Islamic securities (Sukuk) and economic growth: New empirical investigation from Southeast Asia using non-parametric analysis of MCMC panel quantile regression

PurposeThis paper aims to investigate empirically whether Islamic securities enhance economic growth in the Southeast Asian region based on the endogenous growth theory using the non-parametric analysis.Design/methodology/approachThis paper applies panel quantile regression with Markov chain Monte Carlo optimization as an optimal non-parametric approach to investigate the effect of Islamic securities on economic growth starting from 2013Q4 to 2019Q4 in Southeast Asia. Total issued Islamic securities holdings are employed as a measure for Islamic securities, while the gross domestic product is employed as a proxy for economic growth. The sample includes all working Islamic financial foundations in the top progressive Islamic securities markets' countries of Southeast Asia (Malaysia, Indonesia and Brunei Darussalam).FindingsThe findings confirm that the increase of issuing Islamic securities in Islamic capital markets of Southeast Asia is increasing the levels of economic growth, reflecting the weighty role of the Islamic capital market development as an active contributor to economic growth.Practical implicationsThis research would fill the literature gap by exploring Islamic securities–economic growth nexus in Southeast Asia using a robust non-parametric approach based on the endogenous growth theory for better estimation results. The findings of this review serve as a roadmap for financial analysts, policymakers and decision makers to stimulate the Islamic securities markets as another source of finance which can promote the economic growth.Originality/valueThis research is the first that investigates empirically the Islamic securities–economic growth nexus in Southeast Asia using a new empirical investigation built on the non-parametric analysis and outlined within the theoretical context of the endogenous growth model to gain robust evidence about this nexus.

Testing the convergence and the divergence in five Asian countries: from a GMM model to a new Machine Learning algorithm

PurposeThe purpose of this paper is to empirically test the economic convergence that operate between five selected Asian countries (namely Thailand, Singapore, Malaysia, the Philippines and Indonesia). In particular, it seeks to investigate how increased economic integration has impacted the inter-country income levels among the five founding members of ASEAN.Design/methodology/approachA new Machine Learning (ML) approach is applied along with a panel data analysis (GMM), and the application of KOF Globalization Index.FindingsThe Generalized Method of Moments (GMM) results highlight that the endogenous growth theory seems to be supported for the selected Asian countries, indicating evidence of diverging forces resulting from unequal growth and polarization dynamics. Overcoming the technical issues raised by the econometric approach, the new ML algorithm brings contrasted but interesting results. Using the KOF Globalization Index, the authors confirm how the last phase of globalization set the conditions for an economic convergence among sample members.Originality/valueUsing the KOF Globalization Index, the authors confirm how the last phase of globalization set the conditions for an economic convergence among sample members. As a matter of fact, the new LSTM algorithm has provided consistent evidence supporting the existence of converging forces. In fact, the results highlighted the effectiveness of the experiments and the algorithm we chose. The high predictability of the authors’ model and the absence of self-alignment in the values showed a convergence be-tween the economies.

On the Relationship between Education Reforms and Sustainable Development: Evidence from Nigeria

Nigeria between 1980 and 2018 shows a mixed relationship between education reforms and sustainable development. In 2016, over 45 percent of Nigerian graduates are unemployed and about a 39.4 percent increase in education enrolment rate had resulted in stagnated economic sustainable development in Nigeria. Following the endogenous growth theory and the environmental Kuznets hypothesis underpinnings, this study investigated the cause and effect of education reforms and sustainable development in Nigeria between 1980 and 2018. The descriptive statistics employed describe the data distribution of the included variables while the vector error correction model (VECM) econometric technique was used to determine the short-run and long-run impact of education reforms on economic, social, and environmentally sustainable development in Nigeria. The results found that qualitative education reform has a positive impact on economic and environmentally sustainable development while quantitative education has a negative impact on socially sustainable development in the long run. Further, the short-run, VECM results revealed that qualitative education reforms will speedily affect economic, social, and environmentally sustainable development than the quantitative education reforms within the period of study. The study recommends that quantity and quality education reforms should be seen as complementary and not a substitute in achieving sustainable development by the year 2030 in Nigeria.

The Corona Virus Pandemic And Stochastic Growth: Implications For Developed, Developing, And Emerging Economies

This article studies the impact of the “coronavirus” on the economy when the growth path follows a stochastic Markov process in a multi countries’ exchange context. The methodology used is endogenous growth theory coupled with topology, the fixed point, and the separation theorem for the equilibrium determination through private agents’ maximization behaviors. Thereafter, the equilibrium is rendered optimal in the Pareto sense through the linear programming method and the portfolio choice theory used by the social planner. The results found are: First, growth decreases almost everywhere; second, per-capita income increase in contrast. Finally, the conjunction of the whole accelerates convergence and catching-up since the most affected countries are also the richest. As a result, they experience higher economic and social disorders giving credibility to the Solow (1956) marginal productivity that decrease the hypothesis that poor countries grow faster than rich countries. Consequently, the pandemic negative action is an accelerator of the economic retarded countries market-based economy which targets a faster means of achievement.

ENDOGENOUS GROWTH THEORY : PENGARUH BELANJA KESEHATAN DAN PENDIDIKAN TERHADAP EKONOMI

Indonesia has a considerable amount of human resources. Those resources should be empowered more in order to contribute to the economy. The proposition that can be taken to manage the plans is investing in human resources through the form of education and health. When the society becomes healthier and skillful, then they can contribute positively to the economy through productivity increase. The intervention of the government’s role in both sectors can be through government spending such as making programs or facilities that are expected to benefit the society. Therefore, this literature intends to see whether the government spending on the education and health sectors can contribute positively to the economy or even the opposite, using the OLS method with a research span from 1990 to 2019. The results show that health and education spending significantly affects the economy. This indicates that workers in Indonesia are getting skillful and also supported by their health, so that the productivity is well maintained. Both of these statements reflect that health and education spending in Indonesia has an impact on the economy through productivity increase.

GENETIC, CULTURAL, AND HISTORICAL DETERMINANTS OF KNOWLEDGE CREATION

Knowledge creation has been a pivotal ingredient of endogenous growth theory to understand differences in standards of living across countries. Yet, the identification of key drivers explaining cross-country differences in knowledge creation still remains a topic of central interest in this research field. In this paper, I provide a framework to hypothesize and empirically test the persistent effects of novelty-seeking traits on cross-country differences in scientific knowledge creation. The results suggest a positive and statistically significant relationship between both outcomes that is consistent with the hypothesis that the prevalence of novelty-seeking traits in society facilitates scientific knowledge creation through beneficial human behaviors related to risk-taking and explorative behavior. The empirical findings remain qualitatively unaffected when controlling for additional historical, biogeographical, and socioeconomic factors that appear as additional important determinants in the creation of scientific knowledge in society.

The Project as the Way to Implement Entrepreneurial Activity in the 21st Century

Aim. The aim of this paper is to study and develop theoretical and methodological basis for understanding the phenomenon of the “project” and its role in the implementation of entrepreneurial activity in the 21st century.Tasks. The main objective of this paper is to conceptualize the category of the “project” in the modern entrepreneurial paradigm. The widespread dissemination of this concept indicates that in the 21st century, the content side of entrepreneurial activity is gradually changing towards its humanization, showing a shift from exclusively economic goals towards ethical and aesthetic motives.Methods. The methodological basis of the paper is a transdisciplinary attitude that combines the philosophical and ethical provisions of the theory of synergy, metaethics, semantic theories that underpin the scientific research in the field of entrepreneurship theory. It also provides a synthesis of the methodology of individualism and holism, which allows expanding the development of the entrepreneurship theory according to the intersubjective nature of economic reality and the endogenous growth theory.Results. Today’s interpretation of the concept of the “project” is gradually acquiring a different meaning. Increasingly, there is a tendency to use this word in connection to socially significant problems from an educational project to a charitable project. The category of the “project” implies the connection between the public good and the private need.Such a shift in emphasis indicates that there is a universal need for understanding entrepreneurship as a useful activity of great social significance. The task of the theory of entrepreneurship is to create a symbolic system of the modern entrepreneurial paradigm, based on the humanism principles, responsibility, biophilia, and education, implying the awareness of market participants about the potential impact of their actions on the entire eco-system.Conclusions. We consider the restrictions in response to anthropogenic human activities as a source of new entrepreneurial opportunities and as an integral positive element of the modern economy. In this basis, the restrictions provide freedom to innovative actions that will help to maintain the environment while eliminating environmental threats. However, the change cannot happen without adequate information flows, appropriate regulations, and viable market institutions. The modern world can be characterized as a world of uncertainties; therefore there is a constant transition from one environmental crisis to another. Each environmental crisis is an unintended consequence of previous economic innovations and can be resolved with new ones. While governments will develop regulatory frameworks that stimulate environmental protection and regeneration, they cannot act as quickly as entrepreneurs who can implement innovations and stimulate corresponding creative destruction. Governments’ capacity is limited and their speed of response is slow due to their need to meet the interests of different groups; entrepreneurs destroy such interests. Modern technological possibilities multiply the choice and, consequently, the freedom. As practice shows, no legislative restrictions can hold back a “civilizational” development for a long time, and this necessitates an awareness of responsibility.Therefore, we consider the development of the ethical foundations of entrepreneurial activity as the most promising investment. In the light of this, one should abandon the established use of the entrepreneurship concept, put a new essence into it, and develop new categories that would correspond to the content side of entrepreneurial activity.

Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory

In this paper, we review the literature on declining business dynamism and its implications in the United States and propose a unifying theory to analyze the symptoms and the potential causes of this decline. We first highlight 10 pronounced stylized facts related to declining business dynamism documented in the literature and discuss some of the existing attempts to explain them. We then describe a theoretical framework of endogenous markups, innovation, and competition that can potentially speak to all of these facts jointly. We next explore some theoretical predictions of this framework, which are shaped by two interacting forces: a composition effect that determines the market concentration and an incentive effect that determines how firms respond to a given concentration in the economy. The results highlight that a decline in knowledge diffusion between frontier and laggard firms could be a significant driver of empirical trends observed in the data. This study emphasizes the potential of growth theory for the analysis of factors behind declining business dynamism and the need for further investigation in this direction. (JEL D33, E25, J24, L13, O33, O34)