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Post crisis Remodeling of the Economy for the Sustainable Growth of South Eastern European Countries

Post crisis Remodeling of the Economy for the Sustainable Growth of South Eastern European Countries

The focus of this research will be on the response to the global economic crisis by selected South Eastern Europe countries such as: Albania, Bosnia, Macedonia, Serbia, Slovenia, Croatia, Bulgaria and Montenegro. Since these countries are considered as transition, mainly small and highly open economies, their economic growth model prior 2008, seemed manageable and sustainable. The formula they pursued for achieving higher economic growth was clear: increasing export, investing heavily into real estate and infrastructure plus implementing structural reforms in addition to promoting the countries as attractive foreign investment destinations, which should ultimately lead to a higher economic growth. But, these countries appeared ex ante more vulnerable when taking into consideration their reliance on foreign demand and capital inflows prior and during 2008, which were used to finance their growth. As global liquidity springs ‘dried out’, the SEE region’s growth model appeared dramatically challenged, triggering fears that the shortage of external capital inflows could generate some severe macroeconomic adjustment and jeopardize macroeconomic and financial stability. To a great extent, this poses question on whether these countries should continue to rely mostly on external demand and foreign capital, or a new approach is needed in order to finance their economic growth in future. The main finding of this research is that instead of experiencing external ‘push’ factors for economic growth by the Governments, a promotion of internal resources is needed in order to enable for “the catching up” process of these countries to continue.

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The Challenge of Economic Growth and Environmental Protection in Developing Economies

The Challenge of Economic Growth and Environmental Protection in Developing Economies

was an attempt to investigate the association between the industrialization and environmental degradation with the help of Environmental Input-Output Analysis (EIOA). So, they selected five major industries, whose contributions to industrial sector are substantial. They found that Industrialization cannot be separated from its environmental impact. The fast growth of production and consumption can create negative externalities such as increased noise and air pollution, road congestion and water pollution. Environmental damage can have a negative effect. Cherniwchan (2012) developed a simple two-sector model of neoclassical growth and the environment in a small open economy to examine how industrialization affects the environment. The model is estimated using sulfur emissions data for 157 countries over the period 1970–2000. Results showed that the process of industrialization was a significant determinant of observed changes in emissions. That means one percent (1%) increase in industrial sector output to total output is associated with an 11.8% increase in the level of emissions per capita.

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Essays on Economic and Policy Time Variations in Small Open Economies

Essays on Economic and Policy Time Variations in Small Open Economies

The first objective of this thesis is to assess whether the transmission mechanism has changed over the past four decades. To this end, the first paper in this thesis (Chapter 2) estimates a time varying structural vector autoregression (SVAR) model. Consistent with the conventional time invariant SVAR model, the time varying SVAR provides a multivariate model through which the propagation of an exogenous change in the cash rate, can be analyzed. In addition, the added flexibility of allowing for time varying parameters and time varying covariance matrix, allows for two notions of effec- tiveness to be explored. The first notion of effectiveness measures the responsiveness of key macroeconomic indicators – inflation and real GDP growth – to a same-sized change in the monetary policy rate. The second metric compares the degree of ex post unexplained cash rate volatility – after accounting for systematic responses to inflation and real GDP growth. There are three main results. First, point-wise estimates from (generalized) impulse response functions suggest that the RBA’s ability to influence real GDP growth and inflation has increased since the RBA adopted the current inflation targeting regime. Second, posterior probabilities from the impulse response analysis provide little evidence that the transmission mechanism has become less effective fol- lowing the GFC period. Third, analysis based on the second metric shows a strong reduction in the level of unexplained cash rate volatility since the RBA adopted the current inflation targeting regime. In light of these results, I conclude that monetary policy effectiveness has increased over the sample period, with little evidence to support the claim of a weaker transmission mechanism since the 2007/08 financial crisis.

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Innovation Capacities in Advanced Economies: Relative Performance of Small
Open Economies

Innovation Capacities in Advanced Economies: Relative Performance of Small Open Economies

As Furman et al. (2002) point out there is a strong patenting bias in those countries which have a history of patents production such the US and Switzerland (due to path dependency and the importance of the history of resource commitments). However, other ‘ new ’ innovative countries ’ rate of growth in patents per million has been nothing short of phenomenal: Singapore, for example, has an average annual patent growth rate of 30% between 1981 and 2008, going from just over 1 patent per million in 1981 to 84 in 2008. Such performance begs analysis and raises the question for us in this paper as to whether smaller economies generally are supported or hindered by their relatively low scale, or low critical mass in economic terms, in achieving innovative success. The varying rates of increase in patent production is treated in detail in Furman and Hayes (2004).

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Winners of globalization

Winners of globalization

the International Finance Corporation, the private sector arm of the World Bank. The developing countries in this category vary from small to large, even very large. They are regarded as emerging because they have adopted market-friendly economic reform programs, resulting in sounder macroeconomic policy structures. China is the largest and most important EME, along with several smaller economies like Tunisia. The common strand between these two economies is that both of them embarked on reform programs and consequently recorded rapid GDP growth. Both of them have liberalized their markets and are in the process of emerging onto the global economic stage. Sustained rapid clip GDP growth is the first indispensable characteristics of an EME. Many of them are in the process of making a transition from a command economy framework to an open market economy, building accountability within the system. The Russian Federation and the East European economies that were part of the Soviet bloc in the past fall under this category. Secondly, other than adoption of an economic reform program, an EME builds a transparent and efficient domestic capital market. Third, it reforms its exchange rate regime because a stable currency creates confidence in the economy and investors in the global capital markets regard it as fit for investment. Fourth, a crucial feature of an EME is its ability to integrate with the global capital markets and attract significant amount of foreign investment, both portfolio and direct. Growing investment—foreign and domestic—implies rising confidence level in the domestic economy. Global capital flows into an EME add volume to its stock market and long- term investment into its infrastructure. For the global investing community the EMEs present an opportunity to diversify their investment portfolios. Investing in the EME gradually became a standard practice among the global investors who wished to diversify, although they added some risk to their portfolios.

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Endogenous Growth Models in Open Economies: A Possibility of Permanent Current Account Deficits

Endogenous Growth Models in Open Economies: A Possibility of Permanent Current Account Deficits

The second reason why this paper directs its attention to the degree of relative risk aversion is because it has been reported that the degree of relative risk aversion in Japan is relatively higher than that in the U.S. It is another important heterogeneity than demographic changes between the U.S. and Japan. Szpiro’s (1986) well-known empirical studies on international comparison of the degree of risk aversion conclude that, of the nine industrialized countries studied, the Japanese have the highest degree of relative risk aversion, e.g. the degree of relative risk aversion in Japan is 2.76 while that in the U.S. is 1.19. Furthermore, it is a well-known fact that compared with the households in the U.S., the households in Japan invest their financial assets much less in risky investments, which clearly indicates that the degree of risk aversion in Japan is much higher than that in the U.S. (e.g., Nakagawa and Shimizu, 2000). In addition, heterogeneity in risk averse behavior has recently been reported from the medical or genetical point of view. Ono et al. (1997) and Nakamura et al. (1997) show that the genetic composition of the receptor for brain chemicals such as serotonin or dopamine differs widely among human races, and that most Japanese have inherited a certain type of receptor composition that produces more cautious and therefore more risk averse characteristics, while many Americans have inherited the other type that produces less risk averse characteristics. Harashima (1998) argues that the so-called “Japanese economic system” or “Japanese capitalism” originates in the higher degree of relative risk aversion in the Japanese.

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Inflation, Growth and Exchange Rate Regimes in Small Open Economies

Inflation, Growth and Exchange Rate Regimes in Small Open Economies

Concerning economies with floating exchange rates, I find that changes in domestic inflation and world (U.S.) inflation affect the domestic capital stock differently according to whether or not credit is rationed. What matters when credit is rationed is how the domestic and foreign rates of inflation affect the self-selection constraint, and they affect this differently. In marked contrast to the literature on closed economies, either credit rationing tends to be observed when domestic rates of inflation are low, or else the scope for credit to be rationed depends in a relatively complicated way on the rate of money creation (inflation). In the first situation, moderate increases in the rate of money growth (inflation) stimulate output when credit is rationed (inflation is initially low), but reduce output when there is no credit rationing (inflation is initially high). Thus there will be inflation thresholds as are observed empirically: inflation and output are positively (negatively) correlated below (above) the threshold. As a consequence, there is a strict limit to the extent to which domestic inflation can be used to stimulate output. Furthermore, the presence of credit rationing seems to increase the scope for both instability and economic fluctuations. When the second situation obtains, however, increases in the domestic rate of inflation always have adverse consequences for real activity and private information (together with high rates of inflation) seems to increase the scope for indeterminacy of dynamic equilibria and for economic fluctuations.

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Fdi and economic growth in the manufacturing sector: an empirical  evidence from south asian economies

Fdi and economic growth in the manufacturing sector: an empirical evidence from south asian economies

not Granger cause GDP in India. It is actually faster economic growth that attracts increased volume of FDI inflows (see also Choe, 2003; Choi, 2004; Carkovic and Levine, 2005). With regard to the reasons for the ambiguous results, it can be caused by potential errors in the estimation method (Nair Reichert and Weinhold, 2001). Mencinger (2003) fin negative growth effect of FDI in eight transitional economies over the period of 1994 to 2001. The author proposes several reasons for a negative growth effect of FDI such as the form of FDI, including majority as Mergers and Acquisitions (M&A) in these eight economies and the proceeds of M&A are spent on imports. These causes an increase in the current account deficit. De Mello (1997) points out that the actual growth effect depends on several channels through, which FDI affect the host economies such as knowledge spillovers and complementarity or substitutability between FDI and host country domestic investment. Similar arguments are shared by the United Nations Economic Commission for Europe (UNECE). The Economic Survey for Europe (UNECE, 2001) states that the growth effect of FDI in transitional recipient economies depends on actual circumstances in those host countries.

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Is Economic Growth Criminogenic for Firms In Developing Economies?

Is Economic Growth Criminogenic for Firms In Developing Economies?

We now consider how several country and firm-level factors may influence the relationship between economic growth and the burden of crime on firms. Economic growth may not only represent labor market opportunities, but may also capture the quality of legal and public institutions (Lederman et al., 2002). Thus we examine the strength of the relationship between economic growth and crime and how this relationship depends on factors such as police, female ownership and management, governance and voter turnouts in elections. The relationship between police, governance and crime have been explored in the literature, and thus we expect the effect of economic growth may be conditional these factors. We also use voter turnout as a proxy for social organization, and thus it would be interesting to see if the effect of economic growth is strengthened by social organization, or weakened by its presence. Finally, given the robust positive relationship between female ownership and management and crime, which is consistent with female headed households and crime, we examine whether economic growth weakens of strengthens this relationship. We use the estimation results in table 1, column 2 as the base as there is a more straightforward interpretation with regards to the magnitude of the effects of interaction variables. Both the Logit and OLS estimations provide qualitatively similar results for economic growth

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Financial Development and Economic Growth Nexus in Emerging European Economies: New Evidence from Asymmetric Causality

Financial Development and Economic Growth Nexus in Emerging European Economies: New Evidence from Asymmetric Causality

The emerging European economies have distinctive features among the developing economies. They are geographically close to each other; is building an institutional structure similar that of the developed Western European countries; and many of those countries are the European Union members. These countries had a period of the transition from centrally planned economic system to the market based economic system through 1990’s, with the exception of Turkey. Another important feature of the emerging Europe countries is the gradual but encompassing integration with the rest of the world. Gill et al. (2012) argued that the economic and commercial relationship of Emerging Europe region have been integrated not only to the Western European economies but to the remaining economies of the world. The transition period left those economies with a human capital stock in need of the new knowledge and skills. Thus, revealed the necessity to restructure the industrial sector and to rebuild many institutions that did not exist in the centrally planned economies or were non-functional.

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INTELLECTUAL CAPITAL PHILOSOPHY IN ACCOUNTING AND FINANCIAL ENGINEERING AND APPLIED MODELS

INTELLECTUAL CAPITAL PHILOSOPHY IN ACCOUNTING AND FINANCIAL ENGINEERING AND APPLIED MODELS

Measuring the intellectual capital is one of the most important issues in the field of knowledge management. One of the main problems of traditional accounting systems is their inadequacy and inability to measure the value of intellectual capital in corporate financial statements. The present age is the age of knowledge economy in which the role and importance of knowledge capital in the economy and business have changed a lot and the importance of it is increasing day by day. This has led to the importance of intellectual capital as a research and economic category. In the complex and evolving business environment of the organization's lives, the introduction of new products is the creation of innovation and the provision of value-added processes based on modern knowledge. For this reason, managers are required to measure intellectual capital as an important measure for increasing the business performance of organizations. In fact, traditional financial accounting is not able to calculate the true value of companies. It only measures the financial sheet and tangible assets. Intellectual capital brings a perfect new model for observing the real value of organizations and it can be used to calculate the future value of companies. Banks are no exception to this category, and like participating in the calculation of their true value and accounting, they need to measure their financial balance sheets and their assets.

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Economic growth : past trends and future prospects of advanced economies

Economic growth : past trends and future prospects of advanced economies

Third, unlike in earlier decades there are no high growth economies in the 00s. The best performance comes, somewhat unexpectedly, from Greece, but at only 1.8% per annum. This is followed by Sweden and Australia (both 1.5% pa). Also, for the first time a country (Italy) exhibited a negative annual growth rate (-0.2% pa) over a decade.

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Dynamic Externalities and Regional Development: The case of Tunisia

Dynamic Externalities and Regional Development: The case of Tunisia

1. Dynamic Externalities and local economic growth: theoretical and empirical facts Local or regional economic development emerged, as a concept in the 60s following the Great Practical Plan aiming at upgrading the regions left behind. This process is explained through various indexes and variables characterizing the local economic structure used also to investigate the evolution of spatial distribution patterns of the economic activities. The increasing inequalities in the living conditions and access to resources show the importance of mobility factor in the agglomeration process. As a matter of fact, developed areas attract the business organizations seeking new investment opportunities; indeed, the companies are ready to pool their activities, forming a "spatial cluster". We have already revealed a relationship between the location of firms and the average size of plants. This spatial concentration is bolstered by scale returns allowing companies to reduce their production costs. Besides, the firms established in these areas take advantage of clustering with other firms in the same sector which raising a positive effect of localization economies. Furthermore, this leads to an inter- sectoral positive effect of urbanization economies which promotes economic growth.

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Economic Analysis Of Loan Repayment Patterns Of MSMEs

Economic Analysis Of Loan Repayment Patterns Of MSMEs

MSME credit plays a vital role in the development of economy. The complete growth of the MSME sector requires a long-term commitment from bank and financial institutions to ensure that this sector remains sustainable. Further, the varying financial needs of the diverse enterprises making up the MSME sector require intermediation through a variety of financial institutions. For this reason the Bank and financial institutions are committed to continue financing. But, usually a considerable portion of loan is given against collateral security which requires repayment. However, repayment problems turn into a main hurdle for the financial institutions to continue providing credit services. The present paper studies the loan repayment patterns of MSME and its relationship with credit adequacy. A descriptive analysis was done to permit the study to make use of both quantitative and qualitative data collection techniques and data analysis procedures. This study analyzed the MSMEs loan repayment capacity using data from 112 MSMEs from Telangana region.

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Openness and productivity of the Swiss economy

Openness and productivity of the Swiss economy

With regard to the trade openness indicators, the results are less conclusive. Nominal and real trade openness are not significantly related to productivity at the 5 % signifi- cance level. If we look at exports and imports without gold and transit trade, we find a significant positive long-run relation to productivity. However, the significance of the adjustment coefficients indicate that exports respectively imports adjust after a deviation from the long-run rela- tionship. In this system, productivity is weakly exogenous. In addition to these openness indicators, we test the relationship between the real effective exchange rate and labor productivity and find a significant positive long-run relation. Therefore, a higher real exchange rate is accom- panied with higher productivity. At first sight, a positive relation is not in line with theoretical considerations because an overvalued currency should dampen exports and therefore economic growth. However, Rodrik (2008) finds empirical evidence that this reasoning is only true for developing countries. He finds no negative relation for advanced economies. Moreover, the adjustment coefficients indicate that the real effective exchange rate adjusts after a deviation from the long-run relationship, productivity does not. Hence, an appreciation of the real effective exchange rate may be attributed to an increase in labor productivity.

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Impact of high non-performing loan ratios on bank lending trends and profitability

Impact of high non-performing loan ratios on bank lending trends and profitability

The topic of high NPL ratios in national economies has been the focus of many research projects across the world in recent years. The relationship between NPL ratios and the overall health of a national economy is well-established; a meta-analysis by a team of researchers in 2019 led by Professor Shihadeh, Gamage, and Hannon clearly showed the relationship between the increasing NPL ratios in select countries and the impact they had. In addition to that study, multiple studies conducted at universities around the world point to the fact that a high NPL ratio is a primary indicator for bank failure. If taken at the

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Is Business Cycle Asymmetry Intrinsic in Industrialized Economies?

Is Business Cycle Asymmetry Intrinsic in Industrialized Economies?

We consider a model-averaged forecast-based estimate of the output gap to measure economic slack in ten industrialized economies. Our measure takes changes in the long-run growth rate into account and, by addressing model uncertainty using equal weights on different forecast- based estimates, is robust to different assumptions about the underlying structure of the economy. For all ten countries in the sample, we find that the estimated output gap has much larger negative movements during recessions than positive movements in expansions, suggesting business cycle asymmetry is an intrinsic characteristic of industrialized economies. Furthermore, the estimated output gap is always strongly negatively correlated with future output growth and unemployment and positively correlated with capacity utilization. It also implies a convex Phillips Curve in many cases. The model-averaged output gap is reliable in real time in the sense of being subject to relatively small revisions.

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Savings, Foreign Direct Investment Inflows and Economic Growth in Emerging Asian Economies

Savings, Foreign Direct Investment Inflows and Economic Growth in Emerging Asian Economies

The studies on the relationship between economic growth and savings have reached mixed findings depending on country/country group, study period and methods. Carroll and Weill (1994), Sinha and Sinha (1998), Anoruo and Ahmad (2001), Agrawal (2001), Baharumshahl et al. (2003), Verma (2007), Ekinci and Gul (2007), Odhiambo (2009), Agrawal et al. (2010) and Andrei and Huidumac-Petrescu (2013) found that there was unidirectional causality from economic growth to savings, while Aghion and Howitt (2005), Greenidge and Miller (2010), Jangili (2011), Budha (2012), Tang and Ch’ng (2012), Tang and Lean (2013) and Tang and Tan (2014) found that there was unidirectional causality from savings to economic growth. On the other hand relatively few studies such as Tang and Chua (2012) and Gulmez and Yardımcıoglu (2013) found that there was bidirectional causality between economic growth and savings.

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Institutional Quality and Economic Growth: The Case of Emerging Economies

Institutional Quality and Economic Growth: The Case of Emerging Economies

Institutional quality has an important role in stimulating economic activities and accelerating economic growth especially in emerging markets where great efforts have been put to improve institutional quality. In this paper, we collect data in the period of 2002-2015 for 29 emerging markets to examine the impacts of in- stitutional quality on economic growth. By conducting the system-GMM esti- mators, we find that the institutional quality has positive impacts on economic growth in emerging markets. In addition, institutional quality improvement has negative impacts on the economic growth effect of trade openness and FDI. The findings also demonstrate that the competition brought by trade openness may impede the spill-over effect of FDI. However, better institutional can mitigate the competition brought by trade openness in the areas that FDIs operate to op- timize their spill-over effect. Policy makers in emerging economies should im- prove institutional quality and competitive capacity of domestic firms before promoting trade openness and FDI. This also provides implication to trade poli- cies for the period 2015-2018 that emerging economies should focus on im- proving their capability in absorbing the benefits from economic integration with stronger institutional reforms.

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ECONOMIC GLOBALIZATION AND ECONOMIC GROWTH IN THE DEVELOPING ECONOMIES: A CASE OF NIGERIAN ECONOMY

ECONOMIC GLOBALIZATION AND ECONOMIC GROWTH IN THE DEVELOPING ECONOMIES: A CASE OF NIGERIAN ECONOMY

Licensed under Creative Common Page 349 Although, the F-statistic result indicated that all the incorporated globalization and other indicators are simultaneously significant at 5% critical level. This prompts the rejection of the null hypothesis “globalization has no significant effect on economic growth in Nigeria”. While, the adjusted R-squared result reveals that 76.7% of the total variation in economic growth proxy by real gross domestic product (RGDP) is accounted by changes in exchange rate (EXR), interest rate (INTR), inflation rate (INFL), foreign direct investment (FDI), trade openness (TOP), and financial openness (FOP) during the review period. The Durbin-Watson test result reveals that there is presence of weak positive serial correlation among the residuals, because of the d- value (0.9955) is less than two. Also, the result is not spurious since coefficient of determination is not greater than Durbin-Watson value.

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