The Effects of Financial Development and Governance Quality on Economic Growth: Evidence from Developed and Developing Countries

2021 ◽  
Vol 40 (1) ◽  
Author(s):  
Assef Filfilan
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Financial Development ◽  
Low Income ◽  
Good Governance ◽  
Principal Component ◽  
Threshold Level ◽  
Low Income Countries ◽  
Domestic Credit ◽  
Governance Quality

This paper investigates the effects of financial development on economic growth with especial emphasis on the role played by governance quality. An indicator of governance built from the Principal Component factor method (PCF) and which takes into account the simultaneous effects of political, institutional and economic governance, is used in mediating such relationship. The study is carried out using a two-step system dynamic GMM method for 93 developed and developing countries over the 1996–2018 period. The findings from the study revealed that the effects of financial development on economic growth various according to the nature of governance and the level of development of countries.  Results show a non-significant effect of financial development on economic growth for low-income countries and a positively significant impact in middle and high-income ones. Estimations demonstrate also that good governance plays an important and significant role in mediating the finance-growth relationship. Finally, results demonstrate that there is a certain threshold level that countries must achieve to make government domestic credit to private sector favorable to economic growth.

scholarly journals Lifestyle transitions and the developing world: Reflections on the implications for health, well-being and wealth

2013 ◽  
Vol 3 (2) ◽  
pp. 70
Author(s):  
Ufuoma John Ejughemre
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Low Income ◽  
Well Being ◽  
Evidence Base ◽  
Lifestyle Changes ◽  
Low Income Countries ◽  
Health Concern ◽  
Negative Consequences ◽  
Middle Income

Context: The past few decades witnessed significant economic growth in many developing countries of the world. These economic changes towards increasing gross domestic product (GDP) brought with it several other transitions in these countries: demographic, epidemiological, technological, and nutritional. These resulted in improving the living standards as well as life expectancy in many of these countries. However, of public health concern is the fact that these transitions paradoxically have their negative consequences on the health, well-being and wealth of the populace in these countries. Objectives: This review therefore assesses the evidence of the extent to which these changes have affected the living patterns in many developing countries and the epidemiological implications besides others issues on the populace in these countries. Methods: By using key words, the author involved a broad search of literatures on lifestyle changes, economic growth, nutrition, urbanization, smoking and alcohol, communicable and non-communicable diseases in countries termed low and middle income. Findings and conclusion: The review identified discernible evidence base about the implications of these changes on health, well-being and wealth of these nations. Accordingly, as lifestyle transitions now come to bear, it thus necessitates an all inclusive approach that will include proactive and pre-emptive interventions as well as consistent participation from governments, multilateral institutions, research-funding agencies, donors, and other players in health systems. This is because it will provide the global community with great opportunities in uniting high, middle, and low-income countries in a common purpose, given the shared interests of globalization and economic burdens worldwide.

scholarly journals Inequality and economic growth in Bangladesh–a diversified evidence on Kuznets pattern `U` hypothesis

1970 ◽  
Vol 7 (1) ◽  
pp. 117-123
Author(s):  
SMA Islam
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Low Income ◽  
Structural Adjustment ◽  
National Level ◽  
Low Income Countries ◽  
Poor People ◽  
Kuznets Hypothesis ◽  
The Government

The study of inequality and economic growth to the developing countries are now a days a comprehensive issue since the growth stimulate the standard of living to the poor people and accordingly reduce income inequality. The improvement of inequality and growth may reduce the social movement to the government and may keep the economic and social integrity amongst the different ethnic groups by efficient resource allocation and income redistribution in Bangladesh. The objective of this research is to assess long term relationship between inequality and growth in Bangladesh with a methodology of Kuznets pattern inverted U hypothesis first introduced by Simon Kuznets since 1955. The popular concept of Kuznets hypothesis suggests that as economic growth occurs, income inequality first increase and then decline after a certain turning point. The study of Kuznets hypothesis is popular to the international economic environment rather than domestic, especially to the developing countries where the per capita GDP is below the level of world average. This study found the evidence that the presumption of Kuznets hypothesis has satisfied in the economy of Bangladesh in national level. In low income countries, structural adjustment is necessary to satisfy the Kuznets hypothesis. Keywords: Kuznets Hypothesis; Inequality; Growth DOI: 10.3329/jbau.v7i1.4973 J. Bangladesh Agril. Univ. 7(1): 117-123, 2009

How financial development and economic growth influence human capital in low-income countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Ali ◽  
Syed Ali Ali Raza ◽  
Chin-Hong Puah ◽  
Shamim Samdani
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Financial Development ◽  
Low Income ◽  
Random Effect ◽  
Random Effect Model ◽  
Unit Root Test ◽  
Low Income Countries ◽  
Analysis Tool ◽  
Content Type

PurposeThis research aims to explain the effect of financial indicators and economic growth on human capital in low-income countries.Design/methodology/approachWe gathered balanced panel data from 1980 to 2016 over a sample of 12 low-income countries categorized by World Development Indicators. The data stationary properties were analyzed by unit root test while the existence of a long-run relationship among the variables was confirmed by cointegration test. We performed Hausman test to differentiate between the fixed effect and random effect model. The sensitivity analysis confirmed the robustness of the results.FindingsOur findings indicated that broad money supply and private sector credit has a positive and significant impact on human capital. Interestingly, bank credit showed a negative and significant effect on human capital. We also found a significant positive relationship between human capital and economic growth in the study sample.Originality/valueThis is a preliminary study using financial development and human capital in low-income countries with panel econometric techniques as an analysis tool. Overall, we suggest a policy to focus on the financial sector development and economic growth to produce sustainable human capital.

Foreign Aid, External Debt and Economic Growth Nexus in Low-Income Countries: The Role of Institutional Quality

2012 ◽  
Vol 51 (4II) ◽  
pp. 97-116 ◽  
Author(s):  
Unbreen Qayyum ◽  
Adnan Haider
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Low Income ◽  
Economic Performance ◽  
Foreign Capital ◽  
Good Governance ◽  
External Debt ◽  
Institutional Quality ◽  
Low Income Countries

Foreign capital and institutional quality simultaneously play an important role in the development process of low-income countries. By and large developing nations fell short of funds necessary to spur the economic growth. Along with this constraint, they are facing the down fall in the quality of governance. Low earned revenues and high government expenditure increase the reliance upon the foreign capital mostly in the form of foreign aid and external debt. Just the availability of foreign funds is not sufficient to stimulate the economic growth, there is a need of good governance along with better quality of institutions that will act as a catalyst and improves the efficiency of capital, [see for instance, Agnor and Montiel (2010)]. Good governance establishes impartial, predictable and consistently enforced rules in the form of institutions and thus crucial for the sustained growth [North (1990 and 1992)]. Those countries which have good institutions show positive growth rates whenever the stock of capital increases but the countries with bad institutions, increase in capital investment may lead to negative growth rates due to rent seeking and other unproductive activities, Hall, et al. (2010). In this context, North (1992) argues that the institutions as well as the ideology shape economic performance. While taking into account the technology used, institutions affect economic performance by determining the cost of transaction and production. Formal rules, informal constraints and characteristics of enforcing those constraints together formulate the institutions. Institutions affect economic performance and the differential in performance of economies is basically influenced by the way institutions evolve. The neoclassical economic theory is of little help in investigating the sources beneath economic performance because institutions are taken for granted in their models Agnor and Montiel (2010).

scholarly journals Foreign Direct Investment: A Journey To Economic Growth In Ghana - Empirical Evidence

2013 ◽  
Vol 12 (5) ◽  
pp. 573
Author(s):  
George Owusu-Antwi ◽  
James Antwi ◽  
Peter K. Poku
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Low Income ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Low Income Countries ◽  
Series Data ◽  
Economic Activities

Foreign Direct Investment (FDI) has been viewed as a major stimulus to economic growth in developing countries. Its ability to deal with two major obstacles; namely, shortages of financial resources and technology and skills, has made it the center of attention for policymakers in low-income countries in particular. In spite of the significance generated by FDI flows, the flow to developing countries and the world, in general, has witnessed persistent decline over the years. The implication for the drop means that competition to attract FDI has increased as developing countries continue to create the enabling environment to attract foreign investors. Ghana, in particular, has, over the last decade, pursued various forms of economic reforms and liberalization of trade regimes in order to become more competitive in the international financial market. A handful of papers has recently dealt with FDI flows in Ghana. However, most of these studies are concerned with strategic FDI policy to attract FDI flows. The purpose of this study is to empirically determine the factors that influence FDI flows in Ghana, using time series data from 1988 to 2011. Regression analysis was carried out using relevant econometric techniques. The results of the study capture trade openness, exchange rate, natural resources, and infrastructure as the drivers of FDI in Ghana. Macroeconomic variables, such as inflation and per capita gross domestic products, were also registered to impact the determinants of FDI flows in Ghana. The contribution of this paper is that economic liberalization was found to be significant, indicating that policymakers' efforts in liberalizing the economic activities may necessarily translate into significant FDI inflows into the country.

scholarly journals The Rotavirus Vaccine Landscape, an Update

Pathogens ◽  
2021 ◽  
Vol 10 (5) ◽  
pp. 520
Author(s):  
Roberto Cárcamo-Calvo ◽  
Carlos Muñoz ◽  
Javier Buesa ◽  
Jesús Rodríguez-Díaz ◽  
Roberto Gozalbo-Rovira
Keyword(s):  
Developing Countries ◽  
Mortality Rate ◽  
Low Income ◽  
State Of The Art ◽  
The State ◽  
Cold Chain ◽  
Low Income Countries ◽  
Rotavirus Vaccine ◽  
Oral Vaccines

Rotavirus is the leading cause of severe acute childhood gastroenteritis, responsible for more than 128,500 deaths per year, mainly in low-income countries. Although the mortality rate has dropped significantly since the introduction of the first vaccines around 2006, an estimated 83,158 deaths are still preventable. The two main vaccines currently deployed, Rotarix and RotaTeq, both live oral vaccines, have been shown to be less effective in developing countries. In addition, they have been associated with a slight risk of intussusception, and the need for cold chain maintenance limits the accessibility of these vaccines to certain areas, leaving 65% of children worldwide unvaccinated and therefore unprotected. Against this backdrop, here we review the main vaccines under development and the state of the art on potential alternatives.

scholarly journals Why Do Developing Countries Tax So Little?

2014 ◽  
Vol 28 (4) ◽  
pp. 99-120 ◽  
Author(s):  
Timothy Besley ◽  
Torsten Persson
Keyword(s):  
Developing Countries ◽  
Low Income ◽  
News Media ◽  
Weak Sense ◽  
Cultural Factors ◽  
Low Income Countries ◽  
Tax Revenue ◽  
Weak Institutions ◽  
Social And Cultural Factors ◽  
A Share

Low-income countries typically collect taxes of between 10 to 20 percent of GDP while the average for high-income countries is more like 40 percent. In order to understand taxation, economic development, and the relationships between them, we need to think about the forces that drive the development process. Poor countries are poor for certain reasons, and these reasons can also help to explain their weakness in raising tax revenue. We begin by laying out some basic relationships regarding how tax revenue as a share of GDP varies with per capita income and with the breadth of a country's tax base. We sketch a baseline model of what determines a country's tax revenue as a share of GDP. We then turn to our primary focus: why do developing countries tax so little? We begin with factors related to the economic structure of these economies. But we argue that there is also an important role for political factors, such as weak institutions, fragmented polities, and a lack of transparency due to weak news media. Moreover, sociological and cultural factors—such as a weak sense of national identity and a poor norm for compliance—may stifle the collection of tax revenue. In each case, we suggest the need for a dynamic approach that encompasses the two-way interactions between these political, social, and cultural factors and the economy.

scholarly journals Economic Growth and Income Inequality in Developing Countries

2015 ◽  
Vol 9 (6) ◽  
pp. 79-82 ◽  
Author(s):  
Morteza Nemati ◽  
Ghasem Raisi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Income Inequality ◽  
Income Distribution ◽  
Economic System ◽  
Development Strategy ◽  
Low Income ◽  
Poverty Eradication ◽  
The Relationship ◽  
Selection Of

Nowadays, improvement in income distribution and poverty eradication and hence low inequality are served as the main objectives of economic and social development strategy even prior than primary tasks of governments. to manifest importance of income distribution, some economists adopt income inequality and income distribution in society as criteria for economic system of the community, although these criteria and measures are theoretical for the economic system and this varies from the perspective of different people, however, it denotes on  importance of income distribution among individuals. The main objective of this study was to evaluate the effect of economic growth on income inequality in the selection of low-income developing countries.To this end, using panel data and data for 28 developing countries over the period 1990-2010 the relationship between GDP and the Gini coefficient was examined. The results indicate that as per hypothesis Kuznets in the early stages of growth, income inequality increases and then it declines in later stage.

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