Search
Search Results
-
A non-stationary panel data approach for examining convergence in South Africa
42-74Views:231Economic convergence has received much attention since the 1980s when researchers tried to ascertain whether low-income countries would stay that way in the long run, or they would gain ‘developmental traction’ and become the affluent nations of the future. This article gives fresh insight on this topic from an African perspective by comparing 39 countries—South Africa, 32 Organisation for Economic Cooperation and Development (OECD) members and 6 Latin American countries. The author investigated their average steady-state equilibria and tested convergence trends from 1980 to 2019. The Solow–Swan model was tested. Furthermore, this study applies panel econometric modelling to determine the relationship between the variables analysed in the convergence analysis. This commenced with the Levin–Lin–Chu and Im–Pesaran–Shin panel unit root tests. Then, the Kao test and the vector error correction model were used to evaluate the cointegration and relationships between variables. The findings revealed that South Africa’s economic performance is significantly lower than the OECD average gross domestic product per capita with an annual growth rate of 0.54%, which falls below the ‘iron law of convergence’ hypothesis.
JEL classifications: C01, C32, C33, E13, F62, F63
-
A gazdasági növekedés gyorsításának esélyei Magyarországon 2030-ig
5-26Views:225The regime change in 1989/1990 has not produced the expected result: Hungary has not been able to catch-up with the Western market economies. Can Hungary grow 2-3 times faster then its competitors during the next 20 years, as the present Hungarian government declared in its economic plans? Can Hungary improve its relative position and catch-up with the per capita GDP level of the EU-27 average by 2030? The conclusion of the paper is that this is very unlikely to happen. But there is ample room for accelerating productivity growth, and in this regard, every percentage difference counts enormously in the long-term. Three factors of production are analyzed: the natural-physical-geographical endowments of Hungary (N), Labour (L) and the capital stock (C). The following new findings are discussed. First, contrary to the widely held view, the amount of labour currently used by the Hungarian economy is not low in international comparison. The education of the workforce is also adequate. The problem is its allocation: too many workers are employed in low productivity, small firms. The only way forward is to promote the concentration of enterprises, to support the increase in the number of medium-sized and large firms. Second, the rate of domestic savings needs to be increased considerably, to allow for a low-cost financing of investments. In turn, this requires a substantial reform in three areas: healthcare, pensions and higher education. As long as the welfare state exists in its present form and these three spending items are largely financed by the state, one cannot reasonably expect households to save and accumulate families" long-term reserves in financial assets. But before these changes happen the political alite must accept that the obstacles to productivity growth have to be removed from the legal and political stuctures.
JEL classification: E66, O47, O50, O52
-
The development of regional policy in the European Union: reforms and conflicts
88-102Views:221In the European Union the discussion of each budgetary period sees fierce debates about the structural expenses and their distribution. The paper presents a summary of the principles of those involved, and tries to catch them in the policy making of Brussels. In the first half of the paper the necessity of regional policy and its theoretical foundation are examined touching upon the so called convergence and divergence theories. This is followed by the discussion of the conflicting interests and motifs shaping the regional policy. The final question is whether the expenses of the Structural Funds can be justified in view of the processes and results shown.
-
A német transzferrendszer mint a gazdasági visszaesés okozója
Views:266According to the theory of optimal currency areas the most important advantage of monetary integration is its positive effect on economic growth. However, examining Germany we can notice that since German reunification economic growth and the convergence between East and West Germany has slowed down. These facts show that the operation of the German currency union is not optimal and its performance has not improved over the last twenty years. The criteria of the optimal currency area theory is endogenous due to the recent development of the theory. This means that a country is more likely to satisfy the criteria for entry into a curreny union ex post than ex ante. In the case of Germany, examining the trends of economic growth we can conclude the the German currency union has not become optimal in the last two decades. These facts raise the puzzling question of what are the specific circumstances hindering the improvement if Germany's monetary union despite the endogeneity of the optimal currency area criteria. To answer this question the study examines the interactions between monetary and political integration with special attention to the issues of fiscal policy. According to the study the German transfer system and the dependency on transfers explain the discrepancy between theory and empirics.
Journal of Economic Literature (JEL) classification: E42, E62, E63, F01, F31, F36
-
Policy (Institutional) Diversity and Economic Development
5-31Views:205Diversity, or variety, is the essence of economic life in the sense of underlying choice; economic calculation gives numerical substance to how people make choices in their daily endeavours, either as consumers or entrepreneurs. How does variety/diversity takes shape in the realm of institutions and policy making? Is the range of choices open-ended? The last couple of decades has revealed an overwhelming offensive of the neo-liberal paradigm in
terms of defining “best practices”. Even language was shaped accordingly with market reforms being seen in a quasi-single theoretical and policy framework. Are we heading towards increasing uniformity with regard to institutional and policy set ups, worldwide? An affirmative answer would underline the successful market based transformation of a series of command economies. Some convergence between institutional patterns in the USA and the
EU economies might be alluded to in the same vein A supportive argument for this line of reasoning could be that what matters for individual achievement, in the end, are equal opportunities. But this argument can be turned around when debating the merits of various institutional set ups in terms of creating fair chances for people. A sceptical answer would highlight the mounting challenges which confront societies, whether rich and poor, and the international community in general –in spite of the high hopes of not long ago. The demise of the “New Economy”, the series of corporate scandals in wealthy economies and the subsequent recourse to new regulatory legislation, recurrent financial and currency crises throughout the world, and the controversies surrounding the activity of IFIs, should compel “ideologues”, of all sorts, to be more humble in their prescriptions. This essay argues that there is substantial scope for institutional and policy diversity to operate as a means to foster economic development; that there might be a paradigmatic cycle in the dynamic of economic policies. -
The Risks of Global Financial Markets and the Importance of Credibility: Implications for Hungarian Fiscal Policy
27-44Views:213The central issue in the controversy about the adoption of the euro in Hungary is the difficulties associated with the fulfillment of the fiscal criterion and the possible growth sacrifice it requires. In this paper the author examines the question whether the strategy of delaying entry into the euro-zone implies that fiscal consolidation can be delayed as well. In approaching the problem the paper considers the origins and history of the present-day global financial markets and argues that given the high degree of systemic risks individual countries face responsible macroeconomic policies are crucial in minimizing vulnerability to
crises. Consequently in order to avoid excessive interest rates and speculative inflows (or currency crisis in the worst case scenario) fiscal deficits in Hungary would have to be cut and credibility of fiscal policy reestablished even without EMU accession. The overall conclusion from this overview is that delaying entry in order to delay fiscal adjustment is likely to increase the trade off between real and nominal convergence instead of mitigating it.JEL classification: F33, F41, H62
-
Examination of the effect of financial transfers within the European Union
83-102Views:371It is a common view that financial transfers within the European Union have a significant effect on economic growth. Model simulations, sponsored by the European Commission, seem to confirm this supposition. The econometric analyses evaluating the actual impact of the funds, however, yields a dismal picture on the additional growth and convergence effects of financial transfers. This study's goal is to find the reason why the outcomes differ so much. First, we present the main types and the underlying logic of the evaluation methods of EU regional policy. This is followed by a review of the lessons learnt from the specific evaluation methodologies including case-studies, general equilibrium models, and regression analyses. Our conclusion is that the main objectives of the European regional policy prevailed only to a limited extent, which is mainly due to crowding out effects, rent-seeking, inefficient allocation and moral hazard.
-
The Evolution of Welfare Systems: Social Democratic and Social Autocratic Paths
46-65Views:238Students of global and regional political economy have produced a vast literature on divergent paths of capitalist evolution. The evolution of welfare systems, in general, and their different paths, in particular, have also widely been analysed in economic and social studies. The author, joining the discussions from a world system perspective, makes an attempt at presenting a global and regional political economic comparison of the seemingly similar welfare systems that have evolved in Northern and in Eastern Europe. The apparent convergence of the Sovietic type to the Nordic social democratic pattern is scrutinised, distinguishing it from the latter by the “social autocratic” label.
Journal of Economic Literature (JEL) kód: I31, I38, P36, P38