The relationship between urbanization and economic growth

2018 ◽  
Vol 45 (2) ◽  
pp. 316-339 ◽  
Author(s):  
Ha Minh Nguyen ◽  
Le Dang Nguyen
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Dynamic Model ◽  
Estimation Method ◽  
Static Model ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Non Linear ◽  
Asean Countries ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between urbanization and economic growth in ASEAN countries for the period 1993-2014. Design/methodology/approach The Granger causality test and the regression estimation method with static and dynamic panel data (FE, RE, Driscoll and Kraay, D-GMM and PMG) were used. The sample includes seven ASEAN countries: Brunei, Cambodia, Indonesia, Malaysia, Philippines, Thailand and Vietnam. Findings The results show that at least a causal relationship exists between urbanization and economic growth and urbanization positively impacts economic growth. However, the relationship between urbanization and economic growth is non-linear. The urbanization reaches a threshold after which it may impede the economic growth. The estimated threshold is 69.99 percent for the static model and 67.94 percent for the dynamic model. Research limitations/implications The evidence from this study suggests that there is a non-linear relationship between urbanization and the economic growth. Urbanization has the potential to accelerate the economic growth, and this potential will depend on the establishment of favorable institutions and investments in appropriate public infrastructure. Practical implications The decision on the model of urbanization needs to be based on social and environmental considerations as well as market-based economic efficiency. The quality of urbanization manifests in the way that people and businesses perceive when they come to cities and their position in the labor market, urban housing, niche commodity markets, supply chain, collaborative network and physical space for the operation of the business. Most ASEAN countries have not yet reached a high level of urbanization, despite having a number of policies for promoting urbanization to contribute to the economic growth. However, policymakers should find ways to facilitate the development of urbanization that contributes to economic growth, employment growth, environmental sustainability, rather than the pursuit of speeding up the process of urbanization. Originality/value Between urbanization and economic growth at least a causal relationship exists. Urbanization positively impacts economic growth. However, the relationship between urbanization and economic growth is non-linear. The urbanization reaches a threshold after which it may impede the economic growth. The estimated threshold is 69.99 percent for the static model and 67.94 percent for the dynamic model.

The relationship between environmental degradation, energy use and economic growth in Nigeria: new evidence from non-linear ARDL

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hammed Oluwaseyi Musibau ◽  
Waliu Olawale Shittu ◽  
Fatai Olarewaju Ogunlana
Keyword(s):  
Economic Growth ◽  
Environmental Degradation ◽  
Environmental Quality ◽  
Energy Use ◽  
Partial Sums ◽  
Future Research ◽  
Ekc Hypothesis ◽  
Content Type ◽  
Non Linear ◽  
The Relationship

Purpose The purpose of this paper is to study the relationship among environmental degradation, energy use and economic growth, thus lending a voice to testing the relevance, or otherwise, of the environmental Kuznets curve (EKC) hypothesis in Nigeria. Design/methodology/approach The authors rely on the secondary data obtained from World Bank’s World Development Indicators for Nigeria, between 1981 and 2014. The non-linear autoregressive distributed lag (ARDL) technique is used after examining the unit root properties – using the augmented Dickey–Fuller and Phillips–Perron methods – and the long-run relationship – using the ARDL bounds approach to estimate the asymmetries in the effects of economic growth on the environment. Findings The findings of this study uphold the relevance of the EKC hypothesis in Nigeria, as the growth of GDP first reduces the environmental quality but raises it over time. Furthermore, the use of energy is found to deteriorate environmental quality, given that CO2 rises by 0.002% for a unit increase in the consumption of energy in Nigeria. Research limitations/implications A limitation to this research is the data coverage, which is just between 1981 and 2014, based on availability. One other limitation is the use of electric power consumption as a proxy for energy use (because of the difficulty in obtaining accurate data on energy consumption in Nigeria). Future research should, therefore, test different other proxies, to either agree with the findings or justify any deviation therefrom. Also, the use of up-to-date data is recommended as an improvement to this study, while a non-linear technique should be used on studies involving the panel of countries. Originality/value Many studies have examined this relationship by simply taking the square of GDP as a measure of its non-linear effect on the environment. The authors are one of the first who consider the asymmetric effect of economic growth on the environment through the non-linear ARDL technique. With this, the partial sums of positive and negative changes in economic growth on the environment are easily established.

scholarly journals Foreign finance, economic growth and CO2 emissions Nexus in OECD countries

2019 ◽  
Vol 12 (2) ◽  
pp. 161-181 ◽  
Author(s):  
Faris Alshubiri ◽  
Mohamed Elheddad
Keyword(s):  
Economic Growth ◽  
Linear Relationship ◽  
Environmental Quality ◽  
Foreign Investment ◽  
Fixed Effects ◽  
Oecd Countries ◽  
Content Type ◽  
Non Linear ◽  
The Relationship ◽  
Threshold Point

Purpose This study aims to examine the relationship between foreign finance, economic growth and CO2 to investigate if the environmental Kuznets curve (EKC) exists as an empirical evidence in 32 selected Organization for Economic Co-operation and Development (OECD) countries. Design/methodology/approach This study used quantitative analysis to test two main hypotheses: H1 is the U-shape relationship between foreign finance and environment, and H2 is the N-shaped association between economic growth and environment. In doing so, this study used panel data techniques. The panel set contained 32 countries over the period from 1990 to 2015, with 27 observations for each country. This study applied a panel OLS estimator via fixed-effects control to address heterogeneity and mitigate endogeneity. Generalized method of moments (GMM) with fixed effects-instrumental variables (FE-IV) and diagnostic tests were also used. Findings The results showed that foreign finance and environmental quality have an inverted U-shaped association. The three proxies’ foreign investment, foreign assets and remittance in the first stages contribute significantly to CO2 emissions, but after the threshold point is reached, these proxies become “environmentally friendly” by their contribution to reducing CO2 emissions. Also, a non-linear relationship denotes that foreign investment in OECD countries enhances the importance, as a proxy of foreign finance has greater environmental quality than foreign assets. Additionally, empirical results show that remittances received is linked to the highest polluted levels until a threshold point is reached, at which point it then helps reduce CO2 emissions. The GMM and FE-IV results provide robust evidence on inverse U-shaped relationship, while the N-shaped relationship explains that economic growth produces more CO2 emissions at the first phase of growth, but the quadratic term confirms this effect is negative after a specific level of GDP is reached. Then, this economic growth makes the environment deteriorate. These results are robust even after controlling for the omitted variable issue. The IV-FE results indicate an N-shaped relationship in the OECD countries. Practical implications Most studies have used different economic indicators as proxies to show the effects of these indicators on the environment, but they are flawed and outdated regarding the large social challenges facing contemporary, socio-financial economic systems. To overcome these disadvantages, the social, institutional and environmental aspects of economic development should also be considered. Hence, this study aims to explain this issue as a relationship with several proxies in regard to environmental, foreign finance and economic aspects. Originality/value This paper uses updated data sets for analyzing the relationship between foreign finance and economic growth as a new proxy for pollution. Also, this study simulates the financial and environmental future to show their effect on investments in different OECD countries. While this study enhances the literature by establishing an innovative control during analysis, this will increase to add value. This study is among the few studies that empirically investigate the non-linear relationship between finance and environmental degradation.

Effect of quality of governance on the relationship between illicit financial flows and economic growth

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hazlina Mohd Padil ◽  
Eley Suzana Kasim ◽  
Fazlida Mohd Razali ◽  
Ruhaya Atan ◽  
Haziq Aminullah
Keyword(s):  
Economic Growth ◽  
Measurement Theory ◽  
Empirical Support ◽  
Financial Flows ◽  
Content Type ◽  
Illicit Financial Flows ◽  
Quality Of Governance ◽  
Asean Countries ◽  
The Relationship

Purpose The purpose of this paper is twofold. First, the study aims to examine the direct effect of illicit financial flows (IFF) and quality of governance (QoG) on economic growth. Second, this study seeks to examine the moderating effect of QoG on the economic consequences of IFF. Design/methodology/approach This study collected data from nine The Association of Southeast Asian Nations (ASEAN) countries for the period of 10 years from 2008 to 2019. The study concerned an analysis of the testing of a conceptual framework which based on secondary data which may lack a comprehensive substantiation on the grounds of measurement theory. A partial least squares (PLS) modelling using the SmartPLS 3.2.8 version was used as a statistical tool to examine the measurement and structural model. Findings Key findings provide empirical support on the effect of IFF and QoG on economic growth. It also confirmed that QoG significantly moderated the relationship between IFF and economic growth by reducing the negative impact of IFF on economic growth. Practical implications Immediate corrective action needs to be implemented by policymakers of ASEAN countries to strengthen QoG to effectively curb IIF activities. Originality/value This study provides current empirical evidence on the relationship of IFF, QoG and economic growth within ASEAN countries.

Economic growth and market-based financial systems: a review

2015 ◽  
Vol 32 (2) ◽  
pp. 235-255 ◽  
Author(s):  
Sheilla Nyasha ◽  
N.M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Causal Relationship ◽  
Financial Development ◽  
Design Methodology ◽  
Data Sets ◽  
Financial Systems ◽  
Content Type ◽  
The Relationship ◽  
Country Specific

Purpose – This paper aims to survey the existing literature on the causal relationship between market-based financial development and economic growth – in both developed and developing countries, highlighting the theoretical and the empirical evidence. Design/methodology/approach – The paper divides financial development into bank-based and market-based financial development, and it closely reviews the international literature on the relationship between market-based financial development and economic growth. Findings – The direction of causality between market-based financial development and economic growth varies from one country to another, depending on various country-specific characteristics, data sets and the methodology used by the researcher. On balance, there is predominant support for the supply-leading response, where the development of the market-based financial sector is expected to precede the development of the real sector. Originality/value – This review differs fundamentally from previous reviews, in that it divides financial development into bank-based and market-based financial development, and it focuses closely on market-based financial development and economic growth. The majority of the previous studies on this subject failed to make such a distinction, thereby focusing mainly on the general causal relationship between the overall financial development and economic growth. To the best of the authors' knowledge, this may be the first review of its kind to survey the existing research in detail on the causal relationship between market-based financial development and economic growth, in both developed and developing countries.

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: A CAUSALITY TEST IN PANEL PERSPECTIVE

2017 ◽  
Vol 17 (2) ◽  
Author(s):  
Jamilah Idris ◽  
Zulkornain Yusop ◽  
Muzafar Shah Habibullah
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Method Of Moments ◽  
Purchasing Power Parity ◽  
Trade Openness ◽  
Estimation Method ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
General Method Of Moments ◽  
General Method

Openness to trade has been one of the primary drivers stimulating growth. The goal of this particular study is to investigate the relationship between trade openness and economic growth in 87 selected countries which includes both Organizations for Economic Co-operation and Development (OECD) and developing countries for 1977–2011 periods. We used two measures of trade openness i.e. the ratio of trade openness (TO) typically spoke by exports plus imports in nominal value divided by GDP (nominal) which is commonly used in the literature, and trade openness in real (RO) which is defined as the sum of imports and exports in US$ relative to GDP in purchasing power parity US$ (real GDP). An empirical studywas conducted to determine the causal relationship between trade openness and growth in a panelperspective. We used a dynamic panel data estimation method i.e. the general method of moments (GMM). The empirical results reveal a bidirectional causal relationship for both developing and OECD countries. Our finding is consistent with the endogenous theory that increased openness leads to higher growth, which thus prompts expanded openness.Keywords: Openness; Economic Growth; Dynamic Panel General Method of Moments (GMM).

scholarly journals Economic growth and methane emission: testing the EKC hypothesis in ASEAN economies

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rana Muhammad Adeel-Farooq ◽  
Jimoh Olajide Raji ◽  
Bosede Ngozi Adeleye
Keyword(s):  
Economic Growth ◽  
Dynamic Panel Data ◽  
Kuznets Curve ◽  
Ekc Hypothesis ◽  
Content Type ◽  
Panel Data Estimation ◽  
Emission Testing ◽  
Asean Countries ◽  
Data Estimation

PurposeThe purpose of this study is to analyze the Environmental Kuznets Curve (EKC) hypothesis within the methane (CH4) emission–economic growth nexus among the six Association of Southeast Asian Nations (ASEAN) countries from 1985 to 2012.Design/methodology/approachThe study employs dynamic panel data estimation approaches such as mean group (MG) and pooled MG (PMG) techniques.FindingsThe findings reveal that the EKC hypothesis for the CH4 emission in these economies proves to be valid. In other words, economic growth causes CH4 emissions to decrease. Nevertheless, energy consumption is deteriorating the environment by enhancing CH4 emissions in these countries.Originality/valueThe ASEAN region has experienced substantial economic growth over the previous few decades. Nevertheless, pollution has also increased manifolds in this region. Methane is a more potent greenhouse gas (GHG) as compared to carbon dioxide (CO2) and a major source of socio-economic issues in the ASEAN region. This study is the first in the existing literature on the EKC hypothesis examining the role of economic growth on CH4 emissions in the selected ASEAN countries. The outcomes of this study could be really beneficial for the policymakers in this region regarding sustainability and economic development.

Trade openness, labour market rigidity and economic growth: A dynamic panel data analysis

2017 ◽  
Vol 28 (4) ◽  
pp. 555-564
Author(s):  
Burçak Polat ◽  
Antonio Rodríguez Andrés
Keyword(s):  
Economic Growth ◽  
Panel Data Analysis ◽  
Trade Openness ◽  
Estimation Method ◽  
Dynamic Panel Data ◽  
One Step ◽  
Generalised Method Of Moments ◽  
Openness To Trade ◽  
The Relationship

The rapid liberalisation of trade policies since the 1990s has brought additional attention to the role of trade as an engine of economic growth. Although an abundant literature addresses the relationship between openness and economic growth, the real effect of trade liberalisation is still ambiguous and undetermined. Most previous studies have ignored the selection effects of strict labour regulations on international trade. The main objective of this study is to measure the role of labour regulations in moderating the contribution of trade to economic growth among 30 Organisation for Economic Co-operation and Development countries for the period 2006–2013. In doing so, we employ a one-step Generalised Method of Moments system estimation method. Our results reveal that openness to trade does not have a robust and significant effect on growth. However, the interaction of openness with strict labour regulations enhances the contributions of trade to growth.

Self-employment and economic growth in developing countries: is more self-employment better?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sridevi Yerrabati
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Empirical Analysis ◽  
Empirical Relationship ◽  
Dynamic Panel Data ◽  
Policy Implications ◽  
Content Type ◽  
Self Employment ◽  
Non Linear ◽  
The Empirical Analysis

PurposeThe study aims to examine the non-linear relationship between self-employment and economic growth (growth) in the context of developing countries.Design/methodology/approachData from a sample of 83 developing countries covering a period 2002–2015 is used. The empirical analysis is based on the dynamic panel data estimation, and the results are estimated using the two-step system GMM technique. Non-linearity between self-employment and growth is validated using Sasabuchi (1980) and Lind and Mehlum (2010) (SLM) test.FindingsThe empirical analysis suggests a non-linear and a U-shaped relationship between self-employment and growth, confirmed by the SLM test. The threshold levels for total self-employment, female self-employment and male self-employment are 57.49%, 58.86 and 55.81%. The findings are also robust to alternate estimation technique and alternate measure of the dependent variable.Practical implicationsPolicy implications of the findings include the need for policies that foster and channel self-employment properly as the higher level of self-employment is found to benefit growth.Originality/valueThis study is the first attempt to examine the empirical relationship between self-employment and growth. As such, it makes a novel contribution to the extant literature on the relationship between the two variables.

scholarly journals Non-linear relationship between foreign currency derivatives and firm value: evidence on Sharīʿah compliant firms

2021 ◽  
Vol 28 (2) ◽  
pp. 156-173
Author(s):  
Zaminor Zamzamir@Zamzamin ◽  
Razali Haron ◽  
Zatul Karamah Ahmad Baharul Ulum ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Risk Management ◽  
Linear Relationship ◽  
Firm Value ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Quality Reporting ◽  
Linear Framework ◽  
Non Linear ◽  
The Impact ◽  
The Relationship

PurposeThis study examines the impact of hedging on firm value of Sharīʿah compliant firms (SCFs) in a non-linear framework.Design/methodology/approachThis study employs the system-GMM for dynamic panel data to examine the influence of derivatives usage on firm value (Tobin's Q, ROA and ROE). The sample comprised of 59 non-financial SCFs engaged in derivatives from 2000 to 2017 (18 years). The Sasabuchi-Lind-Mehlum (SLM) test for U-shaped is performed to confirm the existence of the non-linear relationship.FindingsThis study concludes that hedging significantly contributes to firm value of SCFs based on the non-linear framework. This study suggests that, first, the non-linear relationship occurs due to the different degree of derivatives usage and risk. Second, firms practice selective hedging to maintain the upside potential of firm value.Research limitations/implicationsThis study has important implications. First, the importance of risk management via derivatives to increase firm value, second, the evidence of selective hedging from the non-linear relationship between derivatives and firm value and third, the need for quality reporting on derivatives engagement by firms in line with the required accounting standard on derivatives.Originality/valueThis study fills the gap in the literature in relation to the risk management strategies of SCFs in three aspects. First, re-examines the relationship using recent data. Second, examines the relationship in the non-linear framework as the limited studies found in the literature on Malaysian firms are only based on linear relationship. Third, determines whether hedging undertaken by firms is optimal as this can only be addressed using the non-linear framework. This study is robust to the various definitions of firm value (Tobin's Q, ROA and ROE) and non-linear methodologies.

The role of digital economy in China's sustainable development in a post-pandemic environment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Malin Song ◽  
Chenbin Zheng ◽  
Jiangquan Wang
Keyword(s):  
Economic Growth ◽  
Sustainable Development ◽  
Supply Chain ◽  
Social Development ◽  
Environmental Protection ◽  
Digital Economy ◽  
Series Data ◽  
Content Type ◽  
The Relationship

PurposeThe COVID-19 pandemic is still raging, which calls for an exploration of how to prevent and control pandemics to promote sustainable development. The purpose of this paper is to examine the role of the digital economy in sustainable development, the relationship between the two, the impacts of the outbreak on economic and social development, and changes in China's digital economy.Design/methodology/approachThe study used the time-series data from 2002 to 2019 and an unconstrained VAR model to examine the relationship between the digital economy and sustainable development before the pandemic.FindingsChina's digital economy has promoted the country's sustainable economic and social development; it has advanced rapid economic growth, improved people's living standards, increased efficient utilization of resources, and strengthened environmental protection.Research limitations/implicationsAmid the pandemic, China's digital economy developed effectively; it showed strong resilience because of its unique advantages. The digital economy in China has helped the country to control the pandemic in a short period, reduced the risk of supply chain disruption, promoted China's economic growth, and ensured the orderly operation of society. Therefore, countries worldwide are encouraged to prioritize their digital economies.Originality/valueCompared with the extant literature, this study explores the sustainable supply chain in a broader sense in the context of a pandemic, and how the supply chain is influenced by the digital economy. It not only includes the stability, resilience, and viability of the supply chain in economic development but also involves aspects of people's life, resource utilization, and environmental protection.

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