Structural change and economic growth in India: a comparative study of Punjab

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anirban Sanyal ◽  
Nirvikar Singh
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Structural Changes ◽  
Green Revolution ◽  
State Level ◽  
Productivity Change ◽  
Time Varying ◽  
Content Type ◽  
Panel Regressions ◽  
Time Varying Parameter

Purpose The Green Revolution transformed agriculture in the Indian State of Punjab, with positive spillovers to the rest of India, but recently the state’s economy has fallen dramatically in rankings of per capita state output. Understanding the trajectory of Punjab’s economy has important lessons for all of India. Economic development is typically associated with changes in economic structure, but Punjab has remained relatively reliant on agriculture rather than shifting economic activity to manufacturing and services, where productivity growth might be greater. Design/methodology/approach The authors empirically examine structural change in the Punjab economy in the context of structural change and economic growth across the States of India. The authors calculate structural change indices and map their pattern over time. The authors estimate panel regressions and time-varying parameter regressions, as well as performing productivity change decompositions into within-sector and structural changes. Findings Panel regressions and time-varying-coefficient regressions suggest a significant positive influence of structural change on state-level growth. In addition, growth positively affected structural change across India’s states. The relative lack of structural change in Punjab’s economy is implicated in its relatively poor recent growth performance. Comparisons with a handful of other states reinforce this conclusion: Punjab’s lack of economic diversification is a plausible explanation for its lagging economic performance. Originality/value This paper performs a novel empirical analysis of structural change and growth, simultaneously using three different approaches: panel regressions, time-varying parameter regressions and productivity decompositions. To the best of the authors’ knowledge, it is the only paper we are aware of that combines these three approaches.

Variations in economic growth across states in Malaysia: an exploratory analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yusniliyana Yusof ◽  
Kaliappa Kalirajan
Keyword(s):  
Economic Growth ◽  
Socioeconomic Development ◽  
Secondary Data ◽  
State Level ◽  
Bootstrap Sampling ◽  
Content Type ◽  
Estimation Techniques ◽  
Development Index ◽  
Three Stage Least Squares ◽  
Development Gap

PurposeThe study contributes to the aim of regional development policy in reducing regional disparities, by examining the spatial balance in socioeconomic development across the states of Malaysia based on composite development index (CDI). Besides, the study has attempted to understand the issues in the development gaps across Malaysian states by evaluating the factors that explain the variation in economic growthDesign/methodology/approachThis study uses three-stage least squares (3SLS) and bootstrap sampling and estimation techniques to examine the factors that explain the variations in the growth of development across the states in Malaysia. The analysis involves 13 states in Malaysia (Johor, Melaka, Negeri Sembilan, Pulau Pinang, Perak, Perlis, Selangor, Kedah, Kelantan, Pahang, Terengganu, Sabah and Sarawak) from 2005 to 2015.FindingsThe pattern in the spatial socioeconomic imbalance demonstrates a decreasing trend. However, the development index reveals that the performance of less developed states remained behind that of the developed states. The significant factors in explaining the variation in growth across the Malaysian states are relating to agriculture, manufacturing, human capital, population growth, Chinese ethnicity, institutional factors and natural resources.Research limitations/implicationsThe authors focused on Malaysian states over the period between 2005 and 2015. The authors encountered some limitations in obtaining relevant data such as international factors and technological change that might also explain the variation in economic growth as the data on these variables are not reported at the state level. Moreover, the data on GSDP by sector was only available from the year 2005. Second, the study is based on secondary data. Future studies might examine the factors that contribute to the development gap across Malaysian states through interviews or questionnaires and compare the findings with the existing results. Despite its limitations, this study contributes to the existing literature that emphasizes on spatial balance of socioeconomic in a developing country, focusing on Malaysian states.Practical implicationsThese findings provide guidance for policymakers by understanding key potential areas to reduce the disparity in economic growth across Malaysian states by understanding their impact on the growth.Originality/valueThis study employs different method of 3SLS and bootstrap sampling and estimation techniques in examining the factors that explain the variations in the growth of development across the states in Malaysia.

Disintermediation of banks in a developing economy

2019 ◽  
Vol 45 (2) ◽  
pp. 222-243 ◽  
Author(s):  
Tahseen Mohsan Khan ◽  
Syed Kumail Abbas Rizvi ◽  
Ramla Sadiq
Keyword(s):  
Design Methodology ◽  
Structural Changes ◽  
Banking System ◽  
Causality Test ◽  
Correction Model ◽  
Content Type ◽  
Balance Sheets ◽  
Panel Regressions ◽  
The Impact ◽  
Major Hypothesis

Purpose The purpose of this paper is to investigate how Pakistani banks manage their portfolios (lending vs investment) when the economic indicators are not supportive. This study investigates three aspects of the banking system in Pakistan – prevalence of disintermediation, post-crisis profitability orientation and depositor protection by financial system in unfavorable conditions. Design/methodology/approach This study is limited to identifying the key economic and financial drivers behind disintermediation and its subsequent impact on banks’ profitability and depositors’ protection. GLS panel regressions and Engle–Granger causality test as specified by the error correction model have been used to test the major hypothesis of this study. Findings This study shows that small banks have been shifting major part of their portfolios toward risk-free investments to be able to maintain their profitability more efficiently and effectively, like large banks. The study also observes that significant pairing causality exists between gross credit loans and investments confirming disintermediation hypothesis for all types of banks except Islamic or Sharia compliant banks, whereas for significant pairing causality, the results are mixed for remaining variables among gross credit loans as a proportion of assets and economic variables that include GDP growth, unemployment, KSE-100 and SBP policy rate. It is also confirmed by the results that disintermediation improves banks profitability and depositor protection, thus providing a good rationale and justification to banks for opting it. Originality/value The study focuses on the impact of structural changes in portfolios only of commercial banks’ revenue-generating assets not including other financial institutions as a part of banking system. Furthermore, data are extracted from balance sheets and is the sole property of corresponding author.

The structure and changes of China’s land system

2019 ◽  
Vol 11 (3) ◽  
pp. 471-488 ◽  
Author(s):  
Liu Shouying
Keyword(s):  
Economic Growth ◽  
Institutional Change ◽  
Structural Changes ◽  
Structural Characteristics ◽  
Institutional Arrangements ◽  
Reform Process ◽  
Content Type ◽  
The Past ◽  
Land System ◽  
Rapid Economic Growth

Purpose The purpose of this paper is to analyze the structure and changes of China’s land system. To achieve this aim, the paper is divided into four parts. The first part gives a brief introduction to the structural characteristics of the Chinese land institutional arrangements; the second part analyzes the reform process of the land system in the past 40 years and its path of change; the third part engages the discussion about the historic contribution made by the land institutional change to rapid economic growth and structural changes; and the final part is conclusion and some policy implications. Design/methodology/approach After 40 years of reforms and opening up, China has not only created a growth miracle unparalleled for any major country in human history, but also transformed itself from a rural to an urban society. Behind this great transformation is a systemic reform in land institutions. Rural land institutions went from collectively owned to household responsibility system, thereby protecting farmers’ land rights. This process resulted in long-term sustainable growth in China’s agriculture, a massive rural-urban migration and a historical agricultural transformation. The conversion of agricultural land to non-agricultural uses and the introduction of market mechanisms made land a policy tool in driving high economic growth, industrialization and urbanization. Findings Research shows that the role of land and its relationship with the economy will inevitably change as China’s economy enters a new stage of medium-to-high speed growth. With economic restructuring, low-cost industrial land will be less effective. Urbanization is also shifting from rapid expansion to endogenous growth so that returns on land capitalization will decrease and risks will increase. Therefore, China must abandon land-dependent growth model through deepening land reforms and adapt a new pattern of economic development. Originality/value This paper gives a brief introduction to the structural characteristics of the Chinese land institutional arrangements, analyzes the reform process of the land system in the past 40 years and its path of change, and evaluates the historic contribution made by the land institutional change to rapid economic growth and structural changes.

scholarly journals Sectoral Volatility, Development, and Governance: A Case Study of Pakistan

2006 ◽  
Vol 45 (4II) ◽  
pp. 797-817
Author(s):  
Toseef Azid ◽  
Naeem Khaliq ◽  
Muhammad Jamil
Keyword(s):  
Growth Rate ◽  
Structural Change ◽  
Service Sector ◽  
Structural Changes ◽  
Agricultural Sector ◽  
Green Revolution ◽  
Rate Of Growth ◽  
Agriculture Industry ◽  
The Future

Development of overall economy of any country largely depends upon the characteristics of different prominent sectors such as agriculture, industry, services, etc. Sharp structural change in prominent sectors are experienced by the Pakistan’s economy during the last four decades, in which industrial and service sector have exhibited an extra ordinary rate of growth, while the agricultural sector did not shown that rate of growth which was experienced during the time of green revolution. Due to these structural changes in the prominent sectors volatility of growth rate has been experienced by the economy. To the extent that most of the recent volatility in growth rate of GDP can be attributed to the increasing share of the some volatility of the some prominent sectors, the analysis of their volatility can be useful in providing some enlightenment on the factors behind this phenomenon and its implications for the formulation of the policy in the future.

Innovation, institutions and economic growth in sub-Saharan Africa – an IV estimation of a panel threshold model

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joseph Ato Forson ◽  
Rosemary Afrakomah Opoku ◽  
Michael Owusu Appiah ◽  
Evans Kyeremeh ◽  
Ibrahim Anyass Ahmed ◽  
...  
Keyword(s):  
Economic Growth ◽  
Developing Economies ◽  
Innovation Policy ◽  
Threshold Model ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Panel Regressions ◽  
Sub Saharan ◽  
The Impact ◽  
The Relationship

PurposeThe significant impact of innovation in stimulating economic growth cannot be overemphasized, more importantly from policy perspective. For this reason, the relationship between innovation and economic growth in developing economies such as the ones in Africa has remained topical. Yet, innovation as a concept is multi-dimensional and cannot be measured by just one single variable. With hindsight of the traditional measures of innovation in literature, we augment it with the number of scientific journals published in the region to enrich this discourse.Design/methodology/approachWe focus on an approach that explores innovation policy qualitatively from various policy documents of selected countries in the region from three policy perspectives (i.e. institutional framework, financing and diffusion and interaction). We further investigate whether innovation as perceived differently is important for economic growth in 25 economies in sub-Saharan Africa over the period 1990–2016. Instrumental variable estimation of a threshold regression is used to capture the contributions of innovation as a multi-dimensional concept on economic growth, while dealing with endogeneity between the regressors and error term.FindingsThe results from both traditional panel regressions and IV panel threshold regressions show a positive relationship between innovation and economic growth, although the impact seems negligible. Institutional quality dampens innovation among low-regime economies, and the relation is persistent regardless of when the focus is on aggregate or decomposed institutional factors. The impact of innovation on economic growth in most regressions is robust to different dimensions of innovation. Yet, the coefficients of the innovation variables in the two regimes are quite dissimilar. While most countries in the region have offered financial support in the form of budgetary allocations to strengthen institutions, barriers to the design and implementation of innovation policies may be responsible for the sluggish contribution of innovation to the growth pattern of the region.Originality/valueSegregating economies of Africa into two distinct regimes based on a threshold of investment in education as a share of GDP in order to understand the relationship between innovation and economic growth is quite novel. This lends credence to the fact that innovation as a multifaceted concept does not take place by chance – it is carefully planned. We have enriched the discourse of innovation and thus helped in deepening understanding on this contentious subject.

Informality and structural change: evidences from microenterprises in India's unorganised manufacturing sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shromona Ganguly
Keyword(s):  
Structural Change ◽  
Small Firm ◽  
Small Firms ◽  
Structural Changes ◽  
Manufacturing Sector ◽  
Labour Productivity ◽  
Capital Intensity ◽  
World Market ◽  
Productivity Analysis ◽  
Content Type

PurposeThis article analyses the structural change in microenterprises located at India's unorganised manufacturing sector in terms of output mix, choice of technique and productivity during the last few decades.Design/methodology/approachBased on data collected from a quinquennial survey of unorganised firms, this study attempts productivity analysis by using the growth accounting technique.FindingsThe paper finds that there is a significant structural change which has occurred in the small firm sector in Indian manufacturing. The share of capital-intensive industries has increased substantially in recent years. Further, though small firms are more labour intensive, the labour productivity and total productivity of these firms are very low. The falling labour productivity and rising capital intensity indicates replacement of labour with capital in Indian small firm sector.Practical implicationsLow productivity of the sector is a cause for concern and this needs to be addressed by making the sector more competitive in the world market. To achieve this, policies should be designed so that small firms reach the efficient scale of production.Originality/valueThis is the first paper which examines structural changes in the Indian MSME sector. The findings have strong implications for creation of a viable ecosystem of entrepreneurship in the country.

Does foreign direct investment promote exports in China?

2017 ◽  
Vol 7 (2) ◽  
pp. 185-202 ◽  
Author(s):  
Xin Li ◽  
Hsu Ling Chang ◽  
Chi Wei Su ◽  
Yin Dai
Keyword(s):  
Foreign Direct Investment ◽  
Causal Relationship ◽  
Direct Investment ◽  
Structural Adjustment ◽  
Structural Changes ◽  
Time Varying ◽  
Causality Test ◽  
Full Sample ◽  
Content Type ◽  
Rolling Window

Purpose The purpose of this paper is to investigate the causal link between foreign direct investment (FDI) and exports in China based on the knowledge capital model (KK model, Markusen, 2002). Design/methodology/approach The bootstrap Granger full-sample and sub-sample rolling window causality test is used to determine whether FDI can promote exports. Findings The full-sample causality test indicates no causal relationship from FDI to exports. However, considering structural changes of exports and FDI, the authors’ find that the full-sample test is not reliable. Instead, the authors use the rolling window causality test to revisit the dynamic causal relationship, and the results present significant effects from FDI on exports, mostly around periods in which the proportion of FDI from Hong Kong, Macao and Taiwan is increasing. Specifically, positive impacts of FDI on exports are stronger than the negative impacts in China. Research limitations/implications The findings in this study suggest a significant time-varying nature of the correlation between FDI and exports. The promotion effect of FDI to exports is proved by the rolling window approach; it thus supports the KK model that divides FDI into lateral FDI and vertical FDI and proves that the constitution of FDI is critical to the relationship between FDI and exports. Practical implications China has been facing adjustment of its economic structure in recent years, and in this situation, increasing the proportion of FDI that can bring advanced production function is critical for the industrial structural adjustment. Originality/value This paper uses the bootstrap rolling window causality test to investigate the time-varying nature of the causality between FDI and exports, considering structural changes for the first time. The authors further deepen the previous research and draw a more realistic conclusion.

scholarly journals Construction of China’s financial conditions index in the post-crisis era

2019 ◽  
Vol 2 (2) ◽  
pp. 258-276
Author(s):  
Nan Li ◽  
Liu Yuanchun
Keyword(s):  
Financial Stability ◽  
Design Methodology ◽  
Predictive Power ◽  
Time Varying ◽  
Content Type ◽  
Vector Autoregressive ◽  
Financial Variables ◽  
Financial Conditions ◽  
Time Varying Parameter ◽  
Better Than

Purpose The purpose of this paper is to summarize different methods of constructing the financial conditions index (FCI) and analyze current studies on constructing FCI for China. Due to shifts of China’s financial mechanisms in the post-crisis era, conventional ways of FCI construction have their limitations. Design/methodology/approach The paper suggests improvements in two aspects, i.e. using time-varying weights and introducing non-financial variables. In the empirical study, the author first develops an FCI with fixed weights for comparison, constructs a post-crisis FCI based on time-varying parameter vector autoregressive model and finally examines the FCI with time-varying weights concerning its explanatory and predictive power for inflation. Findings Results suggest that the FCI with time-varying weights performs better than one with fixed weights and the former better reflects China’s financial conditions. Furthermore, introduction of credit availability improves the FCI. Originality/value FCI constructed in this paper goes ahead of inflation by about 11 months, and it has strong explanatory and predictive power for inflation. Constructing an appropriate FCI is important for improving the effectiveness and predictive power of the post-crisis monetary policy and foe achieving both economic and financial stability.

scholarly journals The sustainability of Swedish fiscal policy: a re-examination

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Arcade Ndoricimpa
Keyword(s):  
Fiscal Policy ◽  
Regression Model ◽  
Structural Changes ◽  
Cointegration Test ◽  
Time Varying ◽  
Fiscal Deficits ◽  
Slope Coefficient ◽  
Content Type ◽  
Multiple Structural Changes ◽  
Sustainability Of Fiscal Policy

PurposeThis study reexamines the sustainability of fiscal policy in Sweden.Design/methodology/approachTo test the sustainability of fiscal policy, two approaches are used; the methodology of Kejriwal and Perron (2010), testing for multiple structural changes in a cointegrated regression model and time-varying cointegration test of Bierens and Martins (2010), and Martins (2015).FindingsUsing the first approach of testing for multiple structural changes in a cointegrated regression model, the results indicate that government spending and revenue are cointegrated with two breaks. An estimation of a two-break long-run model shows that the slope coefficient increases from 0.678 to 0.892 from the first to the second regime, implying that fiscal deficits were weakly sustainable in the first two regimes, from 1800 to 1943, and from 1944 to 1974. Further, results from time-varying cointegration test indicate that cointegration between spending and revenue in Sweden is time-varying. Fiscal deficits were found to be unsustainable for the periods 1801–1811, 1831–1838, 1853–1860 , 1872–1882, 1897–1902, 1929–1940 and 1976–1982 and weakly sustainable over the rest of the study period.Research limitations/implicationsA number of implications arise from this study: (1) Accounting for breaks in cointegration analysis and in the estimation of the level relationship between spending and revenue is very important because ignoring breaks may lead to an overestimated slope coefficient and hence a bias on the magnitude of fiscal deficit sustainability. (2) In testing for cointegration between spending and revenue, assuming a constant cointegrating slope when it is actually time-varying can also be misleading because deficits can be sustainable for a period of time and unsustainable over another period.Originality/valueThe contribution of this study is three-fold; first, the study uses a long series of annual data spanning over a period of two centuries, from 1800 to 2011. Second, because of the importance of structural change in economics, to examine the existence of a level relationship between spending and revenue, the study uses the methodology of Kejriwal and Perron (2010) to test for multiple structural changes in a cointegrated regression model, as well as time-varying cointegration of Bierens and Martins (2010) and Martins (2015).

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