Our paper consists of four sections. In the next section, we estimate tentative time series of intangibleinvestment following the methodology developed by Corrado, Hulten, and Sichel (2005, 2006). We find that the ratio of intangible to tangible assets is lower in Japan than in the US. In Section 3, we construct intangible capital by using the intangibleinvestment series and conduct a growth accounting exercise. The results of the growth accounting with intangible capital show that the contribution of intangible capital to economicgrowth is small because the share of intangible capital in total capital is also relatively small. However, this result does not mean that the potential role of intangible capital is not important for economicgrowth. If intangible capital in Japan contributed to economicgrowth at the same rate as in the US, labor productivity growth in Japan would be 0.2 percentage points higher. The last section summarizes our results and their policy implications and discusses future tasks.
Our paper consists of four sections. In the next section, we estimate time series of intangibleinvestment following the methodology developed by Corrado, Hulten, and Sichel (2005, 2006). We find that the ratio of intangible to tangible assets is lower in Japan than in the United States. We also estimate intangibleinvestment by sector and find that the intangibleinvestment/value added ratio in the service sector is much lower than that in the manufacturing sector. In Section 3, we construct intangible capital by using the intangibleinvestment series and conduct a growth accounting exercise. The results of the growth accounting with intangible capital show that the contribution of intangible capital to economicgrowth is small because the share of intangible capital in total capital is also relatively small. However, this result does not mean that the potential role of intangible capital is not important for economicgrowth. If intangible capital in Japan were to contribute to economicgrowth at the same rate as it does in the United States, labor productivity growth in Japan would be 0.2 percentage points higher than it actually is. In Section 4, we conduct a sensitivity analysis focusing on the parameters used for estimating investment in firm-specific resources. We find that when we take Japanese data concerning firm-specific human resources and organizational structure into account, the intangibleinvestment/GDP ratio is higher than that estimated in the base case. On the other hand, the effect of intangible capital deepening becomes smaller than that estimated in the base case, because the growth in firm-specific human capital in the alternative case is slower than that estimated in the base case. The last section summarizes our results and their policy implications and discusses future tasks.
This article presents an empirical investigation of the role of IT Information Technology capital in the Japanese macroeconomy, with a particular focus on the adjustment of IT capital stock. We use the Translog model in this study and treat IT capital as the only quasi-fixed factor. We found that the shadow price of IT capital was largely decreased, and that there was a significant diﬀerence in the shadow prices between the beginning of the measurement periods and in recent years. There was also a high investment incentive in most periods. We found evidence for the contribution of IT capital to labor productivity, and our findings are consistent with the proposition that IT capital contributes to output growth.
This paper tries to calculate some facts for the “knowledge economy”. Building on the work of Corrado, Hulten and Sichel (CHS, 2005,9), using new data sets and a new micro survey, we (1) document UK intangibleinvestment and (2) see how it contributes to economicgrowth. Regarding investment in knowledge/intangibles, we find (a) this is now greater than tangible investment at, in 2008, £141bn and £104bn respectively; (b) that R&D is about 11% of total intangibleinvestment, software 15%, design 17%, and training and organizational capital 22%; (d) the most intangible-intensive industry is manufacturing (intangibleinvestment is 20% of value added) and (e) treating intangible expenditure as investment raises market sector value added growth in the 1990s due to the ICT investment boom, but slightly reduces it in the 2000s. Regarding the contribution to growth, for 2000-08, (a) intangible capital deepening accounts for 23% of labour productivity growth, against computer hardware (12%) and TFP (40%); (b) adding intangibles to growth accounting lowers TFP growth by about 15% (c) capitalising R&D adds 0.03% to input growth and reduces lnTFP by 0.03% and (d) manufacturing accounts for just over 40% of intangible capital deepening plus TFP.
In Nigeria, Samuel, (2007) examines the relationship between foreign direct investment (FDI) and economicgrowth and measuring the gross domestic product (GDP) finds out that gross domestic product causes foreign direct investment and that the contribution of FDI to economicgrowth is significant. Nadiri (1993) in his study, also finds positive and significant effects from U.S sourced FDI on productivity growth of manufacturing industries in France, Germany Japan and United kingdom. Equally Lumbila (2005) used a panel analysis to study the impact of foreign direct investment on economicgrowth in 47 African countries between 1980 and 2000 and found that FDI exerts a significant positive effect on economicgrowth. Hapiyaremya and Ziesemer (2006) in a study of SSA Countries found that the overall level of capital investment does not seem to significantly affect economicgrowth because most of the capital was in the primary sector. Similarly, Adelegan (2000) explored the seemingly unrelated regression model to examine the impact of FDI on economicgrowth in Nigeria and found out that FDI is pro-consumption and negatively related to gross domestic investment. Finally, Ariyo (1998) studied the investment trend and its impact on Nigeria’s economy growth over the years. He found out that only private domestic capital consistently contributed to raising GDP growth rates during the period of 1970-1995.
At the same time, the measurement and evaluation of R&D investment per- formance is also the focus of many scholars. Using data from US companies, Scherer confirmed that corporate R&D investment will improve innovation performance, indicating a linear positive correlation between R&D input and innovation output . Qinmei Wang et al. regarded the contribution of R&D investment in economicgrowth as the sum of the three effects, and analyzed the dynamic impact of R&D investment on economicgrowth by logarithmic mean Dirich’s index decomposition (LMDI). The results showed the total R&D input. The impact on economicgrowth is the most important, and the change in R&D input structure has a positive effect on economicgrowth, but the impact is small, and R&D intensity has a significant effect on the economy . Yanbing Wu conducted research on relevant data of manufacturing industry and found that R&D investment has a significant role in promoting the total factor productivity of China’s industries and industries . Wen Pang et al. used the factor analysis method to study the R&D investment of colleges and universities nationwide. It is empirically concluded that the regional differences in the R&D input and output benefits of colleges and universities are large, and the basic research of colleges and universities plays an important role in economicgrowth . Jianping Peng used the dynamic panel data model to conduct research and anal- ysis on China’s provinces and cities except Tibet, and found that China’s R&D input and output elasticity is significant. Every 1% increase in R&D investment stock will increase GDP by 0.096 to 0.106 percentage points .
This paper will examine the potential that a contraction in U.S. finance has to impinge aggregate output, looking at both the direct effects of a diminution in the size of the sector, and at potential spillovers to the rest of the economy. Steindel (2090) found that in the data used in the National Income and Product Accounts, substantial, sustained contractions in both finance and real estate do not appear to, by themselves, be capable of accounting for very large and prolonged slowdowns in activity. This paper re-examines those findings in the wake of updated data. Furthermore, taking into account the work of Corrado, Hulten, and Sichel (2005, 2009) on the role of intangible investments in U.S. economicgrowth, a modified estimate of financial sector activity is discussed. This measure assumes that the unusually large compensation received by workers in the financial sector (documented by Phillipon and Reshef, 2009) may be a proxy for investment in market knowledge. The resulting augmentation of financial investment appears capable of accounting for a meaningful proportion—on the order of one-third—of the brisk trend growth rate of multifactor productivity (MFP) in the sector in the last generation. This allows for a more systematic estimation of the potential direct aggregate impact of a contraction in finance.
In this study, the heterogeneous role of intangible capital in production and productivity spillover is investigated based on sectoral level data for 39 economies constructed from the WIOD, which contribute to the literature confirming intangible capital as a source of growth, the literature confirming the productivity spillover effect of intangible capital, and the literature related to income inequality as well as to the pattern of productivity spillover effects. In order to construct a sufficiently large dataset for the heterogeneity analysis, the method of this study might have sacrificed some accuracy compared with the method used in constructing national level data by Corrado et al. (2009) and the literature following it. The source of inaccuracy might be caused by the deviation of the measured outsourcing ratio from the actual outsourcing ratio, ‘other business activities’ intermediates including expenditure that is not intangibleinvestment, the distribution of computerized information investment across sectors inconsistent with that of ‘computer and related services’ intermediate etc. Nevertheless, the econometric method deployed in this study has some tolerance of measurement error, which is likely to make the constructed dataset satisfy the analysis requirement 11 . Multilevel analysis that is a
A viable equity market can serve to make the financial system more competitive and efficient. Without equity markets, companies have to rely on internal finance through retained earnings. Large and well established enterprises are in a privileged position because they can make investment from retained earnings and bank borrowings, while new companies do not have easy access to finance. Without being subjected to the scrutiny of the stock market, big firms get bigger and for the emerging smaller companies, retained earnings and fresh cash injections from the controlling shareholders may not be able to keep pace with the needs for more equity financing which only an organized market place could provide (Popoola, 2014). The Nigerian Capital Market came into being in 1960 as the Lagos Stock Exchange and was changed to the Nigerian Stock Exchange in December 1977. It began operations in 1961 with 19 securities listed for trading. Branches were opened in key cities of the country. There are 13 branches of The Nigerian Stock Exchange (excluding the head office in Lagos). The NSE was growing consistently in order to meet the needs of its customers and to achieve the highest level of competitiveness. The Exchange operates fair, orderly and transparent markets that bring together the best of African enterprises and the local and global investor communities. The Nigerian Stock Exchange is poised to champion the acceleration of Africa’s economic development and to become ‘’the Gateway to African Markets’’ Wikipedia (2012).
In general the relationship between measures of democracy and economic performance is far from clear (Barro, 1996, 1997; Durham, 1999) because on the one hand, economicgrowth requires a long-term rule of law and protection of civil and political freedoms, as stated North (1995), and on the other hand, as noted by Olson (1982), political freedom promotes the demands of special interest groups for redistributive policies. The efforts of these groups may produce a legislative deadlock and political sub-optimal, and thus affect growth. In a literature review, Brunetti (1997) compared 17 studies finding a positive, negative or not significant between growth and democracy.
Another influence factor of one region’s development is represented by its production structure (economic profile). The differences in the output structure lead to differing answers and reactions both from one area to another, and even from one sector to the other. For instance, in the situation when a region has a marked agricultural character, it is very probable that its development shall be affected by unexpected events (in particular natural ones), being less sensitive to cyclical changes of demand. The predominance of one or another sector can be the reason for fluctuations at macroeconomic level or at the level of other regions with dissimilar specialisations. The variations present into the formation of agricultural incomes trigger changes in the demand or consumption of other industrial activities, or in the tertiary sector.
Aitken and Harrison (1999) using panel data to investigate the impact of FDI on the performance of domestic firms in Venezuela for the period 1976-1989 found that foreign equity participation was positively correlated with increases in productivity with recipient plants with less than 50 employees. Also, the increase in foreign ownership negatively affected the productivity of wholly domestically owned firms in the same industry. They did not find any evidence to support technology “spillovers” from foreign firms to domestically owned firms. They concluded that gains from foreign investment appeared to be captured by joint ventures. However, in their study, they did not consider other gains from FDI such as employment creation, increase in human capital through training and learning by doing. They also failed to capture the long-run effects of FDI.
The neoclassical economists argue that FDI influences economicgrowth by increasing the amount of capital per person. However, because of diminishing returns to capital, it does not influence long-run economicgrowth. Even though FDI is positively correlated with economicgrowth, host countries require minimum human capital, economic stability and liberalized markets in order to benefit from long-term FDI inflows. Growth in neoclassical theory is brought about by increases in the quantity of factors of production and in the efficiency of their allocation. In a simple world of two factors (labour and capital), it is often presumed that low-income countries have abundant labour but scarce capital. This situation arises owing to shortage of domestic savings in these countries, which places constraint on capital formation and hence growth. Even where domestic inputs in addition to labour are readily available and hence no problem of input supply, increased production may be limited by scarcity of imported inputs upon which production processes in low- income countries are based. International capital flows (ICFs) readily become an important means of helping developing countries to overcome their capital shortage problems. One of the components of international capital flows is foreign private direct investment (FDI). Other components are Official flows from bilateral sources (e.g developed and OPEC countries), multilateral sources (such as the World Bank and its two affiliates, the international Development Association IDA, and the international finance corporation-IFC, on concessional and non-concessional terms and Commercial Bank loans (including export credits).
Public Investment/Expenditure is also another influential variables affecting economicgrowth either positively or negatively. The role of public expenditure is seen from two aspects. Public investment, in the form of human and physical investments, is an input to economicgrowth; however public expenditure on unproductive sector reduces the performance of the economy by reducing the amount of money available for productive investments. In the short run in two out of three studies, public expenditure is found that it negatively affects economicgrowth. According to Mustefa (2014) negative sign of public investment may be observed since public spending has a long gestation period. It creates a crowding out effect on growth in the short run. In the long run, however, studies favor the positive outcomes of public expenditures. This is in line with the endogenous growth models which states that fiscal policy can determine the national level of output (Mustefa (2014) and Tadese(2012)).
Investment in Ireland by multinational companies from the United States of America is substantial. This represents the continuation of an economic relationship that has existed for several decades. Multinational companies are attracted to locate operations in Ireland by a range of factors and US companies are strongly represented among them. In addition to standard investment location factors, such as regulatory environment, workforce skills, costs, infrastructure and tax policy, US companies are also attracted to Ireland by an English-speaking population, EU membership that allows Ireland to provide an export platform to supply markets in Europe and Ireland’s large network of tax treaties. Despite the importance of US investment in Ireland, it is difficult to measure the size of the contribution of US multinational companies accurately. A range of data sources exists but they are of varying usefulness. This paper briefly reviews some of existing literature and data on the economic aspects of US multinational investment in Ireland. However, the focus of the paper is to examine in detail the fiscal contribution of US companies. This is possible using Revenue data on tax payments and returns. Analysing data on the major taxes, sectoral composition and changes over time provides a clear picture of the fiscal contribution of US companies to the Irish economy for the first time.
In the 20th century, theories of economicgrowth were based on classical streams, Adam Smith and David Ricardo were figures of classical economists who discussed many economic theories, including economicgrowth. In his book entitled An Inquiry to the Nature and Causes of Wealth of Nations (1776), Adam Smith explained how to analyze economicgrowth through two factors, namely the total output factor and the population growth factor. Meanwhile, according to Joseph A. Schumpeter in his book entitled Theory of Economic Development, discusses the important role of entrepreneurs in development. Schumpeter concluded that the process of economicgrowth is basically a process of innovation carried out by innovators and entrepreneurs in the global market when information and technology development.
The future economic success of the UK relies on the ideas, knowledge and talent of people from across the country. Universities are central to building this capacity, driving innovation and creating new industries in all our regions. We each share a commitment to ensuring that the research base continues to contribute to economicgrowth by driving profits, attracting inward investment and creating jobs across the country. We show here how these efforts are succeeding, and how future policy could add even more value to the research and innovation system.
Despite the fact that history of the growth performance was poor in the past, the Ethiopian Economy is growing at a rapid rate of double digit for the last few years. Real GDP averaged 11.2% per annum during the 2003/04 and 2008/09 period, placing Ethiopia among the top performing economies in sub Saharan Africa (Ncube, Lufumpa and Ndikumana, 2010). Also the government put a lot of efforts to attract FDI in order to internalize the growth rate of the economy. However, the country is surrounded by multidimensional problems that challenge to sustain the current trend of economicgrowth. The most important permanent feature of the Ethiopian economy is the presence of resource (financial) gap. The resource gap can be explained as the presence of savings investment gap, foreign exchange gap and fiscal gap. The presence of these resource gap forces the country to rely on an inflow of foreign finance (specifically foreign direct investment) to bridge the gap. Gross domestic saving as a proportion of GDP is low and unlikely to achieve this growth rate by mobilizing the major domestic savings. In 2005 gross domestic saving was only 2.6% of GDP. That is, total consumption accounted for 97.4% of the GDP (EEA, 2007). So, due to the subsistence nature of the economy, it is unlikely to improve the performance of the economy by enhancing private domestic investment. That is, the performance of Ethiopia in improving the level of investment and promotion of economicgrowth through domestic capital sources and private capital inflow alone is far from adequate. This makes the importance of foreign direct investment indisputable to the performance of the economy.
The Polish Presidency in the Council of the European Union comes in a particular moment of the European agenda. The new shape of EU policies will be formally negotiated by the Council and the European Parliament after the official presentations of those policies by the European Commission. The negotiations will be especially challenging in the light of the economic, social and political effects of the crisis and of its vastly diversified impact on EU Regions. The Presidency Trio: Poland-Denmark-Cyprus will ensure continuity in the EU proceedings in order to provide a smooth transition into the next programming period. Poland, as a country rapidly closing the gap in economic and social development through efficient imple- mentation of Cohesion Policy, has a special role to play at a time when post-crisis negotiations of the new programming period begin. The aim of Cohesion Policy is to support comprehensive actions for the well-being of future generations and to invest in human and intellectual capital in order to allow the whole Europe to reach its potential and face the challenges in the national, European and global scale. Therefore, the Polish government has supported the Europe 2020 Strategy from the very beginning. The same vision will dominate our programme regarding the shape of Cohesion Policy.
Robust growth in renewable power generation will also create opportunities in related sectors. Major investment will be necessary in order to smoothly integrate intermittent renewable energy sources into the national grid. There is already momentum on this front, with Spain and Morocco agreeing in February this year to construct a third power interconnector between the two countries under the Strait of Gibraltar. Greater integration with the European power grid would encourage further renewables investment by enabling surplus generation to be exported to Europe.