Search Results (188)

This paper examines whether total factor productivity (TFP) in Israeli agriculture has genuinely slowed or declined in recent years, or whether the reported trend is primarily driven by methodological choices, data limitations, and measurement error. We compare two widely used approaches to TFP measurement—those of the Bank of Israel and the U.S. Department of Agriculture (USDA)—which differ in their definitions of output, treatment of inputs, and assumptions regarding factor shares. We reconstruct and refine the underlying datasets, addressing important limitations in the existing measures, including the omission of foreign labor, inconsistencies in agricultural land measurement, and the application of non-representative input shares. Despite data improvements and methodological adjustments, both approaches yield similar qualitative conclusions. Following rapid increase in earlier decades, TFP growth in Israeli agriculture appears to have stagnated or declined since the early 2010s. A decomposition of output growth further indicates that recent production patterns have been driven primarily by greater input intensity per unit of land rather than by technological progress or efficiency gains. As a result, agricultural output has shown little or no net growth over the past decade. We discuss potential explanations for this slowdown, including climate change, the growing reliance on reclaimed and other marginal water sources, and the long-term decline in agricultural research and development (R&D) investment relative to sectoral output. Overall, the findings suggest that the productivity slowdown is real rather than an artifact of measurement and underscore the need for renewed investment in agricultural innovation and climate adaptation to sustain domestic production and strengthen food security. Full article

This study empirically investigates the impact of exchange rate volatility on foreign direct investment inflows to India from 1990 to 2023, addressing a crucial dimension of macroeconomic stability in emerging economies. Recognizing that currency fluctuations significantly influence multinational corporations’ investment decisions, understanding this impact is vital for effective economic policy. Utilizing annual time series data from the Reserve Bank of India and the World Bank, the study employs the Quantile Autoregressive Distributed Lag (QARDL) modeling framework to capture both short-run and long-run dynamics. Unlike conventional mean-based estimators, the QARDL framework captures heterogeneous effects across different points of the FDI distribution, allowing for a more comprehensive understanding of how macroeconomic factors influence investment under varying economic conditions. The empirical results reveal significant asymmetries in the relationship between exchange rate fluctuations and FDI inflows. In the long run, exchange rate depreciation positively influences FDI inflows, particularly at the median and upper quantiles of the FDI distribution, suggesting that currency competitiveness becomes more important when investment inflows are already moderate or strong. In contrast, the exchange rate effect is statistically insignificant at lower quantiles, indicating that currency movements alone are insufficient to attract foreign investment when inflows are weak. These results offer valuable empirical insights for policymakers seeking to enhance macroeconomic resilience and promote long-term capital inflows in developing countries. Full article

This study examines the association between foreign exchange (FX) governance and financial stability by analysing empirical evidence from multinational entities. We analyse a 16-year panel (2009–2024) comprising 6613 firm-year observations using OLS regression with industry and year fixed effects. Firm-level data on financial sustainability, FX governance, board attributes, and controls are drawn from the London Stock Exchange Group (formerly Refinitiv), while country-level institutional and economic indicators are obtained from the World Bank. The result suggests that FX governance is negatively associated with earnings volatility, implying that FX governance enhances the financial stability of organisations. The baseline result is robustness to endogeneity and selection bias. However, our subsample analysis reveals that the impact of FX governance on financial stability varies based on institutional quality and industry. Whereas FX governance is negatively associated with earnings volatility thus enhancing financial stability in high-institutional-quality settings, the impact is not significant in low-institutional-quality environments. This study contributes to knowledge by empirically validating the relevance of FX governance to financial stability. Our study also contributes to the limited studies on the role of FX governance in diminishing earnings volatility, thus exposing FX management as a strategy for achieving financial sustainability. The international sample analysed in the study contributes to the generalisability of results. Full article

Nowadays, Global Value Chains (GVCs) play a vital role in job creation, income generation, knowledge diffusion, and productivity growth. However, significant disparities exist across countries in terms of their integration into GVCs, and Tunisia is no exception to this pattern. In this regard, the question about factors that influence GVCs’ participation is yet to be discussed, to formulate and implement appropriate strategies and reforms. Thus, using firm-level data from the 2025 World Bank Enterprise Survey, this paper examines the role of female leadership and innovation in determining Tunisian firms’ participation in GVCs. Participation in GVCs is captured by a dummy variable indicating the firm’s export and import status. Estimation results from the logit model show that female representation in decision-making positions significantly increases the likelihood of firms’ participation in GVCs. The results also highlight the importance of process innovation in GVC participation, while product innovation appears to have no significant effect. Notably, when firms combine both types of innovation, their likelihood of joining GVCs increases further. Regarding control variables, firm size appears to be an important determinant, as larger firms display a greater tendency to participate in GVCs. The findings further indicate that firm certification and foreign equity participation significantly promote integration into GVCs, while corruption constitutes a major constraint on the integration of Tunisian firms. From a policy perspective, these findings highlight the need to rethink industrial policies, with a stronger focus on process innovation as a key lever of productive sector modernization. Achieving this transformation also requires the development of an inclusive policy ecosystem that supports meaningful and sustainable progress in female’s leadership representation. Full article

Exchange rate volatility has intensified in recent decades, yet its systematic implications for banking-sector stability remain contested. This study investigates whether exchange rate volatility constitutes a meaningful source of financial fragility using a global panel of 103 countries over the period 2000–2021. Financial stability is proxied by the banking-sector Z-score, while exchange rate volatility is estimated using a EGARCH-based framework to capture time-varying uncertainty. To address cross-sectional dependence, heterogeneity, and endogeneity, the analysis employs Driscoll–Kraay fixed effects, two-step system GMM, and quantile regressions. The results reveal that exchange rate volatility exerts a statistically and economically significant negative effect on banking stability, reducing Z-scores across countries and income groups. The findings remain robust across alternative specifications and estimators. Bank-level fundamentals—capitalisation, liquidity, and credit—enhance stability, whereas higher non-performing loans and risk exposure amplify fragility. Macroeconomic conditions also matter, with stronger growth, institutional quality and external balances supporting resilience, while inflation, economic policy uncertainty and expansionary government spending weaken stability. By integrating time-varying volatility modelling with dynamic panel techniques in a large cross-country setting, this study provides new global evidence that exchange rate volatility is not merely a macroeconomic fluctuation but a structural source of banking-sector risk. The findings carry important implications for macroprudential policy, foreign-exchange management, and coordinated monetary–fiscal responses aimed at safeguarding financial stability in open economies. Full article

This study investigates the relationship between banking sector stability and economic growth in Ethiopia, employing a dynamic panel data approach with the Two-Step System Generalized Method of Moments (GMM). The analysis uses a balanced dataset from 13 Ethiopian commercial banks covering 2014 to 2023, gathered from the World Bank database, the National Bank of Ethiopia, and audited financial statements. Banking sector stability is assessed using indicators such as Z-score, non-performing loan (NPL) ratio, capital adequacy ratio (CAR), liquidity ratio (LR), return on assets (ROA), and loan-to-deposit ratio (LDR), along with key macroeconomic and institutional factors. The results show that banking stability, as indicated by Z-score, liquidity ratios, and profitability, has a positive and significant effect on economic growth, confirming the sector’s role in promoting development. Surprisingly, a positive correlation between NPLs and economic growth suggests unique structural features in the Ethiopian banking system that warrant further investigation. Other variables, such as inflation rates, government expenditure, and gross domestic savings, positively influence economic growth, whereas foreign direct investment is negatively associated with it. The study highlights the importance of enhancing the stability of the banking sector by implementing robust regulatory frameworks, prudent risk management practices, and improved profitability to support sustainable economic development in Ethiopia, while calling for additional research into the unexpected effects of NPLs and FDI amid ongoing financial reforms. Full article

Poland ranks among the world’s leading exporters of goose meat and edible offal, yet domestic consumption remains minimal, revealing a structural imbalance between production and internal demand. This study aims to provide a comprehensive economic assessment of Poland’s foreign trade in goose meat and offal during 2020–2024, examining export specialization, price dynamics, and market resilience. Using official data from the Central Statistical Office (GUS), Eurostat, UN Comtrade, and the National Bank of Poland (NBP), trade flows were disaggregated by CN product codes, destination countries, and unit prices to identify key structural patterns. Results indicate that export volumes remained largely limited by price responsiveness despite sharp price increases and exchange rate fluctuations, confirming stable foreign demand. Exports were heavily concentrated in Germany, which absorbed over 70% of the total trade value, while domestic consumption stayed below 0.5 kg per capita annually. These findings demonstrate both the competitiveness and the fragility of Poland’s export-oriented trade model, characterized by dependence on a single market and limited domestic integration. The study concludes that long-term food system resilience requires diversification of export destinations, stimulation of domestic demand, and stronger alignment with sustainability goals. A forthcoming second part will address environmental impacts and consumer awareness. Full article

This paper examines the effect of trade openness on corporate tax revenue in the Middle East and North Africa (MENA) region, where increased economic integration might incite more business activity and expand taxable corporate income but also intensify losses due to practices such as profit shifting. The study follows a quantitative empirical approach and applies a panel ARDL model to secondary data collected from international databases (World Bank and IMF), such as GDP, trade openness (exports and imports as % of GDP), inflation, corporate tax revenues, foreign direct investment inflows and tax evasion via informal economies, for a sample of ten developing countries from the MENA region, including Morocco, Tunisia, Egypt, Jordan, Lebanon, Algeria, Saudi Arabia, Oman, the United Arab Emirates, and Bahrain, over the period 2010–2023. We employ a PMG ARDL model to study our panel data, allowing the analysis of both short-run and long-run effects to investigate the relationship between trade openness and tax revenues. Our results show that in the long run, export-driven economies generate higher corporate tax revenues by expanding profitability and the tax base, and imports also positively affect revenues, indicating that trade openness stimulates economic activity. Conversely, FDI inflows reduce corporate tax revenues, consistent with profit shifting and tax incentives in developing countries. GDP growth does not necessarily increase tax receipts, likely due to tax elasticity effects and growth-oriented tax structures. Also, tax evasion appears to decline, likely reflecting improved compliance, and no significant short-run effects are observed. The results contribute to the literature on tax compliance and economic integration in the case of open economies in developing countries. From a practical perspective, our findings have implications for policymakers and tax regulators in the MENA region, as they highlight the dual nature of globalization for developing countries and their tax systems and underscore the need for effective compliance measures in trade and investment policies. Full article

Regulatory bodies have observed an increase in environmental issues due to firms’ interactions with the environment. Nonetheless, reconciliation actions are emerging, driven by the pursuit of sustainable development goals. This study investigated the impact of financial development and foreign direct investment on ecological footprints in sub-Saharan African nations, while examining the mediating role of regulatory quality and control for corruption. The research was motivated by the growing environmental degradation in the region amid growing capital inflows and financial market expansion. Using panel data of 18 sub-Saharan African countries between 1996 and 2023, sourced from the World Bank database and World Governance Indicators, we employed an Autoregressive Distributed Lag model to assess the short- and long-run relationships among ecological footprint, financial development, foreign direct investment, and key institutional factors. Results from the baseline model show that financial development significantly increases ecological footprints, while the effect of foreign direct investments is insignificant in the absence of institutional factors. However, when mediating variables are introduced, foreign direct investment significantly worsens ecological footprint, and regulatory quality and control for corruption show strong moderating effects, confirming the pollution haven hypothesis. Also, all control variables (trade openness, gross domestic product per capita, government expenditure, and population density) show significant outcomes with environmental sustainability. The findings underscore the importance of institutional factors in shaping sustainable foreign direct investment flows and financial systems. These research findings offer policy pathways for aligning investment strategies with sustainability goals in sub-Saharan Africa. Recommendations include strengthening the nation’s institutional framework, linking foreign direct investment to environmental compliance and promoting green finance policies across the region. Full article

The U.S. dollar’s share in global central banks’ foreign reserves has declined slightly between 2015 and 2025. When gold is included as foreign reserves, the decline is significantly larger. We find that the average USD share in total reserves declines by 12 percent, while the gold share increases by 8 percent and other reserve assets by 4 percent. The rise in the share of gold is primarily explained by gold price appreciation. In the case of sanctioned Russia, appreciation is 78%, while physical gold accumulation accounts for 22% of the increase in the value of gold reserves. In China, 91% of the increase in the share of gold is due to gold appreciation, while only 9% is due to gold accumulation. In India, the respective proportions of active versus passive accumulation were 80% and 20%, while in Japan they were 96% and 4% respectively. Physical gold accumulation took place in China (538 metric tons), Russia (915 mt), India (322 mt) and Japan (81 mt). For Germany, France, Italy, Spain, England, and Switzerland, 100% of the share of gold reserves took place passively due to gold appreciation, with no change in physical gold held. Reserve de-dollarization takes place in all ten countries, except for Switzerland, whose USD assets rose by 2% of total reserves. In most cases, de-dollarization reflects valuation effects rather than substantial reductions in dollar asset holdings. Full article

This paper examines the influence of Monetary Policy Transparency on Foreign Equity Portfolio Allocation by addressing the informational frictions that shape cross-border investment in Financial Markets. Building on recent developments in central bank communication, we construct a multidimensional measure of Monetary Policy Transparency that extends traditional frameworks by incorporating Accounting Information Transparency and Financial Stability Transparency. This enhanced index provides a more comprehensive representation of the informational environment faced by foreign investors. Using a panel of developed and emerging economies over a twenty-year period, the empirical analysis combines OLS and system GMM estimations to account for endogeneity, dynamic effects, and unobserved heterogeneity. The results indicate that higher levels of Monetary Policy Transparency significantly increase the attractiveness of domestic equity markets to foreign investors, with heterogeneous effects across country groups linked to differences in institutional credibility and financial integration. Overall, the findings highlight multidimensional transparency as a key determinant of Foreign Equity Portfolio Allocation, underscoring the strategic importance of Accounting Information Transparency and Financial Stability Transparency in shaping foreign equity portfolio allocation. Full article

This paper analyzes the impact of corruption on foreign direct investment (FDI) in the Portuguese-speaking African countries (PALOP) economies between 2006 and 2018. The focus lies on Angola, Cape Verde, Guinea-Bissau, and Mozambique since, according to Transparency International, they exhibit intermediate to low levels on the Corruption Perceptions Index. Despite sharing historical and cultural ties, as former Portuguese colonies, no research has focused on the impact of corruption on FDI in the PALOP economies, to the best of our knowledge. To accomplish this, we use an Instrumental Variables Fractional Probit Regression applied to data from the World Bank Enterprise Surveys, which gather information for 2180 firms. The results show that, on average, corruption does not significantly affect FDI in PALOP economies. Trade, credit, and firm size emerge as key FDI determinants, while investment levels and tax rates are not relevant. Corruption has negligible effects on FDI in manufacturing but boosts FDI in services. Interestingly, while corruption has no significant effect on FDI for small and medium firms, a positive, significant impact is revealed for large firms. Finally, corruption’s overall FDI impact is the same across PALOP countries, except in Angola, where it negatively influences FDI compared to Mozambique. Full article

This study examines the evolution, heterogeneity, and short-term prospects of export performance in seven Central and Eastern European (CEE) economies—Croatia, Czech Republic, Hungary, Poland, Romania, Bulgaria, and Slovakia—over the period 1995–2024. Using annual World Bank data, exports are modeled as a share of GDP to ensure cross-country comparability and to capture differences in trade dependence. The analysis combines descriptive and inferential statistics with Augmented Dickey–Fuller tests, non-parametric comparisons, Granger causality analysis, and country-specific ARIMA models to investigate export dynamics, the role of foreign direct investment (FDI), and future export trajectories. The results reveal a common long-term upward trend in export intensity across all countries, driven by European integration and structural transformation, but with pronounced cross-country differences in export dependence and volatility. Highly open economies such as Slovakia, Hungary, and the Czech Republic exhibit strong export performance alongside greater exposure to external shocks, while larger domestic markets such as Poland and Romania display lower export intensity and greater stabilization. Granger causality tests indicate that FDI contributes to export growth in several economies, often with multi-year lags, highlighting the importance of absorptive capacity and institutional quality in translating investment inflows into export competitiveness. ARIMA-based forecasts for 2025–2027 suggest continued export expansion and relative stabilization despite recent global disruptions. This study’s primary contribution lies in integrating comparative export analysis, causality testing, and short-term forecasting within a unified econometric framework, offering policy-relevant insights into export-led growth and economic convergence in post-transition European economies. Full article

This study examines the drivers of net interest margin (NIM) in developing economies, with a particular emphasis on Ethiopian commercial banks. It adopts an explanatory research design, analyzing quantitative data from the audited financial statements of 13 banks over 13 years (2012–2024), totaling 169 observations. Both Driscoll–Kraay fixed- and random-effects standard errors were computed in RStudio (version 4.5). The primary analysis relied on Driscoll–Kraay random regression outcomes, though fixed regression results were included for robustness checks. Findings indicate that the loan-to-deposit ratio, bank size, capital adequacy, and foreign direct investment (FDI) inflows have a significant positive impact on NIM, underscoring their role in enhancing profitability and stability. Conversely, inflation significantly reduces margins, while no substantial effects were observed for operational efficiency or GDP. These insights suggest that Ethiopian banks should focus on asset growth, maintaining strong capital reserves, increasing the loan-to-deposit ratio, and attracting FDI. Policymakers are encouraged to stabilize inflation and create a conducive environment to FDI to support sectoral growth. Future research could investigate operational efficiency alongside industry-specific indexes, such as the Herfindahl–Hirschman index for loans, assets, and income, to better understand variations in NIM. Full article

Developed and developing economies use globalization and foreign direct investment (FDI) to pave the way and to maximize economic growth. This study aims to investigate the impact of globalization and FDI on the economic growth of South Africa over the period from 1998 to 2022. The study employed the autoregressive distributed lag (ARDL) approach on annual data from the World Bank and the KOF index of globalization. ARDL tests reveal a long-run positive and statistically significant relationship of 12.7% in the case of economic globalization. This indicates that there is a reasonable level of the emergence of a globalized economy to integrate new and diverse systems, within internal economic growth forces that are supporting the globalization and endogenous growth theories. Political globalization is negative and statistically significant, while social globalization is positive but is used to depress long-run economic growth because of its insignificant status. The novelty of this study is to focus on the impacts of economic, social, and political globalization and FDI on the economic growth of South Africa, through direct and interactive procedures. The findings can be used by South African policymakers and other countries to prioritize reaping the benefits of globalization. These outcomes can be used to sensitize and promote policies that can attract relevant FDI, while enhancing economic growth. Full article