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Economies, Volume 5, Issue 3 (September 2017)

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Research

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Open AccessArticle The Relevance of Political Stability on FDI: A VAR Analysis and ARDL Models for Selected Small, Developed, and Instability Threatened Economies
Economies 2017, 5(3), 22; doi:10.3390/economies5030022
Received: 27 April 2017 / Revised: 9 June 2017 / Accepted: 13 June 2017 / Published: 22 June 2017
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Abstract
This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly
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This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly positive FDI net inflows, while the third is a panel with economies that are prone to political violence or targeted by the terrorist attacks. We employ a Granger causality test and implement a vector autoregressive (VAR) framework within the panel setting. In order to test the sensitivity of the results and avoid robust errors, we employ an ARDL model for each of the countries within every panel. Based upon our results, we conclude that there is a long-term relationship between political stability and FDI for the panel of small economies, while we find no empiric evidence of such a relationship for both panels of larger and more developed economies. Similarly to the original hypothesis of Lucas (1990), we find that FDI outflows tend to go towards politically less stable countries. On the other hand, the empiric methodology employed did not find such conclusive evidence in the panels of politically more developed countries or in the small economies that this paper observes. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle Regime-Switching Effect of Tourism Specialization on Economic Growth in Asia Pacific Countries
Economies 2017, 5(3), 23; doi:10.3390/economies5030023
Received: 30 March 2017 / Revised: 23 May 2017 / Accepted: 20 June 2017 / Published: 27 June 2017
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Abstract
In the past 30 years, many studies have focused on exploring the relationship between tourism development and economic growth. However, there has been no consensus reached concerning of the relationship. This study will attempt to clarify the relationship between tourism development and economic
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In the past 30 years, many studies have focused on exploring the relationship between tourism development and economic growth. However, there has been no consensus reached concerning of the relationship. This study will attempt to clarify the relationship between tourism development and economic growth. The purpose of this study is to analyze the relationship between tourism development and economic growth. This study applies the Panel Smooth Transition Regression Model (PSTR) proposed by Gonzalez et al. (2005) to investigate the regime-switching effect of tourism specialization on economic growth in Asia Pacific countries over the period 1996–2009. The results are as follows: (a) there were regime-switching effects of tourism specialization on economic growth; (b) the tourism specialization on economic growth has a better explanation for the effects of non-linear PSTR than linear PLS (Panel Least Squares); (c) in medium degree of tourism specialization countries (the value is between 0.0123~0.01663), tourism development has a significantly positive influence on economic growth, but consumption ability and investment ratios have a significantly negative influence on economic growth; (d) in low or high degree of tourism specialization countries (the value is below 0.0123 or above 0.01663), tourism development has a reduced influence on economic growth, and significantly positive influence on consumption ability and investment ratios. On the basis of these results, this study presents policy recommendations and areas for future research. Full article
(This article belongs to the Special Issue Tourism Economics)
Open AccessArticle The Nonlinearity of the New Keynesian Phillips Curve: The Case of Tunisia
Economies 2017, 5(3), 24; doi:10.3390/economies5030024
Received: 27 December 2016 / Revised: 30 May 2017 / Accepted: 20 June 2017 / Published: 7 July 2017
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Abstract
This article seeks to check the nonlinearity of the Phillips curve in Tunisia for the 1993–2012 period, relying on a hybrid new Keynesian Phillips curve modeled via a Logistic Smooth Transition Regression (LSTR) model with endogenous variables. We estimate this model using the
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This article seeks to check the nonlinearity of the Phillips curve in Tunisia for the 1993–2012 period, relying on a hybrid new Keynesian Phillips curve modeled via a Logistic Smooth Transition Regression (LSTR) model with endogenous variables. We estimate this model using the nonlinear instrumental variables. The empirical results corroborate the new Keynesian assumption ofprice rigidity and show that the response of inflation to the output gap tends to be significant only if the inflation rate tends to be relatively high and exceeds a certain threshold. For a low inflation rate, the price rigidity dominates. This result is particularly evident in Tunisia, especially for the years following the 2011 revolution during which the elasticity of inflation rate to an excess demand has become highly important and the inflation rate experienced record levels. Full article
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Open AccessArticle Nonlinear Effects of Remittances on Per Capita GDP Growth in Bangladesh
Economies 2017, 5(3), 25; doi:10.3390/economies5030025
Received: 20 July 2016 / Revised: 29 June 2017 / Accepted: 8 July 2017 / Published: 17 July 2017
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Abstract
This paper examines the impact of inward remittances flows on per capita gross domestic product (GDP) growth in Bangladesh during 1976–2012. We find that the growth effect of remittances is negative at first but becomes positive at a later stage, evidence of a
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This paper examines the impact of inward remittances flows on per capita gross domestic product (GDP) growth in Bangladesh during 1976–2012. We find that the growth effect of remittances is negative at first but becomes positive at a later stage, evidence of a non-linear relationship. Unproductive use of remittances was rampant in the beginning when they were received by migrant families, but better social and economic investments led to more productive utilization of remittances receipts at later periods. This suggests a U-shaped relationship between remittances and per capita GDP growth. Unlike what is suggested in the literature, that the effect of remittances is more pronounced in a less financially developed economy, our evidence does not show that the effect of remittances on per capita GDP growth in Bangladesh is conditional on the level of financial development. Full article
(This article belongs to the Special Issue Long-Run Economic Impacts of International Migration)
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Open AccessArticle From Clusters to Smart Specialization: Tourism in Institution-Sensitive Regional Development Policies
Economies 2017, 5(3), 26; doi:10.3390/economies5030026
Received: 28 February 2017 / Revised: 8 June 2017 / Accepted: 12 July 2017 / Published: 17 July 2017
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Abstract
In the European Union and its neighborhood, regional development has increasingly come to focus on agglomerations during the last three decades. Notably, during the 1990s and early 2000s, clustering was the major policy focus in regional development. Currently, the concept of smart specialization
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In the European Union and its neighborhood, regional development has increasingly come to focus on agglomerations during the last three decades. Notably, during the 1990s and early 2000s, clustering was the major policy focus in regional development. Currently, the concept of smart specialization is applied all over the European Union and is attracting interest in the EU’s neighborhood. The tourism sector particularly tends to agglomerate regionally and even locally. While there is a large body of literature describing tourism clusters and while tourism features as a priority sector in many regional development strategies such as smart specialization strategies, there is a research gap on policy approaches applying agglomeration-oriented policy concepts to tourism destinations in an institution-sensitive way. This article argues that both cluster policy and smart specialization can be of considerable value for institution-sensitive tourism development, either when adapted to the specificities of the tourism sector or when integrating tourism development into wider, cross-sectoral strategies of regional development. Such a policy can be a valuable tool for local and regional development, provided that policies are designed in an institution-sensitive manner and respond to the particular institutional context prevailing in a tourist destination. The article illustrates some preliminary thoughts for institution-sensitive tourism development through cluster policy and smart specialization in Cyprus, Israel, and Tunisia. Full article
(This article belongs to the Special Issue Tourism Economics)
Open AccessArticle Regional Economic Convergence in Turkey: Does the Government Really Matter for?
Economies 2017, 5(3), 27; doi:10.3390/economies5030027
Received: 21 March 2017 / Revised: 6 July 2017 / Accepted: 18 July 2017 / Published: 24 July 2017
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Abstract
Solow (1956) has made an essential contribution to the Neo-classical growth approach through the economic convergence hypothesis. It assumes that poorer countries’ or regions’ per capita incomes tend to grow at faster rates than the richer ones. Convergence could occur either among a
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Solow (1956) has made an essential contribution to the Neo-classical growth approach through the economic convergence hypothesis. It assumes that poorer countries’ or regions’ per capita incomes tend to grow at faster rates than the richer ones. Convergence could occur either among a group of economies with the same steady states or within regions in which their fundamental dynamics differ, and thus they exhibit multiple steady states. This study aims to investigate convergence with respect to GDP per capita across NUTS 2 regions in Turkey for the time period 2004–2014. In the convergence process, we also inquire into role of government in terms of regional government investments and fixed investment incentives. All the empirical results confirm the validity of the convergence hypothesis at a regional level. Also, in the context of the convergence process, it is possible to conclude that the role of government is likely to be decisive in solving regional economic disparities. Full article
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Open AccessArticle A Soft Systems Approach to Knowledge Worker Productivity—Analysis of the Problem Situation
Economies 2017, 5(3), 28; doi:10.3390/economies5030028
Received: 8 March 2017 / Revised: 21 July 2017 / Accepted: 21 July 2017 / Published: 1 August 2017
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Abstract
Low knowledge worker productivity is an important problem that needs to be addressed. Current research addressing this problem is fragmented and deals with different isolated elements of the problem. There is a need for a holistic approach to knowledge worker productivity. This paper
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Low knowledge worker productivity is an important problem that needs to be addressed. Current research addressing this problem is fragmented and deals with different isolated elements of the problem. There is a need for a holistic approach to knowledge worker productivity. This paper takes the first steps of a holistic approach to knowledge worker productivity by using soft systems methodology to describe the problem situation. The main challenge of this research was the abstraction of the results from two literature reviews into simple rich pictures and specific root definitions to identify the fundamentals of knowledge worker productivity. The problem situation was explored from the perspective of two problem owners, the organization and the individual knowledge worker. The rich picture from the perspective of the organization highlighted that the organization must communicate what they perceive as value and create a work environment that promotes collaboration, encourages knowledge sharing, motivates and fulfills the needs of their knowledge workers. The rich picture from the perspective of the individual knowledge worker highlighted the fact that knowledge workers need to manage their personal resources, be effective and efficient to maximize their own productivity. This paper attempts to integrate these two perspectives into a holistic view. Full article
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Open AccessArticle Does Foreign Direct Investment Successfully Lead to Sustainable Development in Singapore?
Economies 2017, 5(3), 29; doi:10.3390/economies5030029
Received: 12 June 2017 / Revised: 22 July 2017 / Accepted: 24 July 2017 / Published: 7 August 2017
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Abstract
The role of foreign direct investment (FDI) inflows is tested on three main pillars of sustainable development (SD), which consists of economic growth, income distribution and environmental quality for Singapore. The analysis is performed by using Autoregressive Distributed Lag (ARDL) estimation technique. The
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The role of foreign direct investment (FDI) inflows is tested on three main pillars of sustainable development (SD), which consists of economic growth, income distribution and environmental quality for Singapore. The analysis is performed by using Autoregressive Distributed Lag (ARDL) estimation technique. The sample data is based on annual data, covering the period from 1970 to 2013. The estimated long-run elasticity indicated that FDI inflows not only lead to higher economic growth and better environmental quality but also widen the income disparity in this country, which may disrupt its SD mission. The other two introduced variables that could also play a part as potential drivers for sustainable development (SD) are trade openness (TO) and financial development (FD). Based on the outcomes, TO has also led to higher economic growth and lower environmental degradation. However, this variable does not have significant impact on income distribution for Singapore. As for FD, it is found to have a significant and positive impact on economic growth and also successfully reduce the income inequality problem. On the contrary, this variable does not have any significant relationship with environmental quality, as indicated by carbon dioxide (CO2) emissions. Mixed evidence of a relationship is detected for other macroeconomic variables in the three estimates models. As the income inequality issue has become more serious, it is important for Singaporean policymakers to focus on attracting more foreign investors to invest in various sectors, in the hope that these companies can offer better wages to the local workers and thus improve income distribution in the country. More attention is needed to explore the potential role of TO and FD as drivers for SD in this country. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle Accounting for Nonlinearity, Asymmetry, Heterogeneity, and Cross-Sectional Dependence in Energy Modeling: US State-Level Panel Analysis
Economies 2017, 5(3), 30; doi:10.3390/economies5030030
Received: 9 June 2017 / Revised: 27 July 2017 / Accepted: 10 August 2017 / Published: 15 August 2017
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Abstract
This paper provides an example of several modeling and econometric advances used in the panel estimation of energy demand elasticities. The paper models the demand of total, industrial, and transport energy consumption and residential and commercial electricity consumption by analyzing US state-based panel
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This paper provides an example of several modeling and econometric advances used in the panel estimation of energy demand elasticities. The paper models the demand of total, industrial, and transport energy consumption and residential and commercial electricity consumption by analyzing US state-based panel data. The paper employs recently developed dynamic panel methods that address heterogeneity, nonstationarity, and cross-sectional dependence. In addition, the paper (i) considers possible nonlinear relationships between energy consumption and income without employing polynomial transformations of integrated income; and (ii) allows for and calculates possible asymmetric relationships between energy consumption and price. Finally, the paper models energy efficiency improvements by a nonlinear time trend. To our knowledge no other paper has combined all of the econometric and modeling advances that are applied here. Most of the results conformed to expectations; however, limited to no evidence of nonlinearities and asymmetries were uncovered. Full article
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Open AccessArticle The Nature of Spain’s International Cultural Tourism throughout the Economic Crisis (2008–2016): A Macroeconomic Analysis of Tourist Arrivals and Spending
Economies 2017, 5(3), 32; doi:10.3390/economies5030032
Received: 31 March 2017 / Revised: 27 July 2017 / Accepted: 11 August 2017 / Published: 28 August 2017
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Abstract
Since the global economic and financial crisis of 2008, tourism has taken up a central position in the recovery of Spain’s severely damaged economy. If the first years after the recession signaled a considerable decline of the tourism sector, the later years in
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Since the global economic and financial crisis of 2008, tourism has taken up a central position in the recovery of Spain’s severely damaged economy. If the first years after the recession signaled a considerable decline of the tourism sector, the later years in which those countries with the highest numbers of outgoing tourists to Spain had recovered, consolidated the tourism sector as one of the principal drivers of economic development. Testament to this are its contribution to a growing Gross Domestic Product (GDP) and decreasing unemployment, and its ability to stabilize the country’s balance of payments. On the other hand, tourism has also proven to be a complex economic sector, in which various factors have come together in different forms. Faced with the impossibility to consider every single one of these factors, this study has limited itself to researching those indicators that shape the international character of Spain’s cultural tourism sector, and subsequently determining how this sector performed from a macroeconomic perspective. The outcome of this study is to detect patterns that may allow for the development of more effective means for managing cultural tourism. The descriptive analysis of official cultural and tourism statistical data, and the synthetic representation of the results in various tables and graphs indicate that cultural tourism, at least in terms of international tourist arrivals, has indeed remained stable throughout the crisis, even though it has not grown significantly ever since. Full article
(This article belongs to the Special Issue Tourism Economics)
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Open AccessArticle The National Bank of Ukraine Communication Strategy Optimization within the Framework of Impact on Exchange Rate Expectations of Economic Agents
Economies 2017, 5(3), 33; doi:10.3390/economies5030033
Received: 4 April 2017 / Revised: 5 June 2017 / Accepted: 26 July 2017 / Published: 4 September 2017
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Abstract
An important challenge in terms of smoothing excessive exchange rate volatility under the conditions of flexible exchange rate arrangement is optimization of the communication strategy of the country’s monetary regulator. Over the past two decades, communication (information support) has become an increasingly important
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An important challenge in terms of smoothing excessive exchange rate volatility under the conditions of flexible exchange rate arrangement is optimization of the communication strategy of the country’s monetary regulator. Over the past two decades, communication (information support) has become an increasingly important aspect of monetary policy. Communication enables influence of the volatility of financial markets, improvement of the predictability of monetary policy, and helps to achieve macroeconomic objectives. Nevertheless, as of today, consensus on the issue into what the optimal strategy of the central bank communication is has not been reached, either in Ukraine, nor in developed countries yet. Considering the abovementioned, the methodical approaches to improve the central bank’s communication strategies, based on the use of its verbal interventions in the context of smoothing out excessive cyclical volatility of exchange rates of the national currency, are determined in this article. It is suggested to consider the growth of the factor “information signal/information noise” as a criterion of the central bank’s optimal communication strategy. It is proved that the monetary regulator’s main task should be the continual provision of information concerning a fundamentally justified level of the exchange rate and the level of deviation of the actual rate of the national currency from its fundamental-equilibrium level, as of a given time, to the national foreign exchange market participants. The methodological approach to the improvement of information support of forecasting fundamentally specified value of the national currency is outlined. Full article
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Open AccessArticle A Firm-Level Investigation of Innovation in the Caribbean: A Comparison of Manufacturing and Service Firms
Economies 2017, 5(3), 34; doi:10.3390/economies5030034
Received: 3 May 2017 / Revised: 9 August 2017 / Accepted: 25 August 2017 / Published: 12 September 2017
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Abstract
A lack of growth remains a major concern for Caribbean countries. Private sector development has been identified as vital in addressing this problem. Innovation, a necessary condition for competitiveness, is a key channel through which the private sector can help to stimulate growth.
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A lack of growth remains a major concern for Caribbean countries. Private sector development has been identified as vital in addressing this problem. Innovation, a necessary condition for competitiveness, is a key channel through which the private sector can help to stimulate growth. An analysis of innovation at the firm level for Caribbean manufacturing and services sectors shows that patent rights, the level of domestic sales, collaboration for innovation purposes, innovation intensity (that is, the efficiency with which innovation funds are managed), availability of technology, knowledge about new market trends, domestic sales, and the size of the workforce are critical to the innovation process in both sectors. Several differences also exist. Innovative service firms are older, in contrast to manufacturing firms, which tend to be younger; foreign ownership is key for service firms; and both types of firms face different obstacles to innovation. Policymakers should tailor policies that take such differences into account. Full article
(This article belongs to the Special Issue Innovation and Economic Development)
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Open AccessArticle The Effect of Access to Information and Communication Technology on Household Labor Income: Evidence from One Laptop Per Child in Uruguay
Economies 2017, 5(3), 35; doi:10.3390/economies5030035
Received: 21 June 2017 / Revised: 31 August 2017 / Accepted: 4 September 2017 / Published: 19 September 2017
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Abstract
This paper examines the effect of the One Laptop Per Child program in Uruguay (Plan Ceibal) on household labor income. Since 2007, the Uruguayan government has delivered one laptop to every child and teacher in public primary schools. This program has
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This paper examines the effect of the One Laptop Per Child program in Uruguay (Plan Ceibal) on household labor income. Since 2007, the Uruguayan government has delivered one laptop to every child and teacher in public primary schools. This program has considerably increased access to information technology within households, as evidenced by parents’ utilization of said technology. Households in the department of Florida received laptops in 2007, while those in the department of Canelones received them in 2009. Therefore, using data from Household Surveys from the National Institute of Statistics in Uruguay, a difference-in-difference model is estimated to capture the effect of the plan of giving laptops on labor income. The results indicate that there is a statistically significant positive effect of the plan on household labor income for households below median income, specifically, those at the 10th and 20th quantiles. Such findings suggest that the program has greater potential when targeted to low-income households, where parents possess lower computer skills. Full article
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Review

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Open AccessReview A Brief Overview of International Migration Motives and Impacts, with Specific Reference to FDI
Economies 2017, 5(3), 31; doi:10.3390/economies5030031
Received: 16 November 2015 / Revised: 7 June 2017 / Accepted: 3 August 2017 / Published: 21 August 2017
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Abstract
International migration has become one of the most debated topics in many developed and developing countries. Host countries are concerned about the socioeconomic consequences of international migration, while sending countries—from a developing country’s perspective—are concerned about the brain drain and loss of their
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International migration has become one of the most debated topics in many developed and developing countries. Host countries are concerned about the socioeconomic consequences of international migration, while sending countries—from a developing country’s perspective—are concerned about the brain drain and loss of their younger population. This paper presents a concise literature review on existing theories of international migration, and long-run effects of international migration on Foreign Direct Investment (FDI). The empirical studies reviewed in this paper indicate a positive and statistically significant relationship between international migration and FDI. Full article
(This article belongs to the Special Issue Long-Run Economic Impacts of International Migration)
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