Economic Growth

This paper tests the link between bank credit and economic growth. We examine this link for European Union (EU 27). The period 1990 2010 was chosen on the basis of its providing a sufficient number of observations. The methodology uses a panel data approach. The panel is unbalanced due to the lack of information on some countries in all of the years analyzed.

Thus what type of budgeting we need for economic growth of the country that can ensure the faster and inclusive growth that the 12thFYP intends is a matter of policy making and it requires a greater insight and huge exercise to think over which path will take us to a high trajectory ensures first things first, the globalisation without reins, allowing Multinational Corporations (MNCs) to capture the big market through Foreign Direct Investment(FDI) route, throughing open the service sector, cutting the subsidies on agriculture and K. oil, gas etc or alternatively strengthen the domestic agriculture sector, making the country as industrial and manufacturing hub and thus streamlining the globalisation. As continue bleedings in euro zone is the result of blindly followed globalisation, slowdown in Indian GDP to 5% in fiscal 2011-12 is again the result of fall in external demand due to euro zone crises. At least we have to find the hedge, otherwise the unrestricted forces of globalisation would engulf us, this is they want. No force can stop us to become a super power provided that we could use the democracy and democratic dividend in a right way and find hedge for the economy. We have to turn the globalisation to work for the inclusive growth and our budget policy needs to be consistent and clear here rather than turning ourselves toward where globalisation directs us.

Most studies of the relationship between economic freedom and growth of GDP have found a positive correlation. One problem in this area is the choice of measure of economic freedom. A single measurement does not reflect the complex economic environment and a highly aggregated index makes it difficult to draw policy conclusions. This paper attempts to answer the question: How does economic freedom impact economic growth? Using data from 13 selected MENA countries over the period of 2000 to 2009, this paper investigates the relationship between economic freedom and economic growth. The results of panel data analysis show that economic institutions, specifically economic freedom, play a significant role in economic development independently and the overall index of economic freedom is positively correlated with growth. It is found that economic freedom does matter for growth. This does not mean that increasing economic freedom, defined in general terms, is good for economic growth since some of the categories in the index are insignificant and some of the significant variables have negative effects.

Kjosevski, J (2011) examined the impact of insurance on economic growth using the insurance penetration as a measure of insurance development, three variables were used: life insurance penetration, penetration non-life insurance and total insurance penetration. The analysis used data for the period 1995-2010 of the Republic of Macedonia using the OLS technique, followed by an analysis of the variability in order to identify the effects of each variable. The result of this analysis shows that the development of total insurance sector positively affects economic growth; this result is confirmed in non-life insurance, while the results show that life insurance negatively affects economic growth.

Abstract. Attempts to establish a link between inflation and economic growth are made quite regularly. The aim of such attempts is not only to determine the impact of inflation on economic growth but also to assess efficiency of the inflation rein-in policy, for example, the policy of inflation targeting. This work reveals the nature of the inter-connection between inflation and economic growth and explains why this inter-connection cannot be sustainable without considering the third parameter, i.e. money supply.

Historically, the wise use of country’s economic potential brought conducive political gains. In contemporary times, where the business competition has reached its peak, the creative diplomacy that caters economic concerns, generally called the economic diplomacy is gaining pace. The term of Economic Diplomacy is fairly new, but apparently the research and evaluation of this concept is rapidly increasing, primarily to assess its impact on economic growth. Despite gaining popularity and acknowledgment, many countries are not taking full advantage of economic diplomacy, the Republic of Kosovo is case in point. The aim of this work is to explore the importance of economic diplomacy for Kosovo, a developing country, but with vast potential for growth. The study begins with a brief analysis on Kosovo economic history and the first signs of economic diplomacy. In addition, it discusses the role, importance and the future of economic diplomacy for Kosovo, vis a vis challenges and opportunities. It analysis the level of the use of economic diplomacy in the region, as well as presents data concerning Kosovo trade with world during the period 2004-2014. Finally it offers a number of recommendations for economic development in relations to economic diplomacy and concludes that success of the economic diplomacy largely depends on active, creative and proactive leadership as well as shrewd decison making.

Whether a country’s investments in international tourism can be used as an engine for economic growth is an important question for policy and decision makers. Tourism boosters consistently lobby for investments and support based on the assumption that tourism is an effective mechanism for economic growth, whether through the creation of new attractions (Waitt, 2001; Getz, 2008) or through infrastructure and enhancements (Briedenhann & Wickens, 2004; Becker & George, 2011; Liasidou, 2012). There is no doubt that international travel and tourism comprises a major part of the global economy and is the largest service sector in international trade (Lew, 2011). It is within the top five sources of international export income for over 80% of countries in the world (UNWTO 2001a). International tourism has proven relatively resilient to global economic downturns, continuing a healthy growth in international arrivals despite retraction in other global sectors (Song & Lin, 2010; Abiven, 2012).

In the words of Alesina et al. (2003, p. 182): ‘‘The question of what makes different countries more or less successful eco- nomically and what explains the quality of their policies is one of the most fascinating that economists can ask, but it is also one of the most difficult to answer. ” We hope that our research could make a contribution to successfully addressing this dif- ficult question. Whereas we provide new important insights into the effect of cultural heterogeneity on economic growth—and our evidence seems to suggest that immigration-fueled diversity is generally good for economic growth—more needs to be done to fully uncover the effect of diversity on development. Firstly, diversity is a phe- nomenon continually in motion and difficult to conceptualize. Individuals have many observable characteristics—race, lan- guage, religion, nationality, wealth, education-but only some categories have economic salience. Indices based on the ethnic- ity, religion, or language identity of sub-populations within each country could be too narrow, whereas these identities are usually given at birth, as Horowitz (1985) suggests. If we subscribe to Horowitz’s (1985) claim that the ascription to birth is one of the most coherent marker of diversity, future studies should treat migration and diversity as two phenomena belonging to the same line of inquiry. Secondly, although we extend earlier research on diversity by constructing more informative measures of birthplace heterogeneity, future research should focus on the characteristics of the migrants (e.g., age, education), which can give a more systematic and accurate snapshot of diversity patterns. Thirdly, the theory on diversity and team performance relies on micro-level argu- ments that focus on individual behavior. To dig deeper into the relationship between diversity and growth, more effort should be devoted to the integration of macro data with individual-level information on cultural and social characteris- tics.

 To sum up, the study recommends that reducing unemployment has a significant role in the growth of GDP. The government may device an appropriate policy how to address the labor market’s failure & improving the labor force productivity through increased level of education & training, skills for illiterate unemployed & access to capital & productive assets that will enable the poor take advantage of the employment generating opportunities. & other policies that will create conducive condition for increasing investment. More employment generation mechanisms have to be adopted because, how far economic growth reduces poverty depends on how much the growth increases opportunities for employment and on the extent to which the poor can join economic process and take advantage of the improved employment potential. ( Abdulkadir H. A ,2014)

It is noteworthy that the results of the studies set out above do not give an unequivocal answer on the linkage between inflation and economic growth. Therefore, researchers are seeking to find dependencies of more specific nature rather than of any general nature. For example, establish influence of inflation separately in the developing countries. Or establish inter-connection of inflation with economic growth for countries in which as at the beginning of the period under review inflation was high. Or establish certain threshold levels of inflation above which influence of inflation on economic growth is high, and below which it weakens.

Development refers making a better life for everyone. It is very essential because it produces an economy, and more broadly a society and culture that determine how people live in terms of income, services, life chances, education and so on. People defining development as modernity, and look at development largely in economic terms. The conception of development underpins much of the work of international organizations. Development is conventionally measured as economic growth with level of development in the process of size of economy. A country's economic health can usually be measured by looking at that country's economic growth and development. The existing development framework and indices seem insufficient to accurately measure development in its comprehensive sense; it could still provide valuable insight to provide a better alternative to the existing development indices.

Hassan et al. (2003) examine the impact of the military expenditure on economic growth and FDI covering five of seven South Asian Regional Cooperation Council (SAARC) nations using panel data over the 1980-1999 periods. Interestingly the result suggests positive relationship between military expenditure and economic growth, and thus supporting the view that military expenditure can bring positive impact on growth. Yildirim and Ocal (2006) examined the issue of arms race between India and Pakistan and its relation to each country’s economic growth. They found that there is a unidirectional causal relationship between military expenditure of India and Pakistan. Reitchuler and Loening (2004) studied on Guatemala and they employed Feder-Ram model to determine linear versus non- linear function. They suggest that the linear model show insignificant effect on growth. However conclusion changes when using non-linear model. They found that at low threshold there is positive effect on growth and beyond the threshold, it turns negative. However, defense is less productive than the civilian sector.

Fosu (1992) emphasizes the variable of human capital as a channel of influence. The addition of interactive variables allows deducing that it is through the fall of the latter factor productivity (human capital), that growth is permanently affected by political instability. However, in addition to the heterogeneity of sources of impact, there are some dissenting voices in this empirical consensus. If the study of Londregan and Poole (1990) is the only one that finds a non-negative effect of instability on the level of economic growth, Levine and Renelt (1992), on their part, emphasize the small robust aspect of the results concerning the impact of institutional variables on the economic performances.

There is also a long run effect of the adoption of cashless payment on economic growth, except for card payment. This long run relationship implies that the conse- quences of adopting electronic money, telegraphic transfer, and cheques on the econ- omy of Austria, Belgium, France, Germany and Portugal, can only be significantly observed in the long run. Although these EU countries are developed nation, the effect of increased usage of cashless payment takes time to diffuse and cannot be recognised immediately.

Entrepreneurs allocate resources among different activities that generates a profit; in particular, in this paper entrepreneurs consider at each instant of time both innovation and rent-seeking as alternative sources of profit. The consequences in terms of economic growth are obviously quite different: the higher the amount of innovations in the economy the higher the rate of economic growth and vice versa. What are the determinants of these different entrepreneurial behavior? Is there anything in the nature of entrepreneurs that essentially distinguishes between innovators and rent seekers? A main claim of this paper is that differences among entrepreneurs are not essential but of degree: all of them are in fact profit-seekers and the only difference is to be found in their attitude towards innovation as a source of profit. In this sense entrepreneurial effort is defined and modelled for each entrepreneur according to its propensity to innovate and the corresponding Entrepreneurial Problem (EP) is posed and solved both analytically and via simulation in terms of profit maximization. The individual decisions measured in units of innovation are then aggregated to calculate the innovation quantity for a given population based on the distribution of heterogeneous entrepreneurs. The entrepreneurship rate and the implications for economic growth are also modelled. Consequently, policy makers should focus on reducing the entry barriers and the costs of production in order to stimulate the entrepreneurial activity and maximize the innovation quantity.

Following the decision rule, Cointegration tests rejects the null hypothesis that states that there is no Co- integration since the absolute value of the ADF test (2.752481) is greater than the critical value at 10% (2.615). We can therefore conclude that Petroleum Profit Tax, Company Income tax, Custom & Excise Duties are all co- integrated with RGDP. This simply implies that there is a long-run relationship between the tax variables and economic growth in Nigeria. To present this long run relationship mathematically, a long-run equation was estimated. This is obtained by the Unit root/ residual-made co-integration test which needs to be normalized by multiplying the equation with the minus (-) sign. This is reported in Table 5. In view of this, detailed result is presented in Appendix 10.

This article does not focus on moving retirement dates till later, neither on extending the coverage of private pensions, but on the question of the macro economic links between funded pension savings and economic growth. The key in understanding what happens in economies is that risks taken by private savers in mortgage lending, in funding government debt and in buying company shares are risks which lock in all savers together for very long periods of time. Such risks can be transferred between savers, but collectively the savers cannot -in the short run- get out of the risks. In the short run, risks can only be liquidated at enormous costs to the savers, a highly inefficient method to protect long term savers, but also inefficient in the proper functioning of the capitalist economic growth system. If –in the short run- savers collectively try to exit the risks via the financial markets, the economies and the fiscal status of governments move into crises modes. As matters currently stand pension savers lose out from all three crises: a financial, an economic and a fiscal crisis. What is needed, are risk management methods, like economic easing, which help eliminate the gap between short and long term objectives of savers. A dream too far? Perhaps not.

While theorists are still far from complete work on the issue that focuses on channels through which institutional variables influence and can influence the economic sphere. Several empirical studies have emerged, with the aim to provide additional arguments to the controversial association between institutions and economic performances. Indeed, many historical evidence also shows that the countries' economic growth has been associated with the establishment of a sound institutional framework. This finding was supported by sound empirical evidence, which showed the negative effects of institutional infrastructure failing (low respect of law, lack of credibility and corruption, political instability among others) on investment and growth.

To demonstrate this, consider the graph shown in Figure 1. 4 The horizontal axis indicates the value of wealth per person in an economy that is attributable to human capital – this is a measure of schooling, spread appropriately over the whole age range of those in work. The vertical axis represents economic growth over the period 1980- 2000. Each data point in the scatter diagram represents one of 85 countries for which I was able to obtain complete information. The diagram shows fairly unambiguously that there is a positive relationship between human capital and growth. (The one clear outlier, with growth of almost 400%, is China. Ignoring this, the scatterplot suggests that an increase of $100000 in wealth due to human capital is associated with an increase of about 25% in the 20-year growth rate – in annual terms that amounts to a little over 1.1 percentage points.) The data in this graph, however, suggest that there may be (at least) two groups of countries in the sample – for one group, the relationship between growth and human capital is quite flat, while for the other group it is relatively steep. Countries in the former group include most of Western Europe, North America and Oceania. Countries in the latter group include primarily the south east Asian tigers, but also some outliers such as Mauritius and Botswana. Explaining the outliers is something that I shall try to do later in the talk.

When rules and regulations become excessive it is difficult for entrepreneurs to innovate. They can try to obtain permits from the appropriate government officials, but this opens the door for corrupt bureaucrats to obtain personal benefits in return for the permits. 15 When, in The Goblet of Fire, a senior government official, Mr. Crouch, tries to intervene in favor of a certain importer, he does not hide the fact that he has personal interest in the goods that this entrepreneur plans to import. This kind of corruption appears rife in the Potterian world. People like Lucius Malfoy and his friends do not hesitate to use their money to influence politicians. Ministry officials in The Order of the Phoenix are well aware that Malfoy is well connected, and that he is entitled to “favors” because he is “giving generously.” Such policies have a strong negative effect on economic growth because they increase the costs of investment. 16 At the extreme, government bureaucracies in the real world are sometimes set up for the sole purpose of extracting bribes from entrepreneurs. 17