Economies, Volume 10, Issue 7 (July 2022) – 25 articles

Since 2013, the central bank has been responsible for supervision in Hungary. In addition to the regulatory change, a law was published in the same year that started the process of abolishing the savings co-operative system. This paper investigates the impact of these two significant changes on the profitability of the Hungarian banking sector between 2003 and 2019 using dynamic panel model estimates. The supervisory change has reduced the profitability of credit institutions and tighter supervision has been implemented. The transformation of the savings co-operative system was in fact an integration that led to the disappearance of savings co-operatives by 2019. Competition in the market has been weakened, which has increased the profitability of the remaining financial institutions. The results were robust in terms of the multiple specifications and profitability ratio. Full article

This study examines the influence of financial distress on corporate restructuring decisions and whether this restructuring varies across the Firm Life Cycle (FLC) stages of Pakistani non-financial listed firms for the 12 years from 2005 to 2016 inclusive. FLC stages and financial distress are measured using the Dickinson model and Altman Z-score, respectively. Corporate restructuring is segregated into equity and debt restructuring. The data are analyzed using a panel logistic regression model. The results reveal that financial distress is negatively associated with corporate debt restructuring decisions and positively associated with corporate equity restructuring decisions. Further analysis shows that new, growing and mature firms have positive associations with equity restructuring decisions and negative associations with debt restructuring decisions, while declining firms prefer debt restructuring. This study has important implications for corporate managers and policy makers. Full article

Corporate social responsibility (CSR) is an integral path towards realizing vision 2030 and the sustainable goals of the UN, as well as the sustainable development of individual countries. However, in recent years it has become increasingly clear that these goals cannot be achieved without sustainable corporate practices. Previous research seeking determine the effect of CSR on the financial performance of various institutions have yielded different results, leaving geographical, sectorial, and scholarly gaps. This study aimed to discover the effect of CSR on the financial performance of financial institutions in Kenya, as this country lacks a direct association between CSR and corporate financial performance (CFP). We focused on examining the effect of ethical, charitable, and gender-mainstreaming CSR activities on the financial performance of financial institutions in Kirinyaga County. A study population of 300 employees working in the financial institutions in Kirinyaga County was included, and a sample of 171 participants was selected using stratified and systematic sampling techniques. A causal research design was adopted, and data were analyzed using SPSS software. Questionnaires were administered in person to gather primary data. The study found a strong positive relationship between CSR practices and the financial performance of financial institutions and recommends that firms invest more in ethical, charitable, and gender-mainstreaming CSR activities, as such activities positively influence their financial performance. Full article

This paper aims to analyze the impact of corruption on firm innovation in Portugal, using data from the World Bank Enterprise Surveys on 1062 firms for 2019. We employ regression analysis and instrumental variables techniques to account for endogeneity in the corruption variable. Our results show that corruption fosters innovation in Portugal, regardless of the dependent variable we use to measure innovation. We have also analyzed the effect of corruption on innovation in foreign and domestic firms. While corruption boosts innovation for domestic firms, we found that the effect is not statistically significant for foreign firms. Our conclusions are of interest to policymakers, as any measure intended to fight corruption should consider its impact on firm performance. As this article shows, such an impact need not be negative. Nevertheless, if mitigating the impact of corruption is still intended, our results indicate that measures promoting foreign direct investment could help achieve this. Full article

Being a form of territorial division of labor, economic specialization should be considered as a strategic management priority, contributing to a competitive territorial production structure and, consequently, regional economic growth. The article is devoted, firstly, to the development of a method for assessing the level of territorial division of labor based on a new coefficient of regional economic specialization; and secondly, to the investigation of regional specialization effects on economic growth. The purpose of the to substantiate the influence of the territory specialization factor on industrial economic growth, along with other conventional factors of regional development, using econometric methods based on an extended exogenous growth model. Premised on the data from Russian manufacturing industries and using a new coefficient of regional specialization, the authors have developed and verified an original approach to substantiate the effectiveness of regional clustering for ensuring the growth of industrial output based on an extended exogenous growth model. Approbation of the proposed assessment method and verification of research hypothesis formulated by the authors have been carried out using regional statistical data of the Russian Federation for the period from 2005 to 2019. The empirical analysis results have contributed to a place-based theoretical approach, involving both the cluster concept and the concept of “smart specialization”. The practical significance of the research is to validate clustering feasibility as a form of territorial division of labor and provide a number of principles for the regional industrial policy based thereon to accelerate territorial economic growth. Full article

Dynamic Stochastic General Equilibrium (DSGE) models are widely used as a tool for policy decision-making. These models lost their fame when they could not predict the crisis in 2008 and could not address policy problems afterward. Meanwhile, the Agent-Based Modelling (ABM) approach emerged as an alternative to DSGE models. Between 2000 and 2020, this study examined scholarly research on the topic of ABM in economics. The information is gathered using the SCOPUS database. Numerous bibliometric indicators are provided, including the total number of publications and citations. The study reveals that agent-based modelling in economics research has grown in recent years. The majority of active research occurs in countries such as the United States of America, and collaboration allows researchers to reach out to many more countries. ABM has the potential to be applied in a wide range of economic fields. ABM also necessitates research into its own development to be used to better understand economic phenomena. Full article

COVID-19 is the last nail in the coffin of globalization as we know it. This research aims to explore the influence of capital ownership in the (re)design of internationalization strategies among firms, considering the new macroeconomic challenges. It is commonly accepted that the extent to which family businesses approach internationalization differs from their counterparts; as such, the identification of leverages or hinderers in this process and the potential singularities of these firms is urgent. Intermittences in global operation and discontinuous internationalization paths remain overlooked in the theory. Continuity or intermittence across the internationalization strategies, as well as their determinants, were tested using data from the triennia of 2018, 2019, and 2020; the data were gathered from the Iberian Balance Sheet Analysis System Database (SABI), through a balanced panel of 26,154 firms belonging to all sectors of the manufacturing industry. Empirical evidence supports the heterogeneity of strategies among family businesses, as well as dissimilarities from their non-family counterparts. The firm dimension, experience in global operation, and the regional ecosystem in which the firm is embedded are identified as being central in internationalization endeavors. Urgency and assertiveness of policy action addressing the new macroeconomic challenges are required to foster economic recovery, and exploring extant entrepreneurial fabric potential and the already-established networks will determine the pace and success of the measures. Moreover, empirical evidence reinforces region-specific actions to be implemented, proposing the re-location of economic activities while promoting the intensification of spatial clustering and international networking. Designing an accurate policy package places demands upon heterogeneous players and layers of action, overlapping clusters and networks, and the creation of a multilevel ecosystem in which the flow of economic, human, and knowledge aspects circulate, reinforcing community resilience. Full article

The analysis of what human capital (HC) is has a long history and culminates in the acknowledgment that HC and its growth are very important for both cognitive education (cognitive skills (CSs)) and personal life (noncognitive skills (NCSs)) and that CSs and NCSs have a strong reciprocal relationship, as studies by Heckman demonstrated. The present contribution (following Heckman’s approach) analyzed the relationship between CSs and NCSs in a sample of middle school students in the Autonomous Province of Trento. The second goal of the research was to verify whether educational teaching behaviors improved students’ personalities. Aside from the use of administrative data (INVALSI data, 2015 and 2018), one survey was administered in the 2018–2019 schooling year to verify the relationship between NCSs and CSs. Moreover, we sought to determine whether education teaching behavior improved the students’ personalities (1522 students in 25 schools) and whether programs could enhance NCSs. Methodological tools for the analysis involved the generalized least squares approach to answer the first question and a difference-in-differences model for the second. The main results showed that the levels of NCSs affected the ability to learn and improve CSs; a challenging teaching approach, especially if accompanied by programs improving its quality, had positive results. Finally, the research suggested that a wider, national-based survey following students from primary to secondary school would allow for a greater understanding of the dynamics of CSs and NCSs. Full article

Faced with food supply disruptions due in part to geopolitics and political instability in its traditional food source markets in the Kingdom of Saudi Arabia and the United Arab Emirates, Qatar—a wealthy, highly import-dependent open economy—plans to identify a set of alternative markets that can assure it of a stable food supply chain and food security. This study develops a set of preferences and import substitution elasticities for the country’s four most important food categories: meats, dairy, vegetables, and cereals. We used quarterly food import data from 2004 to 2017 and the Restricted Source-Differentiated Almost Ideal Demand System (RSDAIDS) to estimate import-substitution elasticities for meats, dairy, vegetables, and cereals imported by Qatar. Based on our findings, India, Australia, and the Netherlands emerged as Qatar’s most competitive sources of food, followed by Brazil, Jordan, and Argentina. Qatar can assure sustained demand for food imports from the aforementioned countries in order to address its food security. Full article

Recently, digital entrepreneurship and creative industries in tourism have been emerging strongly, possibly as a result of the global pandemic of the last two years. Their growth in the last decade has been due to the penetration of technology into the daily life of the tourist and the desire for tours that combine intangible value and a differentiated experience. This paper presents the findings of a research agenda that aims to identify key factors and research dimensions in the adoption of digital entrepreneurship and the creative industries in tourism. The study includes a critical analysis based on a literature review through a filtered search method of statistical information from 20 relevant scientific publications listed in the Scopus and Google Scholar databases. Additionally, this research addresses research gaps and recommends directions for future research. Finally, the conclusions are presented. Full article

Radial symmetry, by our definition, is a precise condition on continuous ideal-point distributions, rarely if ever found exactly in practice, that is similar to the classical 1967 symmetry condition of Plott but pertains to an infinite electorate; the bivariate normal distribution provides an example. A Condorcet cycle exists if the electorate prefers alternative X to Y, Y to Z, and Z to X. An alternative K is a Condorcet winner if there is no alternative that the electorate prefers to K. Lack of a Condorcet winner may engender turmoil. The nonexistence of a Condorcet winner implies that a Condorcet cycle exists. Radial symmetry precludes the existence of Condorcet cycles and thus guarantees a Condorcet winner; but this result assumes that all voters weight the dimensions alike. Our counterexamples show that a Condorcet cycle can arise, even under radial symmetry, if the weighting of issues varies across voters. This finding may be of more than theoretical value: It may suggest that in an empirical setting (without radial symmetry), a Condorcet cycle may be more frequent if voters differ as to how they weight the dimensions. We examine, for illustration based on two dimensions (left–right, linguistic), a Condorcet preference cycle in Finland’s 1931 presidential election. Full article

This paper aims to investigate the mechanism linking an individual’s internal processes, work engagement, active learning, and adaptive performance in three of Indonesia’s digital technology-based companies. The research uses a mixed-method approach. The first study used a quantitative research method in which the data is based on a survey of 185 employees and the collected survey data is then analyzed using the Structural Equation Modeling technique. The second study used a qualitative research method where the data is gathered from 17 managers through semi-structured interviews. We found from the quantitative research that work engagement fully mediates the relationship between self-efficacy and a growth mindset toward active learning. Meanwhile, a partial mediating effect of active learning between work engagement and adaptive performance was also discovered. Based on our literature study, previous research has shown inconsistent findings on the relationship between growth mindset and work engagement. Our findings contribute to the existing literature by clarifying the direct relationship between growth mindset and work engagement. Meanwhile, the qualitative findings emphasized that there are two mechanisms underlies individual adaptive performance (i.e., work engagement and active learning). Additionally, the active learning process promotes continuous new knowledge accumulation to produce new innovation inside an organization. Full article

This study proposes a mathematical modeling approach for the physical capital diffusion through the borders of countries. Physical capital is considered a crucial variable for the economic growth of a nation. Here, we use an extension of the economic Solow model to describe how smuggling affects the economic growth of countries. In particular, we focus on the situation in Venezuela from 2012 to 2015. In this regard, we rely on a nonconcave production function instead of the classical Cobb–Douglas production function. Moreover, we investigate the effect of different physical capital fluxes on economic growth. The physical capital diffusion through the borders of a country is modeled based on a parabolic partial differential equation describing the dynamics of physical capital and boundary conditions of the Neumann type. Smuggling is present at numerous borders between countries and may include fuel, machinery, and food. This smuggling through the borders places challenges on a particular country’s economy. The smuggling problem usually is related to a non-official exchange rate different from the official rate or subsidies. We study the effect of smuggling on the physical capital of a country using an extended Solow model. Numerical simulations are obtained using an explicit finite difference scheme describing how the physical capital diffusion through the border of a country affects its economic growth. The study of physical capital is a paramount aspect of the economic growth of several countries. The results show that when boundary conditions of Neumann type are different from zero, the dynamics of the physical capital differ from the classical economic behavior observed in the classical spatial Solow model without physical capital flux through the borders of countries. In particular, the numerical results show that the physical capital of a country decreases faster as the flux increases on the boundaries. Thus, we can conclude that avoiding smuggling through the frontiers is a crucial factor affecting economic growth. Full article

This study aims to assess the impacts of entrepreneurial framework conditions on economic growth based on the level of economic development in transition-driven economies and innovation-driven economies. The data were organised into a panel (2000–2019) and obtained from the National Expert Survey (NES), the Global Monitor Entrepreneurship (GEM), and the World Bank. By applying the generalised method of moments (GMM) estimation, we found that R&D transfer has a negative impact on economic growth that is innovation-driven, but positively impacts transition-driven economies. The results further highlighted that regardless of the level of development of the country, business and professional infrastructure do not positively impact economic growth. However, taxes and bureaucracy and physical and service infrastructure were shown to positively impact only innovation-driven economies, as in transition-driven economies, they were shown to have negative impacts on economic growth. The present study contributes to a better understanding of the link between economic growth and the conditions for entrepreneurship in economies with different degrees of economic growth. This study can serve as a basis for policy makers to adjust or develop new policies to accelerate economic growth. Full article

This research investigates the positive relationship between leadership styles, high-involvement human resource management practices, and individual employee performance. In this study, we adopt servant, shared, and empowering leadership to explain leadership styles in the digital era. We propose four hypotheses and design a research framework to be analyzed. We develop a self-report questionnaire and distribute it online to three hundred targeted respondents, and collect two hundred and seventy-six complete responses from November 2021 to January 2022. This research applies a quantitative method, using structural equation modeling run by SPSS and AMOS. The results reveal well-distributed data, and all the indicators of the three variables are valid and reliable. The use of CFA confirms the indicators’ validity and reliability. The GoF analysis ensures that the research model is feasible for SMEs. The hypothesis analysis shows the acceptance of H1 and H3, but the rejection of H2 and H4. Leadership styles positively affect individual employee performance and high-involvement human resource management practices in SMEs operating in Lubuklinggau. High-involvement human resource management is not a mediator of the relationship between leadership styles and individual employee performance. Full article

The COVID-19 pandemic, as with previous major crises, such as the 2008 financial crisis, has had a severe negative impact on international trade flows. The present paper aims to contribute to the debate concerning how to foster resilience against future crises, in terms of countries’ aggregate exports, by examining the effect of development aid (i.e., so-called official development assistance), particularly the impact of the Aid for Trade (AfT) component, upon export resilience. The resilience of exports refers to the ability of countries’ aggregate exports to resist shocks, regardless of whether they are environmental or external shocks. The core argument of the analysis is that development aid would affect export resilience through its impact upon productive capacities. The analysis covers 93 developing countries over the period 2002–2018. The findings indicate that the total development aid flows, including both AfT flows and NonAfT flows, exert a positive effect upon export resilience. Among AfT components, AfT for productive capacities appears to exert a greater positive effect upon export resilience than AfT for economic infrastructure and AfT for trade policy and regulation. In addition, development aid (regardless of which aid variable is considered) exerts the greatest positive effect upon export resilience in countries (such as the least developed countries—LDCs) that have the lowest productive capacities. These findings highlight the need for donor countries to supply higher development aid flows, in particular, AfT flows, to countries such as LDCs that have low productive capacities. Full article

This study aims to evaluate the impact of the National Economic Recovery Program—Pemulihan Ekonomi Nasional (PEN) and digitalization on micro, small, and medium enterprises’ (MSMEs) resilience during the COVID-19 pandemic. This research is based on primary data from a survey of 6009 Bank Rakyat Indonesia customers conducted from March–June 2021. Using the generalized ordered logistic regression technique, this study found that a combination of new loans, credit restructuring, and/or interest subsidies was the most successful PEN for enhancing MSME resilience. Meanwhile, providing new loans merely improved liquidity, not sales or profitability. However, just providing a restructuring program weakened resiliency. This research also discovered that MSMEs that have been digitalizing for more than a year are more resilient than those that have not. This study highlights the necessity of offering several interventions for MSMEs and assisting MSMEs in going digital to improve MSME resilience during the COVID-19 pandemic. Full article

Facing the current complicated situation of the COVID-19 pandemic, in addition to medical efforts on disease prevention and treatment, governments of countries also have to come up with solutions to deal with the negative impacts of the pandemic on the economy. This study aims to provide specific, comprehensive, and scientific estimates of the impact of the COVID-19 pandemic on the Vietnamese economy. By using the Bayesian method to estimate DSGE models, research results show that a shock increase by one standard deviation (about 1.49% increase in the probability of a COVID-19 outbreak) to the Covid status variable immediately reduces the output gap by 0.94%. However, this effect only lasts for one quarter, and the output gap widens again. Meanwhile, refinancing interest rates, inflation, and exchange rate changes also have an immediate decline in response to this shock, but the magnitude of the reduction is relatively small. Full article

This paper argues that income inequality explains the variation in the economic performance of different countries over the first year of the COVID-19 pandemic. Unlike the conclusions reported by some studies, this study shows that health casualties caused by COVID-19 has had a higher adverse economic impact on countries with lower income inequality. Notwithstanding, the decline in the economic growth as well as the number of casualties caused by COVID-19 are, overall, proportionate to the level of income inequality of the country. Furthermore, the results show that countries with more dependence on the service sector and countries that implemented more restrictive measures (lockdowns) experienced a higher decline in GDP growth over the first year of the pandemic period. The paper concludes with some important policy implications that support the role of strong institutions in making economies resilient over a period of pandemic. Full article

This study examined the role of the Micro Waqf Bank in empowering women micro-entrepreneurs. This research used a mixed-method with an explanatory design. Quantitatively, this study examines the effect of the joint responsibility system, financing, and mentoring on the growth of the micro-enterprises business. The sample used was 200 women micro-entrepreneurs using a purposive sampling technique. Quantitative data analysis was performed using the Structural Equation Model based on Partial Least Squares (SEM PLS) technique. This research qualitatively analyzes how the Micro Waqf Bank has carried out its role in empowering women, including dealing with crises due to the COVID-19 pandemic. Thematic analysis was used as the qualitative data analysis technique. Informants in this study amounted to 6 informants from MWB Mawaridussalam consisting of Management, Mentors, and female micro-enterprises. The research results quantitatively indicate that there is a positive and significant impact on the joint responsibility system, financing, and mentoring on the development of micro-enterprise members. Mentoring is the most significant variable that impacts the growth of a micro-enterprise business. Qualitatively, the research results show the role of the Micro Waqf Bank in the economic empowerment of women micro-business entrepreneurs by specifically recommending reinforcement of the mentoring function. Full article

The purpose of this paper was to investigate the mediated moderating effect of employee engagement (EE) by leader’s supervision in the effects of corporate entrepreneurship (CE) on innovation performance (IP). The study applied the cross-sectional analysis with our own survey that provided the data for this design. A total of 248 participants (12 managers, and 236 employees) were recruited for this study. The relationship of CE and IP was mediated by EE. Additionally, leader’s supervision moderated the relationship between CE and IP. Furthermore, leader’s supervision had a mediated moderation effect from CE to the IP, through the EE. The significance of this study lies in its contribution to CE, IP, EE and leader’s supervision literatures. It was revealed that CE behavior was found in the organizational learning processes that strengthen employees’ ability to analyze markets and formulate new products. Full article

Using an exclusive data set from Indonesia in 2018–2020, this study aims to prove whether there is a relationship between the allocation of village funds and the level of hunger in the community. In particular, this study tries to find out whether the Village Fund allocation policy has an effect on the achievement of the United Nations Sustainable Development Goal 2 (SDG#2). Using a quantitative method with regression analysis, this study found that the allocation of village funds by the Indonesian government supported hunger and poverty alleviation in all areas of Indonesia’s villages. This research result has implications for policymaking on sustainable food inclusion, especially in Indonesian villages. Full article

This study sought to test the impact of China’s infrastructure investment on economic growth in selected African states. Many comparative studies have shown the positive role that infrastructural loans plays in supporting economic growth. However, for Africa, the role of China’s infrastructure projects has mixed views with regards to its contribution to growth and development. A survey of the literature showed that the central question about Chinese infrastructural loans is whether the infrastructural projects are beneficial or detrimental to Africa. Currently, there is no settled opinion as to whether (or not) Africa is benefiting from the Chinese economic relations. This study was quantitative, and we used panel data to achieve our objectives. The study employed annual panel data for 15 African countries covering the period of 2000–2017. The Pooled Mean Group, Mean Group, Fully Modified Ordinary Least Squares, and Dynamic Ordinary Least Squares panel techniques were used for estimation purposes. The main conclusion from the quantitative analysis of China’s infrastructural loans in Africa is that China’s efforts in developing infrastructure are translating into economic growth. This study provides evidence that China’s engagement in Africa could be beneficial, given the positive relationship between loans and economic growth. Full article

Pakistan is a country with rich natural and human resources. The role of highly skilled people in national development has become enormously vital in the new developmental period, but it is also an irrefutable fact that the gap in highly skilled personnel in Pakistan is expanding. The organization of Technical Vocational Education and Training was introduced to prepare a skilled workforce for various industries and sectors in Pakistan; however, the 60% level of young, unskilled, and semi-skilled labor emerging from informal and non-formal sectors is largely attributed to the failure of Technical Vocational Education and Training to supply the country with its requirements for trained manpower for the economy and China Pakistan Economic Corridor (CPEC) projects. China and Pakistan launched historic projects such as CPEC as part of the Belt and Road Initiative (BRI), which fostered economic cooperation and development between the two countries. This article will go through the overview and the course of Technical Vocational Education and Training (TVET) in Pakistan. The major purpose of this study is to highlight that TVET in general, and CPEC in particular, are suffering from a lack of qualified personnel because of a variety of other reasons, such as outdated equipment, a lack of industry connectivity, inadequate skills, unemployment, and so on. The study is descriptive and exploratory in nature, and it employs a qualitative research method. The perspectives of the TVET challenges in Pakistan were researched using the data obtained from 500 student and staff respondents, including teachers, TVET workers, and TVET job holders. Some of the important findings include the fact that the current state of the TVET institutions is no doubt due to infrastructural issues and a lack of funding. In addition, TVET in Pakistan is marked by inadequate skills, a lack of industry connectivity, unemployment, insufficient teacher training, and a lack of female participation. In this study, recommendations were given based on the research analysis and research findings. Full article

Cretan olive oil is known for its premium quality worldwide. In the post pandemic international environment, the rising demand for olive oil due to its health benefits has generated greater competition amongst traditionally non-producer and producer countries. Olive oil exports affect both the financial growth and stability of companies that trade it and the economic prosperity of the Crete prefecture. Various factors can influence a company’s export performance, and of those it is widely agreed that the presence of an export manager yields a positive impact. The aim of this paper is to investigate the influence of an export manager on export marketing policies. The application of the Chi-Square Test (χ²) was judged as the most suitable criterion for the elaboration of the research. The χ² test showed that there are statistically significant correlations between variables. The findings of the research indicate an exports manager’s influence on promotions abroad and in conducting market research before exporting to a new foreign market. The employment of an export manager and the level of his/her certified knowledge appear to have a positive impact on the export marketing policies of companies that export Cretan olive oil. Full article