Finance-investment-growth nexus in South Africa: an ARDL-bounds testing procedure

In this paper we examine the dynamic causal relationship between financial development, investment and economic growth in South Africa—using the newly developed ARDL-Bounds testing procedure. Unlike the majority of the previous studies, we incorporate investment in the bivariate model between financial development and economic growth—thereby creating a simple trivariate causality model. In addition, we use three proxies of financial development, namely M2/GDP, the ratio of private sector credit to GDP and the ratio of liquid liabilities to GDP in order to test the robustness of the results. Our results show that, on the whole, economic growth has a formidable influence on the financial sector development. The study also finds that there is a distinct unidirectional causal flow from economic growth to investment. Moreover, the study also finds that investment, which results from growth, Granger-causes financial development. The study, therefore, recommends that South Africa should intensify its pro-growth policies in order to bolster investment and financial development.     

Is foreign direct investment good for the poor? New evidence from African countries

This paper conducts an empirical investigation of the relationship between foreign direct investment (FDI) inflows and poverty in selected African economies. Using system generalised method of moments, our findings showed that FDI inflows have significantly contributed to poverty reduction in African countries. Our results also showed that better institutional quality and human capital development are associated with reducing poverty. Furthermore, interacting FDI with financial development was found to significantly reduce poverty, thus providing support to the hypothesis that better functioning financial systems enhance the efficiency of FDI in reducing poverty.     

A METHODOLOGICAL ADDITION TO THE CROSS‐NATIONAL EMPIRICAL LITERATURE ON SOCIAL STRUCTURE AND HOMICIDE: A FIRST TEST OF THE POVERTY‐HOMICIDE THESIS*

Dozens of cross‐national studies of homicide have been published in the last three decades. Although nearly all these studies test for an association between inequality and homicide, no studies test for a poverty—homicide association. This absence is disconcerting given that poverty is one of the most consistent predictors of area homicide rates in the abundant empirical literature on social structure and homicide in the United States. Using a sample that coincides closely with similar recent studies, applying a proxy for poverty (infant mortality) that is commonly employed in noncriminological cross‐national research, and controlling for several common covariates (including inequality), this study provides the first test of the poverty—homicide hypothesis at the cross‐national level. The results reveal a positive and significant association between a nation's level of poverty and its homicide rate. The findings also suggest that we may need to reassess the strong conclusions about an inequality—homicide association drawn from prior studies, as this relationship disappears when poverty is included in the model.     

Export diversification and economic performance: evidence from Brazil, China, India and South Africa

In this paper we discuss relationship between export diversity and economic performance, focusing on Brazil, China, India and South Africa (BCIS). Using time data on exports over the period 1962?C2000 and Applied General Equilibrium (AGE) models for each country, we note the similarities as well as differences in the patterns of diversification in these countries. We find evidence of a U-shape relationship between per capita income and export specialization in at least China and South Africa, and given that the results from Granger causality testing are inconclusive and not robust with regards to export diversification measures, some preliminary evidence from the results suggest that export diversification Granger causes GDP per capita in Brazil, China and South Africa, but not in India, where it is rather GDP per capita changes that are driving export diversification. From AGE modeling we find that South Africa differs from the other economies in that it is the only case where export diversification has an unambiguously positive impact on economic development while in contrast in Brazil, China and India, it is rather export specialization that is preferred. We show that the manner in which export diversification is obtained may be important: if it is obtained with less of a reduction in traditional exports, the impacts are better (less negative).     

Paying for the Past: Redressing the Legacy of Land Dispossession in South Africa

The constitution of South Africa mandates equitable redress for individuals and communities evicted from their properties during colonialism and apartheid. The Commission on Restitution of Land Rights' institution‐wide assumption is that the financial awards given as equitable redress had no long‐term economic impact on recipients because the money is gone and they are still in poverty, whereas if people had received land, the economic impact would have been lasting. Consequently, in recent years, the commission has adopted a policy of using its soft power to force claimants to choose land restitution instead of financial awards. However, the interviews I conducted with financial award recipients show that in 30 percent of the cases, the award did produce a long‐term economic benefit because respondents invested in their homes. This empirical evidence suggests that the commission should rethink its recent shift in policy and not totally discount the potential of financial awards to produce a lasting economic benefit.     

Trade liberalisation and endogenous growth: Some evidence for Turkey

This paper examines the impact of trade liberalisation on the long-run economic development as measured by the real GDP per capita in Turkey. Based on the ‘endogenous’ growth theory, we employ bivariate and multivariate cointegration analyses to test the long-run relationship among the relevant variables. Results for Turkey suggest a stable, joint long-run relationship among real GDP per capita, an index of trade liberalisation, human and physical capital in accordance with the ‘endogenous’ growth theory. Statistically significant error-correction terms provide further evidence that those variables are indeed cointegrated. This also implies causal effects.     

International integration and the determinants of regional development in China

Concerns about the duration of China??s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China??s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced a more moderate development. To obtain broad continuos growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (1) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (2) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China??s provinces. Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Extending the model using an unbalanced panel leads to a positive effect of the quality of governance and institutions on development.     

The Economic Convergence Performance of Central and Eastern European Countries

A critical discussion of a comparative growth analysis about Central and Eastern European (CEE) countries is performed. The main conclusion is that there was economic convergence for most CEE accession candidates, but not between them and Western Europe. Results do justify a separation into first and second-wave accession countries, but also undermine differences in Central and Eastern Europe between accession and non-accession countries. This paper critically examines theories and empirical studies for three types of convergence, namely β,σ and club convergence. Each can be in absolute terms or conditional to the long-term equilibrium (steady state) for each country. Empirical results are provided for all types of convergence from 1996 to 2000, both with population-weighted and non-weighted data. The analysis is performed for differently framed country subgroups considering even Western Europe for better comparability. Once absolute convergence is found through a unit root test about a standard deviation time series of cross-sectional income per capita, the regression coefficient for initial income per capita with the average growth over the sample period as dependent variable (β convergence) establishes the speed of this process. The same method applies to the conditional version by using the distance of the income from the corresponding steady state instead of the level of GDP. Then Markov chain probability matrixes (club convergence) provide information about the past behaviour of the whole cross-sectional income distribution over time, but also about intra-mobility of single countries.     

Economic freedom and economic growth in India: What is the empirical relationship?

The recent moves of the Indian economy towards further opening up of the economy with less government control has brought about changes in its policy structure. The objective of this study is to test the hypothesis that greater economic freedom leads to higher levels of economic growth in a federal system like India where business regulations, taxation, and government spending differ widely across states. Pooled linear regression model is applied to categorical data containing economic freedom and its three components as independent variables, and growth rates of income per capita and gross state domestic product as dependent variable, for a panel of twenty states for three time periods, 2004/2005, 2006/2007 and 2009/2010. While examining this relationship, the variables like initial income per capita, initial literacy rate, sectoral composition, and inflation rate are taken as control. The results tend to establish the fundamental effects of economic freedom in fostering economic growth. Three individual dimensions of economic freedom namely size of government, strong rule of law, and flexible regulations governing credit, labour, and product markets are likely to exert beneficial impacts on income growth. Initial income per capita exerts a positive impact, thus proving the prevalence of regional divergence on this front. High human capital, greater share of the services and inflation exert direct impact on growth.     

The return of financial variables in forecasting GDP growth in the G-7

The financial crisis and subsequent sovereign debt crisis together had a profound impact on the current economic environment. This study reexamines the established stylized facts and previous evidence regarding the predictive association between financial variables and real economic activity considering changed economic circumstances. This paper focuses on the predictive ability of the term spread, short-term interest rate and stock returns for real GDP growth in the G-7 countries. We compare the predictive content of nominal financial variables with that of real financial variables and consider the proper number of financial predictors and time variations of forecasting performance. The forecasting results unambiguously indicate that financial variables have regained their predictive power since the financial crisis. Moreover, this study shows that real financial variables are superior to nominal variables and that using several financial indicators for forecasting GDP growth is preferable.     

Innovation capacity and economic development: China and India

Decomposing the GDP growth from 1981 to 2004, this paper finds that innovation capacity has contributed significantly to the economic growth of China and India, especially in the 1990 s. Outputs of the national innovation system, measured by patents and high-tech/service exports, demonstrate the considerable progress China and India have made in innovation capacity. The enhanced innovation capacity of China and India is primarily due to their heavy investment in the inputs of innovation system, i.e., R&D expenditure and R&D personnel, in recent decades. This paper emphasizes the role that the governments have played in promoting innovation capacity and their contribution to economic development. Both governments have transformed their national innovation systems through linking the science sector with the business sector, providing incentives for innovation activities, and balancing import of technology and indigenous R&D effort. Using case studies of domestic biotech firms in China and India, this paper also offers micro-level insights on innovation capacity and economic development: (1) innovation capacity has become essential for domestic firms?? market success and (2) global institutional factors and national government policies on innovation have considerable influence on the choice of innovation at the firm level, i.e., to conduct indigenous R&D or to import foreign technology.     

洗钱罪初探

洗钱犯罪随着经济全球化和金融网络化的发展愈演愈烈,已经成为国际公害,反洗钱必须提上重要改革日程。我国应多管齐下,标本兼治,综合治理,严加遏止。     

我国部门货币及其发行的法律规制——兼评《非金融机构支付服务管理办法》

部门货币是指非银行部门通过各类储值卡的销售获得的资金。部门货币在我国经济生活中已经广泛存在,在促进经济发展的同时也造成了一些问题。《非金融机构支付服务管理办法》及其细则和《关于规范商业预付卡管理的意见》虽然对其进行了部分规范,但还很不完善,我们应当重视部门货币可能引起的金融风险问题。     

Balancing financial threats and legal interests in money-laundering policy

The fight against money laundering has been energetically introduced and developed into a global enforcement regime. Various economic and financial justifications have been put forward, which are not self-evident. The simple and basic foundation is that ill-gotten profits should not remain in the possession of the criminal. Nevertheless, the cause of fighting money laundering is loaded with arguments about the staggering size and the undermining effects of the crime-money, for which there is no empirical evidence. The arguments concerning the integrity of the financial system, usually taken at face value, proves to be less than coherent. Nevertheless, these (globally) politically accepted arguments prove to be effective in overruling a more careful balancing of legal interests and foundations, like the all-encompassing breadth of the money-laundering approach. This approach is compared with the computer crime legislation, in which restraint was balanced with the requirement to update the legal tools to an adequate level of effectiveness in an electronic criminal environment. This clarity contrasts strongly with the rhetoric of the money-laundering policy, in which we find neither restraint nor clarity.     

Is devaluation contractionary? Empirical evidence for Pakistan

The paper examines the effect of real devaluation on economic growth. In the empirical model we include few other theoretically justified variables e.g., money supply, foreign remittances, and government spending as they appear relevant for Pakistan. The ADF unit root test is used for stationarity of the series. Also, to capture possible structural breaks due to currency regimes shifts, the Saikkonen and Lütkepohl unit root test is used. We apply the ARDL bounds testing approach to cointegration to explore a long run relation among the series; and the variance decomposition method and impulse response function for the direction of causality. The findings affirm cointegrating relation among the series. Real devaluation exerts contractionary effect on economic growth. The results should help in formulating a comprehensive trade policy including the use of competitive devaluation as a tool to correct balance of payments problems.     

Total factor productivity and the role of entrepreneurship

The absence of evidence in the scholarly literature for a tested long-term relationship between entrepreneurship and economic growth is at odds with the importance attributed to entrepreneurship in the policy arena. The present paper addresses this absence, introducing entrepreneurship using four different and accepted models explaining the total factor productivity of twenty OECD countries with data for the period 1969–2010. Traditionally, entrepreneurship is not addressed in these models. We show that in all models—as well as a joint one—entrepreneurship has a significant influence while the remaining effects largely stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita).     

Can financial development enhance transparency?

A substantial strand of literature unambiguously established the importance of financial development for economic growth. Relatively less attention has been paid to the impact that financial development of a country can have on important development outcomes like transparency. As established by existing research, strong financial institutions in a country would imply an improved and transparent banking system, better corporate governance, ease of accessing credit, greater availability of information and best practices in investment protection. All these should theoretically promise a more transparent economic system. Our empirical findings confirm this. Using several estimation strategies, our results confirm that greater financial development enhances transparency.     

析金融全球化对国家货币主权的冲击

伴随着经济全球化而发展起来的金融全球化，在诸多方面对国家货币主权产生了广泛而深刻的冲击，如对国家货币发行权、货币独立权、国家维护本国货币币值的稳定、实施外汇管制和进行货币法定升值与贬值的权利等的削弱或侵蚀。这既表现为国家为顺应金融全球化的发展而自主的让渡主权，也表现为金融资本对货币主权无形的侵蚀。但是，金融全球化并没有从根本上改变国家货币主权。     

Catching-up process in the transition countries

This paper revisits the catching-up hypothesis among the 29 transition countries using the time series approach to investigate income convergence. In this study, we propose a model which specifies a trend function incorporating both sharp and smooth breaks using dummy variables and Fourier functions, respectively. Our empirical results indicate that two convergence clubs are forming among the transition countries and one club is among the rich and the other club is among the poor countries, where most middle income countries will disappear and move into one of the two clubs. Also, our results indicate that the 1980s was an ominous decade for growth in the transition countries with income in most diverging from the USA. With recovery in the 1990s, we find that in the 2000s income per capita in most of these countries was catching up toward the USA.