for the operationalization of the QH model as part of RIS3. Full article
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30 pages, 3308 KiB  
Article
The Impacts of China–Africa Economic Relation on Factor Productivity of African Countries
by Miao Miao, Jiang Yushi and Dinkneh Gebre Borojo
Economies 2020, 8(2), 47; https://doi.org/10.3390/economies8020047 - 04 Jun 2020
Cited by 9 | Viewed by 10974
Abstract
This study attempts to empirically examine the impacts of the China–Africa economic relationship on factor productivity. The two-step system Generalized method of moments (GMM) estimator is applied to analyze the impacts of the Africa–China economic relationship on factor productivity of 44 African countries [...] Read more.
This study attempts to empirically examine the impacts of the China–Africa economic relationship on factor productivity. The two-step system Generalized method of moments (GMM) estimator is applied to analyze the impacts of the Africa–China economic relationship on factor productivity of 44 African countries controlling Africa–China trade, Chinese foreign direct investment (FDI), and aid allocation to African countries for the periods 2003–2017. The estimation strategy controls endogeneity concerns. Another novelty of this study is calculating total factor productivity (TFP) using the regression approach and driving capital stock data. Additionally, the institutional quality index of countries is derived using principal component analysis. The findings of this study refer that the impact of the China–Africa economic relationship on the TFP of African countries is conditional to the domestic institutional quality of African countries. The results imply that the productivity embodied by the Africa–China economic relationship should be backed by the domestic adaptive capacity to use the benefit of China–Africa economic relations to excel factor productivity. Hence, the capability of African countries to benefit from the China–Africa economic relationship to enhance factor productivity should improve the institutional quality. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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21 pages, 423 KiB  
Article
State Ownership and Risk-Taking Behavior: An Empirical Approach to Get Better Profitability, Investment, and Trading Strategies for Listed Corporates in Vietnam
by Tran Thai Ha Nguyen, Massoud Moslehpour, Thi Thuy Van Vo and Wing-Keung Wong
Economies 2020, 8(2), 46; https://doi.org/10.3390/economies8020046 - 03 Jun 2020
Cited by 20 | Viewed by 5835
Abstract
Corporate risk-taking behavior and investment is a crucial factor in order to seek higher profits and a better trading strategy. Competitive advantage and innovation, while maintaining profitability and state ownership, are considered as crucial resources. Furthermore, it is essential to connect the short-term [...] Read more.
Corporate risk-taking behavior and investment is a crucial factor in order to seek higher profits and a better trading strategy. Competitive advantage and innovation, while maintaining profitability and state ownership, are considered as crucial resources. Furthermore, it is essential to connect the short-term and long-term business and investment objectives plus stakeholder’s expectations to corporate sustainability and development. This connection is especially important in the context of transforming economies and getting better trading strategies. This study estimates the relationship between state ownership, profitability, corporate risk-taking behavior, and investment in Vietnam by using Generalized Method of Moments (GMM) methods. Using the data of 501 listed non-financial corporates during the period 2007–2015 from Ho Chi Minh City and Hanoi Stock Exchanges, we find that profitability is determined as a factor to reduce corporate risk-taking acceptance caused by the chances of entrenchment. Meanwhile, the impact of state ownership on the risk appetite of corporate has a non-linear effect. In particular, state ownership reduces corporate risk-taking behavior and investment but yet increases the risk-taking behavior and investment when the state ownership rate exceeds a threshold. One the one hand, this implies that the low level of state ownership not only prevents risk-taking behavior and investment but also results in more severe agency problems, causing unsustainability due to the imbalance of interests among various stakeholders. On the other hand, a dominant role of state ownership concentration causes a boost in corporate risk-taking decision-making in investment and trading strategy, leveraging the connection of significant external resources to deal with uncertain problems. The study contributes to existing theories of corporate governance in the context of a socialist-oriented market. Full article
(This article belongs to the Special Issue Asset Pricing, Investment, and Trading Strategies)
19 pages, 674 KiB  
Article
The Role of the Academic and Political Empowerment of Women in Economic, Social and Managerial Empowerment: The Case of Saudi Arabia
by Maleeha Mohammed Zaaf Al-Qahtani, Tarek Tawfik Yousef Alkhateeb, Haider Mahmood, Manal Abdalla Zahed Abdalla and Thikkryat Jebril Obaid Talalah Qaralleh
Economies 2020, 8(2), 45; https://doi.org/10.3390/economies8020045 - 02 Jun 2020
Cited by 13 | Viewed by 7714
Abstract
Women may be considered to have hidden, unutilized potential for the economy and society, if not utilized at their full capacity, i.e., with effective educational, social and political policies. Allowing women to participate fully in an economy may contribute to the sustainable development [...] Read more.
Women may be considered to have hidden, unutilized potential for the economy and society, if not utilized at their full capacity, i.e., with effective educational, social and political policies. Allowing women to participate fully in an economy may contribute to the sustainable development of the country in question. The empowerment of women may be accelerated if women are educated for this purpose; as a result, the political authorities in Saudi Arabia have proposed a comprehensive framework to empower women. The empowerment of women is essential in the academic sector to develop educational policies for women’s capacity-building. The empowerment of women in the political process is also very important, so they can suggest appropriate policies, rules and laws that favor the empowerment of women in all sectors of the economy and society. The present research aims at testing the effects of academic and political empowerment on the economic, social and managerial empowerment of women, and opens a new horizon of debate in the practical and theoretical domain of female empowerment in Saudi Arabia. To this end, we utilized structural equation modeling due to the endogenous nature of relationships among the hypothesized variables. Perception-based data were collected on the political, academic, economic, social and managerial empowerment of women through a well-structured questionnaire. The data were collected during the period from October 2019 to January 2020 through a simple random sampling method. Then, we tested the direct effect of political empowerment, and its indirect effects through academic empowerment, on the economic, social and managerial empowerment of women. We found that political empowerment has a positive direct effect on economic and managerial empowerment, but an insignificant effect on social empowerment. Further, political empowerment has a positive direct effect on academic empowerment, which, in turn, has positive effects on economic, social and managerial female empowerment. Moreover, these indirect effects are found to be magnitudes larger than the direct effects of political empowerment. This study recommends improving the economic, social and political status of women through political and academic policies, to accelerate sustainable development. Full article
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20 pages, 1393 KiB  
Article
Empirical Measurement of Competition in the Thai Banking Industry
by Jirawan Prayoonrattana, Thanarak Laosuthi and Bundit Chaivichayachat
Economies 2020, 8(2), 44; https://doi.org/10.3390/economies8020044 - 02 Jun 2020
Cited by 7 | Viewed by 5940
Abstract
The degree of competition in the banking industry can be observed and measured by two approaches, structural and nonstructural. Based on these two approaches, there are various indicators, which are different factors and methods. This paper aims to provide calculations, determine a good [...] Read more.
The degree of competition in the banking industry can be observed and measured by two approaches, structural and nonstructural. Based on these two approaches, there are various indicators, which are different factors and methods. This paper aims to provide calculations, determine a good indicator, and assess the competitive environment of the Thai banking industry. Specifically, there are four indicators—concentration ratio, Herfindahl–Hirschman Index, Lerner Index, and Panzar–Rosse H statistic—which are widely used to examine the efficiency and effectiveness of policies in the banking industry. The findings indicate that the Lerner Index, calculated by stochastic frontier analysis, is the most reliable indicator of the banking competition environment in Thailand. It has a range of 0.36 to 0.60 and an average value of 0.40. Furthermore, during the period of study, the degree of Thai banking competition had a tendency to increase over time, which reflects an increase in allocative efficiency of resources in the banking industry. This is in accordance with the Financial Sector Master Plan of the country. However, this result probably leads to instability of the financial system. Therefore, policy-makers should carefully regulate competition policy by considering the systematic risk of the banking system at the same time. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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11 pages, 503 KiB  
Article
Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis
by Bao Ho Dinh, Hai Nguyen Phuc, Trinh Bui and Hau Nguyen
Economies 2020, 8(2), 43; https://doi.org/10.3390/economies8020043 - 01 Jun 2020
Cited by 3 | Viewed by 5386
Abstract
This study aims to assess the protection for Vietnamese agriculture under trade liberalization based on the input–output approach. From a theoretical perspective, the authors develop a general framework to estimate the effective rate of protection using an input–output table, taking into account tariffs, [...] Read more.
This study aims to assess the protection for Vietnamese agriculture under trade liberalization based on the input–output approach. From a theoretical perspective, the authors develop a general framework to estimate the effective rate of protection using an input–output table, taking into account tariffs, subsidies and value-added tax. Based on the data of 2012 and 2016, with a projection to 2020, the empirical results reveal that agricultural production, which is considered as Vietnam’s comparative advantage, is insignificantly protected. From the year 2012 to 2016, the effective rate of protection declined for primary agriculture and its supporting sectors, and would become negative by 2020. This implies that Vietnamese farmers are at a disadvantage due to the effect of trade liberalization. Furthermore, it is empirically revealed that the primary agricultural sector has a high value-added multiplier, which means a significant contribution to the domestic economy, is not protected by the government’s tax and tariff policies. Based on the study results, the authors suggest some policy recommendations to improve the situation, which are focused on the reduction of the value-added tax rate on inputs, while making industries with a high spillover effect to the domestic economy a key priority. Full article
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20 pages, 2425 KiB  
Article
Determining the Financial Inclusion Output of Banking Sector of Pakistan—Supply-Side Analysis
by Fareeha Adil and Abdul Jalil
Economies 2020, 8(2), 42; https://doi.org/10.3390/economies8020042 - 28 May 2020
Cited by 9 | Viewed by 6042
Abstract
Financial inclusion is the process of including the people who lack formal financial services. The concept of financial inclusion emerged globally in the times of millennium and is defined as the availability and usage of formal financial services. It essentially facilitates economic growth; [...] Read more.
Financial inclusion is the process of including the people who lack formal financial services. The concept of financial inclusion emerged globally in the times of millennium and is defined as the availability and usage of formal financial services. It essentially facilitates economic growth; the financially included individuals can invest in business, education, and entrepreneurship, which can pave way to poverty alleviation and economic development. In the context of Pakistan, a developing economy of South Asia, the financial landscape presents a grim picture of financial inclusion where only 16 percent of the population is financially included. Despite the current focus of policies and regulations devoted to enhancing access to finance in Pakistan from the supply side, the current state of financial inclusion is limited. Therefore, this study investigates the financial inclusion process for Pakistan from the supply side. We analyze the supply-side dimension of access by employing econometric technique of autoregressive distributive lag (ARDL) and using time series data of banking sector of Pakistan. Our empirical findings suggest that the greater the size, geographic outreach, and demographic outreach of the banks, the greater the contribution to the financial inclusion. Additionally, improvement in soft consumer loans and increase in small-sized advances reinforces the financial inclusion process. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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27 pages, 3691 KiB  
Article
Reasons Fostering or Discouraging the Implementation of Central Bank-Backed Digital Currency: A Review
by Sergio Luis Náñez Alonso, Miguel Ángel Echarte Fernández, David Sanz Bas and Jarosław Kaczmarek
Economies 2020, 8(2), 41; https://doi.org/10.3390/economies8020041 - 26 May 2020
Cited by 40 | Viewed by 13559
Abstract
This study analyses the current debate around central bank-backed digital currency (CBDC). A comparative study was carried out considering countries for and against implementing a CBDC and their reasons, looking for common causes, differences, etc. The conclusion was that there are opposite tendencies [...] Read more.
This study analyses the current debate around central bank-backed digital currency (CBDC). A comparative study was carried out considering countries for and against implementing a CBDC and their reasons, looking for common causes, differences, etc. The conclusion was that there are opposite tendencies between defenders and detractors of establishing a CBDC. However, today—and taking into account the positions of three large banking institutions (the Federal Reserve of the United States of America, the Bank of Japan and the Bank of England) on establishing (at least in the short term) a CBDC)—it seems that large-scale implementation is still far off. On the contrary, the Chinese Central Bank and banking systems of other countries that have less weight in the world, such as Uruguay, Lithuania and the Bahamas, seem to go against the trend of rejection and are seriously considering its implementation. Although this matter has been dealt with in the theoretical field, more pilot tests such as the one carried out by Uruguay are necessary in order to understand specific effects on the economy, on one hand, and on acceptance of its use by the population, on the other. Full article
(This article belongs to the Special Issue Digital Currencies: Challenges and Opportunities)
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12 pages, 918 KiB  
Article
How Does a Policymaker Rank Regional Income Distributions across Years? A Study on the Evolution of Greek Regional per Capita Income
by Angelos Liontakis
Economies 2020, 8(2), 40; https://doi.org/10.3390/economies8020040 - 25 May 2020
Cited by 2 | Viewed by 2847
Abstract
This study examines the evolution of the regional per capita income from the perspective of a policymaker at the national level. To do that, it utilizes stochastic dominance analysis by including a utility function that expresses the “regional inequalities aversion” level of the [...] Read more.
This study examines the evolution of the regional per capita income from the perspective of a policymaker at the national level. To do that, it utilizes stochastic dominance analysis by including a utility function that expresses the “regional inequalities aversion” level of the policymaker. In this way, the analysis indicates how the policymakers rank income distributions according to their primary policy objectives and more specifically, GDP growth and diminishing of income inequalities. Data refer to the per capita GDPs of the Greek prefectures during the period 2000–2017, in real terms. The estimation of certainty equivalents provides a numeric index of preference among regional income distributions according to the policy objectives mix. Results indicate that the period 2000–2017 is characterized by different patterns of regional income evolutions. Overall, there is no regional convergence from year 2000 to 2017, while the evolution of regional income does not follow a constant path. The analysis provides thoughtful insights into the way that different policy targets and preferences can affect the relevant ranking of income distributions. In a certain level of policymakers’ “regional inequalities aversion”, a balance between economic growth and diminishing of regional inequalities targets is assumed. Apart from a useful tool in economic research, this quantification approach can also be utilized in policy design for setting more appropriate policy targets, based on the preferences of policymakers at the national level. Full article
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17 pages, 333 KiB  
Article
The Growth of Private Sector and Financial Development in Saudi Arabia
by Mohammad Imdadul Haque
Economies 2020, 8(2), 39; https://doi.org/10.3390/economies8020039 - 12 May 2020
Cited by 9 | Viewed by 5749
Abstract
In an attempt to diversify itself away from the dominance of oil on its economy, Saudi Arabia needs to emphasize on the growth of its private sector. Currently, the private sector’s contribution to economic growth is meager as the oil sector dominates the [...] Read more.
In an attempt to diversify itself away from the dominance of oil on its economy, Saudi Arabia needs to emphasize on the growth of its private sector. Currently, the private sector’s contribution to economic growth is meager as the oil sector dominates the economy. This study attempts to assess the role of financial development towards the growth of the private sector. Assessing this relationship is important, as it is quite probable that the dominant oil sector attracts the financial resources, affecting the private sector adversely. Johansen’s method of cointegration is applied on the data for the period 1985–2018. The private sector’s gross domestic product has a negative relation with the supply of money, positive relation with bank credit to private sector, and no significant relationship with share market capitalization, as shown by the results of the study. In addition, the private sector’s growth has a positive and significant relationship with government expenditure, investment, and trade openness. Hence, the study recommends further strengthening of financial sector services. Besides the current trend on government expenditure, investment and trade openness should continue to enable the private sector to contribute significantly to the economic growth of the country. A previous study on the private sector’s growth and financial variables is exclusively missing, and makes this study unique. Full article
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
26 pages, 1145 KiB  
Article
Did Decentralisation Affect Citizens’ Perception of the European Union? The Impact during the Height of Decentralisation in Europe
by Vassilis Tselios and Andrés Rodríguez-Pose
Economies 2020, 8(2), 38; https://doi.org/10.3390/economies8020038 - 10 May 2020
Cited by 5 | Viewed by 4970
Abstract
The aim of this paper is to assess the extent to which different levels of decentralisation across regions of the European Union (EU) affected citizens’ perceptions about European integration over the period 1973–2002. The paper uses Eurobarometer Surveys to explore by means of [...] Read more.
The aim of this paper is to assess the extent to which different levels of decentralisation across regions of the European Union (EU) affected citizens’ perceptions about European integration over the period 1973–2002. The paper uses Eurobarometer Surveys to explore by means of multinomial logistic regressions whether decentralisation was an important factor behind the varying perceptions about Europe. Two dimensions of decentralization—political and fiscal—are considered in the analysis, alongside several compositional and contextual effects. The results of the analysis show that fiscal decentralisation was fundamental for citizens’ support for European integration, while there is limited evidence that political decentralisation played a similar role. Hence, while fiscal decentralisation may have given prominence to the economic benefits of European integration, political decentralisation was more associated with its economic costs. Taking into account that history matters, this paper raises potentially interesting insights for the design of policies aimed at promoting social cohesion. Full article
(This article belongs to the Special Issue The Relationship between Decentralisation and Economy)
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10 pages, 207 KiB  
Article
Divulgence of Additional Capital Requirements in the EU Banking Union
by Michał Kruszka and Marcin Wroński
Economies 2020, 8(2), 37; https://doi.org/10.3390/economies8020037 - 08 May 2020
Cited by 1 | Viewed by 2927
Abstract
The European Central Bank, as a supervisory authority, set additional to the European level one capital requirements known as Pillar 2 for 118 significant credit institutions. Disclosure of Pillar 2 requirements is not compulsory, although many credit institutions choose to inform about them. [...] Read more.
The European Central Bank, as a supervisory authority, set additional to the European level one capital requirements known as Pillar 2 for 118 significant credit institutions. Disclosure of Pillar 2 requirements is not compulsory, although many credit institutions choose to inform about them. We estimate a logit model to investigate if being listed on stock exchange, size, profitability and credibility have impact on the probability of divulgence. We estimate sixteen specifications of our model to compare the explanatory power of different measures of size, profitability and credibility. The legal form and the size are statistically significant in all specifications, while profitability and credibility are significant only in some of them. Full article
9 pages, 1276 KiB  
Article
Direct Effect of TC on the LME Copper Prices
by Byungkwon Lim, Hyeon Sook Kim and Jaehwan Park
Economies 2020, 8(2), 36; https://doi.org/10.3390/economies8020036 - 07 May 2020
Cited by 1 | Viewed by 5057
Abstract
The motivation of this paper is to identify the effect of treatment charge (TC) on LME (London Metal Exchange) copper prices. It is a fundamental variable as a supply side factor, because it is related to the smelting process and reflects the level [...] Read more.
The motivation of this paper is to identify the effect of treatment charge (TC) on LME (London Metal Exchange) copper prices. It is a fundamental variable as a supply side factor, because it is related to the smelting process and reflects the level of concentrates market tightness. To examine this question carefully, the regression model is applied. This paper finds a statistically significant negative link between TC and LME copper prices. It is found that a 10% increase in TC of copper decreases in copper return by 1.8%. Subsequently, the vector autoregression (VAR) model is introduced to consider the impact of TC to copper prices as a permanent effect. It is found that the negative impact of the TC to copper returns dies out quickly. The statistical estimation in this article will provide a good reference for future study. Full article
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26 pages, 474 KiB  
Article
Do Remittances Promote Economic Growth and Reduce Poverty? Evidence from Latin American Countries
by E. M. Ekanayake and Carlos Moslares
Economies 2020, 8(2), 35; https://doi.org/10.3390/economies8020035 - 01 May 2020
Cited by 26 | Viewed by 11864
Abstract
In this study, we explore the hypotheses that (a) workers’ remittances enhance economic growth in Latin American countries, and (b) workers’ remittances help reduce poverty in Latin American countries. In recent decades, workers’ remittances have become an important source of income for many [...] Read more.
In this study, we explore the hypotheses that (a) workers’ remittances enhance economic growth in Latin American countries, and (b) workers’ remittances help reduce poverty in Latin American countries. In recent decades, workers’ remittances have become an important source of income for many developing countries and, as a global aggregate, workers’ remittances are the largest source of foreign financing after foreign direct investment. This paper analyzes the effects of workers’ remittances on economic growth and poverty in 21 Latin American countries. The study uses annual data covering all Latin American countries for the period 1980–2018. We employ panel least squares and panel fully-modified least squares (FMOLS) methods. In addition, we estimate the short-run and long-run effects of workers’ remittances on economic growth and poverty on individual countries with the Autoregressive Distributed Lag (ARDL-ECM) approach to co-integration analysis. The results reveal that workers’ remittances have a positive effect on long-run economic growth in the majority of the countries studied, but have mixed effects in the short-run. They also suggest that workers’ remittances tend to lower poverty rates in Latin America. Full article
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27 pages, 325 KiB  
Article
Technical Efficiency of Smallholder Agriculture in Developing Countries: The Case of Ethiopia
by Anbes Tenaye
Economies 2020, 8(2), 34; https://doi.org/10.3390/economies8020034 - 20 Apr 2020
Cited by 38 | Viewed by 6490
Abstract
The efficient use of inputs is indispensable in many developing countries, such as Ethiopia. This study assesses the level and determinants of technical efficiency of smallholder farmers using the true fixed effects (TFE) model. The TFE model separates inefficiency from unobserved heterogeneity. Empirical [...] Read more.
The efficient use of inputs is indispensable in many developing countries, such as Ethiopia. This study assesses the level and determinants of technical efficiency of smallholder farmers using the true fixed effects (TFE) model. The TFE model separates inefficiency from unobserved heterogeneity. Empirical data come from four rounds of panel data (1994–2009) from the Ethiopian rural household survey (ERHS). A one-step maximum likelihood estimator was employed to estimate the Cobb-Douglas stochastic frontier production function and factors influencing technical efficiency. The results indicated that the major variables affecting technical efficiency are policy responsive, albeit to varying degrees: education of the household head, family size, farm size, land fragmentation, land quality, credit use, extension service, off-farm employment, and crop share. The analyses also identify variables amenable to policy changes in the production function: labor, traction power, farm size, seeds, and fertilizer. The mean household-level efficiency for the surveyed farmers is 0.59, indicating that farmers could improve technical efficiency. This implies that smallholder farms in Ethiopia can reduce the input requirement of producing the average output by 41% if their operations become technically efficient. This study recommends that the above policy variables be considered to make Ethiopian smallholder farmers more efficient. Full article
13 pages, 765 KiB  
Article
Can Local Policies Reduce the Gap between ‘Centers’ and ‘Inner Areas’? The Case of Italian Municipalities’ Expenditure
by Luca Romagnoli and Luigi Mastronardi
Economies 2020, 8(2), 33; https://doi.org/10.3390/economies8020033 - 20 Apr 2020
Cited by 6 | Viewed by 3551
Abstract
This study analyzes the links between Italian inner area municipalities’ expenditure and per capita incomes, considered as a proxy of well-being. Inner areas are territorial contexts characterized by a significant distance from the centers, the main supply poles of essential services. Following a [...] Read more.
This study analyzes the links between Italian inner area municipalities’ expenditure and per capita incomes, considered as a proxy of well-being. Inner areas are territorial contexts characterized by a significant distance from the centers, the main supply poles of essential services. Following a top-down approach, the paper at first demonstrates the existence of a global convergence process in per capita incomes, with a faster rate of convergence in inner areas with respect to centers; then, attention is focused on local administrations’ policies and their impact on incomes in Italian inner areas. The paper gives a twofold contribution to the debate about the implementation of territorial cohesion policies: (a) on one side, public expenditure data are considered for the first time in an econometric model regarding Italian inner areas; (b) on the other side, the reference territorial subdivision is the lowest possible, giving the opportunity to investigate the changes in well-being at the finest scale. Full article
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20 pages, 1399 KiB  
Article
The Boomerang Effects: An Analysis of the Pre and Post Dollarisation Era in Zimbabwe
by Michael Takudzwa Pasara and Rufaro Garidzirai
Economies 2020, 8(2), 32; https://doi.org/10.3390/economies8020032 - 17 Apr 2020
Cited by 10 | Viewed by 9568
Abstract
Does dollarisation influence economic activity in Zimbabwe? The question has incited a lot of debates among researchers and analysts. In an attempt to answer this question, the study used an Auto Regressive Distributive Lag (ARDL) procedure, to investigate the effects of dollarisation on [...] Read more.
Does dollarisation influence economic activity in Zimbabwe? The question has incited a lot of debates among researchers and analysts. In an attempt to answer this question, the study used an Auto Regressive Distributive Lag (ARDL) procedure, to investigate the effects of dollarisation on economic growth in Zimbabwe. The study employed quarterly data over a 14-year period between 2000 and 2014. The results of the study indicate that dollarisation, gross domestic investment and trade openness are positively related to economic growth. Based on the findings of the study, the paper recommends that Zimbabwean policy makers should establish additional complementary policies which foster economic integration with anchor countries to reduce credit risk. On the other hand, dollarisation should be maintained since it resulted in economic stability and improved financial sector credibility. It is therefore still premature to de-dollarise the economy until a sufficient level of credibility is gained by the central bank. Full article
(This article belongs to the Special Issue Macroeconomics and Monetary Policy)
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31 pages, 905 KiB  
Article
Strategic Alliances in Firm-Centric and Collective Contexts: Implications for Indigenous Entrepreneurship
by Antony I. Jongwe, Peter W. Moroz, Moses Gordon and Robert B. Anderson
Economies 2020, 8(2), 31; https://doi.org/10.3390/economies8020031 - 15 Apr 2020
Cited by 9 | Viewed by 5981
Abstract
How might diverse and often conflicting knowledge and belief structures and practices be mobilized into legitimate approaches for people looking to address the need for heightened responsible and sustainable entrepreneurial action by business organizations; humanizing the role of business in development? To answer [...] Read more.
How might diverse and often conflicting knowledge and belief structures and practices be mobilized into legitimate approaches for people looking to address the need for heightened responsible and sustainable entrepreneurial action by business organizations; humanizing the role of business in development? To answer this question, we explore two previously unconnected but aligned streams of literature: (i) work on strategic business alliances in general (R1); and (ii) work on corporate/Indigenous community partnerships specifically (R2). A systematic literature search identified 300 papers on the topics in total. We selected 39 general and 23 Indigenous-specific papers for review using a guiding classification matrix to determine principal themes and concepts. Both streams of literature were reviewed, and an approach was developed to identify areas where the empirical observation of Indigenous partnerships provides a contribution to the theory and practice of Indigenous entrepreneurship within the realm of strategic alliance formation, and vice versa. The paper concludes with a discussion of dissimilarities in the two streams of literature and maps out avenues for future research into strategic alliances involving corporate responsibility and sustainability (CRS), approaches based on Indigenous belief and value systems, and Indigenous entrepreneurship. Full article
(This article belongs to the Special Issue New Lines of Inquiry in Entrepreneurship – From Business Creation to Economic Prosperity)
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17 pages, 328 KiB  
Article
Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market
by Dick Durevall
Economies 2020, 8(2), 30; https://doi.org/10.3390/economies8020030 - 07 Apr 2020
Cited by 3 | Viewed by 7414
Abstract
Fairtrade labeling has the potential to increase market efficiency by connecting farmers to altruistic consumers who are willing to pay a premium for sustainability-certified products. A requirement for increased efficiency, though, is that the farmers’ benefits are larger than the Fairtrade processing costs [...] Read more.
Fairtrade labeling has the potential to increase market efficiency by connecting farmers to altruistic consumers who are willing to pay a premium for sustainability-certified products. A requirement for increased efficiency, though, is that the farmers’ benefits are larger than the Fairtrade processing costs and the excess payment by consumers that does not accrue to farmers; otherwise direct transfers to farmers would be more efficient. This paper analyzes how excess payment for Fairtrade-labeled coffee is distributed in the Swedish market, using information on production costs and scanner data on almost all roasted and ground coffee products sold by retailers. A key finding is that roasters and retailers get 61–70%, while producer countries, in this paper comprising coffee farmers, cooperatives, middlemen, exporters, and Fairtrade International, get 24–31%; Fairtrade Sweden gets 6–8%. These values are the upper and lower bounds that reflect assumptions made about the additional costs of producing roasted and ground Fairtrade coffee, given the cost of beans and the Fairtrade license. The Fairtrade label thus seems to create a coffee product that roasters and retailers can use to exploit their market power. Full article
31 pages, 1080 KiB  
Article
Multidimensional Inequality in Vietnam, 2002–2012
by Thi Kim Thanh Bui and Guido Erreygers
Economies 2020, 8(2), 29; https://doi.org/10.3390/economies8020029 - 05 Apr 2020
Cited by 4 | Viewed by 4459
Abstract
We investigate the evolution of multidimensional inequality of well-being in Vietnam in the period 2002–2012 using household survey data. Our study focuses on four crucial dimensions of human welfare: consumption, education, health and housing. We measure inequality by means of the multidimensional Atkinson [...] Read more.
We investigate the evolution of multidimensional inequality of well-being in Vietnam in the period 2002–2012 using household survey data. Our study focuses on four crucial dimensions of human welfare: consumption, education, health and housing. We measure inequality by means of the multidimensional Atkinson index, which belongs to the Atkinson family of relative inequality indices. The choice of the values of two crucial parameters, with respect to the aversion to inequality on the one hand and the degree of substitutability between dimensions on the other hand, has a significant influence on the perceived trends of inequality. We consider different combinations of dimensions (two, three and four dimensions) and a wide variety of values of the parameters, with the aim of arriving at a robust understanding of the extent of inequality in Vietnam. Our results suggest that the level of multidimensional inequality in Vietnam has decreased, albeit that this is not the case for all combinations of the parameter values. Our study shows that looking at multidimensional rather than one-dimensional inequality leads to a richer understanding of the evolution of inequality, and indicates that it is important to be aware of the influence of value judgments on the assessment of inequality. Full article
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21 pages, 2443 KiB  
Article
A Spatial Analysis of Intensity in Tourism Accommodation: An Application for Extremadura (Spain)
by María Cristina Rodríguez Rangel, Marcelino Sánchez Rivero and Julián Ramajo Hernández
Economies 2020, 8(2), 28; https://doi.org/10.3390/economies8020028 - 04 Apr 2020
Cited by 7 | Viewed by 4323
Abstract
There is a general belief that the distribution of tourist activity in space does not respond to a random pattern, so having a thorough knowledge of said activity will require analyzing and understanding its distribution pattern. At the same time, the adequate planning [...] Read more.
There is a general belief that the distribution of tourist activity in space does not respond to a random pattern, so having a thorough knowledge of said activity will require analyzing and understanding its distribution pattern. At the same time, the adequate planning of this sector requires exhaustive knowledge, on the one hand to be able to enhance the positive effects of concentrations in the space, and on the other hand to avoid those possible adverse effects. Therefore, various studies focus on providing information on the random pattern of these activities, especially in developing destinations with a great interest in generating a model of sustainable tourism development. This paper aims to contrast the results achieved by previous studies at the destination while describing the pattern identified through the use of alternative statistical techniques rather than those commonly used. In particular, an intensity function is estimated using three different methods: quadrant counting, K-function, and kernel smoothing. The results achieved allow the identification of the areas with the greatest tourist intensity while describing the practical implications of the results achieved. Full article
(This article belongs to the Special Issue Tourism and Economic Development)
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15 pages, 1164 KiB  
Article
Leadership and Effective Institutional Economics Design in the Context of Education Reforms
by Wadim Strielkowski, Vyacheslav Volchik, Artyom Maskaev and Pavel Savko
Economies 2020, 8(2), 27; https://doi.org/10.3390/economies8020027 - 03 Apr 2020
Cited by 12 | Viewed by 5932
Abstract
Nowadays, the most typical reforms in higher education are conducted through the reorganization of universities either in the form of a merger, acquisition, or new status attainment. As a result, universities which educate local leaders for their respective national economies and have a [...] Read more.
Nowadays, the most typical reforms in higher education are conducted through the reorganization of universities either in the form of a merger, acquisition, or new status attainment. As a result, universities which educate local leaders for their respective national economies and have a profound impact on the regional economic development, as well as the composition of the labor market and intellectual potential, often encounter negative economic outcomes. The reforms that are imposed by the policymakers “from above” often hamper the development of universities and prevent them from fulfilling their roles described above. The process of reforming higher education in Russia is in many ways similar to the changes in the higher education systems of other European countries, in particular in post-Communist transition economies. Firstly, this process went through the integration into the global market of educational services. Secondly, it proceeded with the rethinking of the role of the university as a self-sustainable business organization. Thirdly, it was concluded by an increase in the demand and accessibility of education using the advancements offered by the digital technologies. Our paper argues that focused and well-balanced economic institutional design might be required for the sustainable development of reorganized leading universities. The project perspective implies that it is necessary to develop an institutional design in relation to what the organization seeks to achieve (either as its regulator or reformer) and how it intends to achieve these goals. In connection with the foregoing, we propose the following principles of designing effective institutions for the sustainable development of reorganized universities: (i) preservation of education as a “mixed” good (i.e., one that has the features of both public and private goods); (ii) transparency of decision making; (iii) complementarity of institutional change; and last but not least (iv) reduction in transaction costs. Full article
(This article belongs to the Special Issue Leadership in Business and Economics)
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12 pages, 259 KiB  
Article
Causality Effects among Gross Capital Formation, Unemployment and Economic Growth in South Africa
by Michael Takudzwa Pasara and Rufaro Garidzirai
Economies 2020, 8(2), 26; https://doi.org/10.3390/economies8020026 - 03 Apr 2020
Cited by 33 | Viewed by 14060
Abstract
Stagnant economic growth, decreasing investment and high unemployment remain consistent macroeconomic challenges for South Africa. Gross Capital formation (GCF) is designed to improve employment and economic growth (GDP). This study investigates the causality effects of the three variables using time series data from [...] Read more.
Stagnant economic growth, decreasing investment and high unemployment remain consistent macroeconomic challenges for South Africa. Gross Capital formation (GCF) is designed to improve employment and economic growth (GDP). This study investigates the causality effects of the three variables using time series data from 1980 to 2018 in a Vector Autoregressive (VAR) framework. Results of the first model reveal a positive long-term relationship between gross capital formation GCF and economic growth GDP. Contrariwise, the first model indicates that unemployment (UNEMP) does not influence economic growth (GDP) in the short run. The second model results reveal a significant and positive relationship between UNEMP and GCF, while the third model shows an inverse relationship between GDP and UNEMP. Based on these findings, the study therefore recommends that fiscal authorities introduce expansionary fiscal policy that stimulates economic growth, investment and employment. Full article
(This article belongs to the Special Issue FDI (Foreign Direct Investment) and Economic Growth)
14 pages, 293 KiB  
Article
Determinants of Interest Margin in Pakistan: A Panel Data Analysis
by Murad Khan and Abdul Jalil
Economies 2020, 8(2), 25; https://doi.org/10.3390/economies8020025 - 30 Mar 2020
Cited by 10 | Viewed by 5676
Abstract
This paper explores the determinants of the net interest margin (NIM) using unbalanced panel data from 2003 to 2017. This paper’s objective is achieved by using a two-step system generalised method of moment (GMM) for estimation. Three different models are to account for [...] Read more.
This paper explores the determinants of the net interest margin (NIM) using unbalanced panel data from 2003 to 2017. This paper’s objective is achieved by using a two-step system generalised method of moment (GMM) for estimation. Three different models are to account for two alternative measures of market competition. The empirical results of these models indicate that operating cost, profit tax, interest rate risk, Lerner index, national savings, money supply and the T-bill rate have significant positive associations with the NIM. Meanwhile, operational size, credit risk and the inflation rate negatively affect NIM. Furthermore, operating cost, taxation and the money supply are the main factors that influence the NIM. The present analysis provides a comprehensive view of the Lerner index, which is a better measure for capturing the degree of market power than the concentration measure (HHI). Managerial efficiency and risk aversion are bank-level factors that do not significantly determine NIM. Operating costs could be decreased by adopting new banking technologies. Therefore, higher competition, lower operating costs and restricted uncertain conditions in a macro environment, particularly in the money market, could reduce the NIM. Full article
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