Open AccessArticle
Examining the ‘’Natural Resource Curse’’ and the Impact of Various Forms of Capital in Small Tourism and Natural Resource-Dependent Economies
Economies 2017, 5(1), 6; doi:10.3390/economies5010006 -
Abstract
The problem of the relevance of human and natural capital, as well as the potential adverse effect of natural capital on economic growth, has gained increased attention in development economics. The aim of this paper is to assess, theoretically and empirically, the relevance
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The problem of the relevance of human and natural capital, as well as the potential adverse effect of natural capital on economic growth, has gained increased attention in development economics. The aim of this paper is to assess, theoretically and empirically, the relevance of several forms of capital on economic growth in certain small economies that are dependent upon tourism or natural resources. The empirical framework is based on Impulse Response Functions obtained from Vector Autoregressive models in which we focus on the model where economic growth is the dependent variable for ten small economies that are dependent upon either tourism or natural resources. We find that there is evidence of the “natural resource curse”, especially in the economies that have a strong dependence on resources that are easily substitutable and whose prices constantly fluctuate. We further find that in the majority of observed cases, the type of capital these small economies are most dependent on for their economic growth causes negative impulses in the majority of the observed periods. Therefore, the main policy recommendation should be to assure that even these small economies should strive towards further diversification and avoid dependence on only one segment of their economy. Full article
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Open AccessArticle
The Impact of Terrorist Attacks on Foreign Exchange Rate: Case Study of Turkish Lira versus Pound Sterling
Economies 2017, 5(1), 5; doi:10.3390/economies5010005 -
Abstract
In this study, the impact of terrorist attacks on exchange rate is estimated. Particularly, the study focuses on terrorist attacks in Turkey and its implication on Turkish lira versus pound sterling exchange rate. In order to find the causal effect, the study employed
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In this study, the impact of terrorist attacks on exchange rate is estimated. Particularly, the study focuses on terrorist attacks in Turkey and its implication on Turkish lira versus pound sterling exchange rate. In order to find the causal effect, the study employed Autoregressive distributive lag (ARDL) bound testing approach as an estimation technique. Accordingly, the analysis reveals that a terrorist attack has a negative impact on the exchange rate in both the short-run and long-run. However, the negative effect of terrorism tends to be small in both the short-run and long-run. More precisely, terrorist attacks depreciate the exchange rate between Turkish lira and pound sterling by approximately 0.024% in the next trading day. The long-term effect also shows that a terrorist attack depreciates the exchange rate on average by 0.0706%. Full article
Open AccessArticle
Financial Deepening and Economic Growth Nexus in Nigeria: Supply-Leading or Demand-Following?
Economies 2017, 5(1), 4; doi:10.3390/economies5010004 -
Abstract
This paper examined the direction of causality between financial deepening and economic growth in Nigeria for the period 1970–2013. The study adopted the Toda–Yamamoto augmented Granger causality test and results showed that the growth-financial deepening nexus in Nigeria follows the supply-leading hypothesis. This
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This paper examined the direction of causality between financial deepening and economic growth in Nigeria for the period 1970–2013. The study adopted the Toda–Yamamoto augmented Granger causality test and results showed that the growth-financial deepening nexus in Nigeria follows the supply-leading hypothesis. This means that it is financial deepening that leads to growth and not growth leading financial deepening. Among other things, the study recommended that policy efforts should be geared towards removing obstacles that undermine the growth of credit to the private sector, and must restore investors’ confidence in the stock market operations. Full article
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Open AccessArticle
Leaning against the Wind Policies on Vietnam’s Economy with DSGE Model
Economies 2017, 5(1), 3; doi:10.3390/economies5010003 -
Abstract
The global financial crisis of 2007–2008 had a negative impact on many countries, including Vietnam. Many policies have been applied to stabilize the macro-economic indicators. However, most of them are based on old qualitative models, which do not help policy makers understand deeply
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The global financial crisis of 2007–2008 had a negative impact on many countries, including Vietnam. Many policies have been applied to stabilize the macro-economic indicators. However, most of them are based on old qualitative models, which do not help policy makers understand deeply how each one affects the economy. In this paper, we investigate a quantitative macro-economic approach and use leaning against the wind policies with the Dynamic Stochastic General Equilibrium model (DSGE) to find a better way to understand how policies stabilize the Vietnamese economy. Based on the framework of Gerali et al., we calibrate the hyper-parameter for Vietnam financial data and do the comparison between the standard Taylor rule and the cases in which we add asset price and credit elements. The results show that the credit-augmented Taylor rule is better than the asset-price-augmented one under the technology shock and contrary to the cost-push shock. Moreover, the extended simulation result shows that combining both asset-price and credit rules on the model is not useful for Vietnam’s economy in both types of shock. Full article
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Open AccessEditorial
Acknowledgement to Reviewers of Economies in 2016
Economies 2017, 5(1), 2; doi:10.3390/economies5010002 -
Abstract The editors of Economies would like to express their sincere gratitude to the following reviewers for assessing manuscripts in 2016.[...] Full article
Open AccessArticle
Financial Reforms and Determinants of FDI: Evidence from Landlocked Countries in Sub-Saharan Africa
Economies 2017, 5(1), 1; doi:10.3390/economies5010001 -
Abstract
The recognition of Foreign Direct Investment (FDI) as a source of funding to foster economic development in both developed and developing countries has been in ascendancy. The prime purpose of this study is to empirically investigate the determinants of FDI for the “landlocked
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The recognition of Foreign Direct Investment (FDI) as a source of funding to foster economic development in both developed and developing countries has been in ascendancy. The prime purpose of this study is to empirically investigate the determinants of FDI for the “landlocked countries” in Sub-Saharan Africa over the period 1995–2013. By employing panel data analysis, the result of the study revealed that domestic investment, trade (openness), human capital, political constraint, natural resource endowment and the market size (with the GDP growth as proxy) as having positive impact on determining FDI flow into the sample countries with only the countries’ tax policies seen otherwise. Our study not only contributes to existing literature on FDI determinants by investigating landlocked countries of Sub-Saharan Africa (SSA) for the first time but also includes natural resources that the landlocked countries are endowed with, tax policies and political constraints in such countries for the stipulated period. Full article
Open AccessArticle
Does Financial Development Drive Private Investment in Ghana?
Economies 2016, 4(4), 27; doi:10.3390/economies4040027 -
Abstract
There is ample evidence from economic growth literature that investment accelerates economic growth and development of developing countries, of which Ghana is not an exception. Based on this, recent growth and development policies in Ghana have focused more on encouraging private sector investment
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There is ample evidence from economic growth literature that investment accelerates economic growth and development of developing countries, of which Ghana is not an exception. Based on this, recent growth and development policies in Ghana have focused more on encouraging private sector investment through the development of the financial sector. This paper investigates the short- and long-run impact of financial development on private investment in Ghana for the years 1970–2014. Additionally, to find out whether the measurement of financial development matters for private investment, several indicators of financial development are used. The results, based on the ARDL bounds testing approach to cointegration, suggest that financial development has not been a key driver of private investment in the long run, while, in the short run, the effect of financial development on private investment depends on how financial development is measured. Given these results, policy makers should be circumspect regarding the choice of financial development indicator used as a policy instrument in the design and implementation of private investment policies for Ghana. Full article
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Open AccessArticle
Remittances, Development Level, and Long-Run Economic Growth
Economies 2016, 4(4), 28; doi:10.3390/economies4040028 -
Abstract
This paper seeks to enrich the field of research on the topic of the impact of remittances on long-run economic growth. Using an unbalanced panel data covering a sample of 116 countries with different development levels over the period 1990–2014, we studied the
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This paper seeks to enrich the field of research on the topic of the impact of remittances on long-run economic growth. Using an unbalanced panel data covering a sample of 116 countries with different development levels over the period 1990–2014, we studied the interaction between remittances and the level of economic development, as well as its impact on long-run economic growth—because the impact of remittances could be influenced by the development level of the receiving countries. In parallel, we explored the hypothesis about diminishing a country’s capacity to use remittances for promoting long-run economic growth as the abundance of remittances increases. To control the endogeneity while estimating the impact of remittances on long-run economic growth, we used OLS (ordinary least squares) with FD (first differences) transformation and FE (fixed effects) approaches and other controls of long-run growth. Our results showed that in general remittances have a positive impact on long-run economic growth, but the impact differs based on the country’s economic development level and the abundance of remittances in the economy. Full article
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Open AccessArticle
The Impact of Financial Development on Economic Growth in Nigeria: An ARDL Analysis
Economies 2016, 4(4), 26; doi:10.3390/economies4040026 -
Abstract
This study empirically examines the relationship between financial intermediary development and economic growth in Nigeria over the period 1981–2011 using the auto-regressive distributed lag (ARDL) approach to co-integration analysis. The results show that the relationship between financial development and economic growth in Nigeria
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This study empirically examines the relationship between financial intermediary development and economic growth in Nigeria over the period 1981–2011 using the auto-regressive distributed lag (ARDL) approach to co-integration analysis. The results show that the relationship between financial development and economic growth in Nigeria is not significantly different from what has been observed generally in oil-dependent economies. The relationship between financial intermediary development and economic growth in Nigeria is found to be insignificantly negative in the long-run and significantly negative in the short-run. The results highlight the dominant role of the oil sector in economic activities in Nigeria. Full article
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Open AccessArticle
Stock Market and Sustainable Economic Growth in Nigeria
Economies 2016, 4(4), 25; doi:10.3390/economies4040025 -
Abstract
This paper examines the relationship between stock market evolution and sustainable economic growth in Nigeria. The study employs Auto-Regressive Distributed Lag (ARDL)-bounds testing approach and a combined stock market indicators index to examine the relationship. The paper finds that, in the long run,
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This paper examines the relationship between stock market evolution and sustainable economic growth in Nigeria. The study employs Auto-Regressive Distributed Lag (ARDL)-bounds testing approach and a combined stock market indicators index to examine the relationship. The paper finds that, in the long run, stock markets have no positive and at best mixed effect on economic growth in Nigeria. This finding supports the numerous past studies, which have reported negative/mixed or inconclusive results on the effects of stock markets on economic growth. The paper, therefore, concludes that, there is the need for increasing financial deepening and the removal of bottlenecks in the financial sectors of the economy by providing further public and institutional education on the value of stock markets for economic development. Full article
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Open AccessArticle
Have Sanctions Modified Iran’s Trade Policy? An Evidence of Asianization and De-Europeanization through the Gravity Model
Economies 2016, 4(4), 24; doi:10.3390/economies4040024 -
Abstract
This study is an empirical attempt to find out whether under sanctions Iran’s trade direction has shifted away from Europe (trade policy of de-Europeanization) towards Asia (trade policy of Asianization). The analysis is conducted using a panel-gravity trade model to analyze bilateral trade
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This study is an empirical attempt to find out whether under sanctions Iran’s trade direction has shifted away from Europe (trade policy of de-Europeanization) towards Asia (trade policy of Asianization). The analysis is conducted using a panel-gravity trade model to analyze bilateral trade pattern between Iran and 50 countries from the EU and Asia during the period 2006–2013. To this end, the authors use an extended gravity model by adding new variables, including the index of Chinn–Ito (KAOPEN) as an indicator of financial openness, and the composite trade intensity (CTI) as an indicator of trade openness. Our findings reveal that the gravity equation fits the data reasonably well. The empirical evidence indicates a significant negative effect of sanctions on Iran–EU bilateral trade (by an average of 46.9%), while it has a positive impact on trade between Iran and the Asian countries (by an average of 85.2%). Overall, these findings confirm that the imposition of various sanctions related to Iran’s nuclear program has pushed the country’s foreign trade to reorient away from Europe towards Asia. Full article
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Open AccessArticle
The Impact of Possible Migration Scenarios after ‘Brexit’ on the State Pension System
Economies 2016, 4(4), 23; doi:10.3390/economies4040023 -
Abstract
The purpose of this paper is to explore the impacts of changes in migration flows—in particular, those resulting from possible migration policy changes after a UK exit (‘Brexit’) from the European Union (EU)—on the finances of the UK state pension system. We find
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The purpose of this paper is to explore the impacts of changes in migration flows—in particular, those resulting from possible migration policy changes after a UK exit (‘Brexit’) from the European Union (EU)—on the finances of the UK state pension system. We find that the aggregate effects of considered shocks to immigration associated with Brexit on the funding of UK state pensions are dwarfed by associated uncertainties, and by coincident cost increases due to population aging and (domestic) pension’s policy. Full article
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Open AccessArticle
Breaking up Is Hard to Do: Why the Eurozone Will Survive
Economies 2016, 4(4), 21; doi:10.3390/economies4040021 -
Abstract Since revelations of the Greek fiscal deficit in the fall of 2009, the breakup of the Economic and Monetary Union (EMU) has moved from unthinkable to plausible. The debate over the future  of the EMU has become increasingly relevant, as numerous efforts to solve the Greek crisis have not  been successful. Neither have basic competitiveness differences between countries in the core and  periphery of the European Union been eliminated. Proposed solutions include development of a  banking union, regulatory measures to monitor trade and capital imbalances, fiscal reforms on the  part of countries in trouble, and centralized fiscal capacity on the part of the EMU itself to offset the liabilities of the indebted states. While the crisis seems to be contained, it is by no means solved.  This leads to the question: “Will the euro survive?” We answer this question in the affirmative, but  in doing so we argue that continuation of the EMU is different from the question of whether the  EMU should have been created in the first place. Some reasons for continuation of the EMU were  present at its creation; others have developed in a path‐dependent way as the Eurozone has evolved. Full article
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Open AccessArticle
Technical Efficiency and Its Determinants of Rice Production in Cambodia
Economies 2016, 4(4), 22; doi:10.3390/economies4040022 -
Abstract
The present study aims to measure the technical efficiency and establish core factors affecting rice production in Cambodia. A four‐year dataset generated from the central government document “Profile on Economics and Social” of 25 entire provinces between 2012 and 2015 and the stochastic
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The present study aims to measure the technical efficiency and establish core factors affecting rice production in Cambodia. A four‐year dataset generated from the central government document “Profile on Economics and Social” of 25 entire provinces between 2012 and 2015 and the stochastic production frontier model (SFA) was applied. The results indicated that the level of output (quantity) of Cambodian rice production varied according to the different level of capital investment in agricultural machineries, total rice actual harvested area, and technical fertilizer application within provinces. Furthermore, evidence revealed that the overall mean efficiency of rice production is 78.4%, which implies that there is still room to further improve technical efficiency given the same level of inputs and technology. More importantly, the findings revealed that irrigation, production techniques and amount of agricultural supporting staff are the most important influencing factors of rice production’s technical efficiency in Cambodia. In conclusion, the present study strongly recommends the development of irrigation systems and good water management practices to be considered and bring about more effective actions by the central government as well as related agencies for improving rice production in Cambodia in addition to capital investment and improving technical skills of supporting staff and rural farmers. Full article
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Open AccessArticle
The Effects of Oil Price Shocks on IIP and CPI in Emerging Countries
Economies 2016, 4(4), 20; doi:10.3390/economies4040020 -
Abstract
In this paper, we investigate the effects of oil price shocks on the production and price level in five emerging countries through comparison with the United States, using a two-block structural VAR model of the global crude oil market proposed by Kilian and
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In this paper, we investigate the effects of oil price shocks on the production and price level in five emerging countries through comparison with the United States, using a two-block structural VAR model of the global crude oil market proposed by Kilian and Park (see International Economic, vol. 50, 2009, pp. 1267–1287). Our main finding is that the effect of oil price shocks on the index of the industrial production (IIP) and consumer price index (CPI) in emerging countries also depends on where the changes fundamentally come from (this is also the case for the United States). We also found that some emerging countries showed unique impulse response patterns, the shapes of which are different from those of the United States and there are differences in impulse response patterns among emerging countries. Full article
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Open AccessArticle
Socio-Economic Implications of Drought in the Agricultural Sector and the State Economy
Economies 2016, 4(3), 19; doi:10.3390/economies4030019 -
Abstract
In 2011, the most severe drought in Texas history caused $7.62 billion in losses in the agricultural sector alone. This paper analyzes ripple effects of the 2011 drought in Texas agriculture on the entire state economy retrospectively in an effort to foster discussion
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In 2011, the most severe drought in Texas history caused $7.62 billion in losses in the agricultural sector alone. This paper analyzes ripple effects of the 2011 drought in Texas agriculture on the entire state economy retrospectively in an effort to foster discussion on targeted mitigation measures in the long term. By using an Input-Output and social accounting matrix model, direct effects on livestock, cotton, sorghum, wheat, corn, hay, and timber production, as well as indirect effects on other related sectors, and finally induced effects from changing consumers behavior have been estimated. According to the results, the 2011 drought caused economic losses of $16.9 billion in the entire Texas economy and increased the unemployment by around 166,895 people. The agricultural sector alone lost around 106,000 jobs. The cotton farming experienced 91% of revenue losses (as compared to 2010), while the livestock production lost 32% in revenue. The decreased production yields and limited market supply directly influence market prices for those products, which might create additional spillover effects on export and import quantities. The presented analysis can be helpful for designing policies to launch mitigation programs for drought events in the future. Full article
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Open AccessArticle
Going Forward from B to A? Proposals for the Eurozone Crisis
Economies 2016, 4(3), 18; doi:10.3390/economies4030018 -
Abstract
After reviewing the main determinants of the current Eurozone crisis, this paper discusses the feasibility of introducing fiscal currencies as a way to restore fiscal space in peripheral countries, such as Greece, which have so far adopted austerity measures in order to abide
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After reviewing the main determinants of the current Eurozone crisis, this paper discusses the feasibility of introducing fiscal currencies as a way to restore fiscal space in peripheral countries, such as Greece, which have so far adopted austerity measures in order to abide by their commitments with Eurozone institutions and the IMF. We show that the introduction of fiscal currencies would speed up the recovery, without violating the rules of Eurozone Treaties. At the same time, these processes could help the transition of the euro from its current status of single currency to a status of “common clearing currency” along the lines proposed by Keynes at Bretton Woods as a system of international settlements. Eurozone countries could therefore move from “Plan B” aimed at addressing member state domestic problems, to a “Plan A” of a better European monetary system. Full article
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Open AccessArticle
Why Migrate: For Study or for Work?
Economies 2016, 4(3), 17; doi:10.3390/economies4030017 -
Abstract
Over the past decades, globalization has led to a huge increase in the migration of workers, as well as students. This paper develops a simple two-step model that describes the decisions of an individual vis-à-vis education and migration, and presents a unified model,
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Over the past decades, globalization has led to a huge increase in the migration of workers, as well as students. This paper develops a simple two-step model that describes the decisions of an individual vis-à-vis education and migration, and presents a unified model, wherein the two migration decisions are combined into a single, unique model. This paper shows that under the plausible assumption that costs of migration differ over the human life cycle, the usual brain drain strategy is sub-optimal. With an increase in globalization, the brain drain strategy will be replaced by the strategy of migration of students. Full article
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Open AccessArticle
Convergence and Heterogeneity in Euro Based Economies: Stability and Dynamics
Economies 2016, 4(3), 16; doi:10.3390/economies4030016 -
Abstract
Cluster analysis is used to explore the performance of key macroeconomic variables in European countries that share the euro, from the inception of the currency in 2002 through to 2013. An original applied statistical approach searches for a pattern synthesis across a matrix
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Cluster analysis is used to explore the performance of key macroeconomic variables in European countries that share the euro, from the inception of the currency in 2002 through to 2013. An original applied statistical approach searches for a pattern synthesis across a matrix of macroeconomic data to examine if there is evidence for country clusters and whether there is convergence of the cluster patterns over time. A number of different clusters appear and these change over time as the economies of the member states dynamically interact. This includes some new countries joining the currency during the period of examination. As found in previous research, Southern European countries tend to remain separate from other countries. The new methods used, however, add to an understanding of some differences between Southern European countries, in addition to replicating their broad similarities. Hypotheses are formed about the country clusters existing in 2002, 2006 and 2013, at key points in time of the euro integration process. These hypotheses are tested using the rigour of a bivariate analysis and the multivariate method of Qualitative Comparative Analysis (QCA). The results confirm the hypotheses of cluster memberships in all three periods. The confirmation analysis provides evidence about which variables are most influencing cluster memberships at each time point. In 2002 and 2006, differences between countries are influenced by their different Harmonised Index of Consumer Prices (HICP) and labour productivity scores. In 2013, after the crisis, there is a noticeable change. Long term interest rates and gross government debt become key determinants of differences, in addition to the continuing influence of labour productivity. The paper concludes that in the last decade the convergence of countries sharing the euro has been limited, by the joining of new countries and the circumstances of the global economic crisis. The financial crisis has driven divergences from pre-existing integration. Country convergence needs to be understood as a dynamic and multivariate concept. This is a significant development of convergence theory and is an addition to how the concept has been understood previously. Full article
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Open AccessArticle
The Formation of Immigrant Networks in the Short and the Long Run
Economies 2016, 4(3), 15; doi:10.3390/economies4030015 -
Abstract
In this paper, we present a formal framework of possible network formations among immigrants. After arriving in the new country, one of the new immigrant’s important decisions is with whom to maintain a link in the foreign country. We find that the behavior
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In this paper, we present a formal framework of possible network formations among immigrants. After arriving in the new country, one of the new immigrant’s important decisions is with whom to maintain a link in the foreign country. We find that the behavior of the first two immigrants affects all those who come after them. We also find that in the long run, under specific conditions, the first immigrant will become the leader of the immigrant society. Over time, as the stock of immigrants in the host country increases, the investment in the link with the leader will increase as well. Full article
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