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Macroeconomics and Economic Growth

Microfoundations of Economic Growth

Raj Nallari's picture

Most growth analysis has been primarily a macroeconomic subject with particular emphasis on contribution of capital, education adjusted labor, and total factor productivity to output growth (see Collins and Bosworth 1996, Hu and Khan, 1997, Sarel 1997, Sala-i-Martin 2000, Hall and Jones, 1999, Easterly and Levine 2001). Importance of macroeconomic policies as represented by budget deficits, exchange rate premia, inflation, trade openness and inflow of foreign Investment etc are tagged on in the growth analysis at a macroeconomic level. A few studies have invoked ethnic differences and other exogenous factors to understand cross country differences in total productivity growth and per capita incomes. 

In trying to understand the rapid output growth of East Asian ‘miracle’ countries, Krugman (1994), Young (1995), and others were engaged in an interesting debate on whether capital accumulation or total factor productivity growth best explained the high and sustained output growth of these countries. Their conclusion that capital accumulation was most important was based on macroeconomic data analysis in a factors of production approach to sources of growth. Others have found that the growth of output is strongly correlated with productivity growth in developed and developing economies as reported by Kehoe and Prescott (2002) and Solimano and Soto (2004), and this co-movement appears to be stronger the longer is the time period considered.

Indonesia's 'big bang' decentralization experiment: Helping poor regions spend resources well

Wolfgang Fengler's picture

After five years in Indonesia, my family and I have left this wonderful country and moved to Kenya. The last five years have been excellent years for Indonesia. The economy stabilized, growth resumed and services started to improve, although modestly and not in all areas. Indonesia still remains an underrated country, but this may change.

Improving investment climate important to boost economic growth in Thailand

Xubei Luo's picture

The investment climate is the fundamental socio-economic framework in which firms operate – the macroeconomic and trade policies they face, the labor and financial markets in which they recruit and raise money, the available infrastructure and impo

Watch Your Wallets, Protectionism is Back!

Zahid Hussain's picture

Protectionism is BackProtectionism is on the rise all over the world, thanks or should we say “no thanks” to the global economic crisis.  Last November, G-20 leaders pledged to fight protectionism. Yet, according to the World Trade Organization (WTO), 18 out of these 20 economies have since taken measures to restrict trade. With the global economy struggling to recover, political pressures demanding protection from import competition to sustain domestic employment are intensifying. It is likely to prove right the old adage that the only thing we learn from history is that we never learn from history.  One lesson from the experience of the 1930s that is currently most relevant is that raising trade barriers deepens and prolongs recession.

Have Innovation and Entrepreneurship Found Solutions for Affordable Housing?

Joe Qian's picture

The recently elected government has recently announced an ambitious goal of eliminating slums in India in its most recent five year plan. Will this be a possibility? If you ask the construction companies, the answer is yes. A number of entrepreneurs and enterprises have embarked on new initiatives to provide affordable housing called such as Tata and its construction of Shubh Griha north of Mumbai.

With the increased rate of economic growth over the last few years, housing developers have tended to focus on the higher end luxury developments causing property prices to soar; I was astounded that luxury apartment homes in Mumbai cost the same as they do in New York and London. As demand for these properties have fallen due to the global financial crisis and increased interest rates, the focus on lower cost housing has increased due to a larger market coupled with acute shortages of housing in urban India.

China's import surge: standard economic theory prevails

Louis Kuijs's picture

When China’s government started to work on and implement its massive stimulus program in November last year in light of a rapid deterioration of the world economy, economists working on China had to work out what it all meant for

Showing vs. Telling: map shows half the world represented by 5 percent GDP

James I Davison's picture

It always seems to be the case that by simply writing or saying something, you can hardly get the same point across as by presenting it in a visual way. For example, it’s one thing to say, “three billion people (a little less than half the world’s population) comprise the bottom 5 percent of global GDP contributors.” But as the Strange Maps blog points out, it’s a little more eye-opening to show a map with those countries completely missing.

I’m not sure this map accomplishes much more than to illustrate a single interesting point – unlike the SHOW World animated maps we wrote about earlier this year or the popular WorldMapper Collection, both of which put several data sets in a visual format.

The map does, however, highlight the interesting fact that most of the countries represented are either in Southeast Asia or Africa. Check it out here.

China's presence on Fortune's Global 500 list grows, despite economic crisis

James I Davison's picture

Another example of China’s respectable growth, despite the global economic crisis, is apparent in this month’s Fortune magazine, with its Global 500 list of the world’s largest companies.

The Resilience of Bangladesh's Economy May Again be Tested This Year

Zahid Hussain's picture

The Bangladesh economy entered FY10 in a position of strength, notwithstanding some pretty tough global circumstances. Good recovery in agriculture, a sustained growth in exports and remittances, and a steady growth in services helped achieve an estimated overall growth of 5.9 percent in FY09, compared with 6.2 percent in FY08. A decline in international commodity prices driven by the global recession and an improvement in domestic food supplies brought inflation down from 10 percent in FY08 to an estimated 7 percent in FY09. Rice prices have remained stable too at nearly 40 percent below the peak reached in April, 2008. The economy has shown reasonable stability in terms of most other macroeconomic indicators. The external current account has been in a large surplus; the exchange rate has been stable; foreign exchange reserves have reached record high levels of nearly $7.5 billion; fiscal balances have been contained; and private credit growth has remained decent.

This is all good news but it doesn’t mean Bangladesh goes totally unscathed by those tough global circumstances.

Philippines offers insight into future of mobile banking and the poor

James I Davison's picture

It’s now evident that people in developing countries have access to the internet and mobile phones like never before, which (as I recently wrote about) may lead to increased economic growth, job creation and good governance. A huge piece of this broad puzzle is mobile banking, and utilizing mobile phones to bring financial services to people who wouldn't otherwise have access to banks ("unbanked").

A new study, released last month by the Consultative Group to Assist the Poor (CGAP) and GSMA, estimates that there are more than one billion people worldwide who are unbanked, yet have access to mobile phones. And by 2012, that number is expected to grow to 1.7 billion people.


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