Economies

17 pages, 1439 KiB

Open AccessArticle

The Path to Poverty Reduction: How Do Economic Growth and Fiscal Policy Influence Poverty Through Inequality in Indonesia?

by Agussalim Agussalim, Nursini Nursini, Sultan Suhab, Randi Kurniawan, Salman Samir and Tawakkal Tawakkal

Economies 2024, 12(12), 316; https://doi.org/10.3390/economies12120316 - 21 Nov 2024

Abstract

One of the factors impeding the decline in poverty in Indonesia is the government’s lack of attention to the need to reduce income inequality. Fiscal policy and economic growth can effectively reduce poverty by lowering income inequality, so the inequality channel must be [...] Read more.

One of the factors impeding the decline in poverty in Indonesia is the government’s lack of attention to the need to reduce income inequality. Fiscal policy and economic growth can effectively reduce poverty by lowering income inequality, so the inequality channel must be considered. Socioeconomic and infrastructure differences between provinces can influence the effectiveness of economic growth and fiscal policy in reducing poverty. This study aimed to assess the effects of economic growth and fiscal policy regarding spending and taxes on direct and indirect poverty reduction through lowering income inequality, as well as considering how these variables influence poverty by province. This study employed secondary data, including panel data for 2010–2023 from 34 provinces in Indonesia, which were analyzed using autoregressive cross-lagged SEM. This study found that economic growth and fiscal policy regarding spending on education and health are statistically significant in directly reducing poverty in regions outside Java but do not affect it through income inequality. Taxes increase income inequality, and the social safety net does not reduce poverty outside Java. The increased spending on education and health should continue, but improvements are needed in terms of targeting social safety nets and tax reforms to strengthen the system and reduce inequality. Full article

(This article belongs to the Section Economic Development)

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18 pages, 716 KiB

Open AccessArticle

Effect of per Capita Income, GDP Growth, FDI, Sectoral Composition, and Domestic Credit on Employment Patterns in GCC Countries: GMM and OLS Approaches

by Nawal Abdalla Adam and Abad Alzuman

Economies 2024, 12(11), 315; https://doi.org/10.3390/economies12110315 - 20 Nov 2024

Abstract

This paper examines the impact of per capita income, gross domestic product (GDP) growth, foreign direct investment (FDI), sectoral composition, and domestic credit on employment patterns in the Gulf Cooperation Council (GCC) countries from 2013 to 2023, based on “Okun’s law”. The dynamic [...] Read more.

This paper examines the impact of per capita income, gross domestic product (GDP) growth, foreign direct investment (FDI), sectoral composition, and domestic credit on employment patterns in the Gulf Cooperation Council (GCC) countries from 2013 to 2023, based on “Okun’s law”. The dynamic data panel was analyzed using the generalized method of moments (GMM) and the ordinary least square (OLS) method. The research findings reveal that the agricultural sector’s contributions have significantly influenced the employment patterns in GCC countries, emphasizing the traditional role of agriculture in creating job opportunities. However, the contribution of the services and industrial sectors has no significant impact on employment patterns. Domestic credit and FDI inflows have significantly influenced employment patterns in GCC countries, underscoring their vital role in sustaining long-term economic stability. Per capita income and GDP growth did not significantly impact the employment pattern in the GCC countries during the study period. This research provides valuable insights to policymakers, highlighting the need to focus on the services and industrial sectors to promote their contribution to employment in GCC countries. The research findings also augment the literature by identifying the key economic indicators contributing to GCC countries’ employment creation. Full article

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27 pages, 2336 KiB

Open AccessArticle

Assessing the Foreign Direct Investment Performance of Middle-Income Countries Using Data Envelopment Analysis with Translation Invariance

by Runyu Yang, Youngbok Ryu and Mikhail V. Oet

Economies 2024, 12(11), 314; https://doi.org/10.3390/economies12110314 - 19 Nov 2024

Abstract

Foreign direct investment (FDI) is a primary vehicle for manufacturing transfer. Middle-income countries can benefit by effectively utilizing FDI to achieve technological development and economic equality and possibly address the middle-income trap issue. This study assessed the FDI performance of ten middle-income countries [...] Read more.

Foreign direct investment (FDI) is a primary vehicle for manufacturing transfer. Middle-income countries can benefit by effectively utilizing FDI to achieve technological development and economic equality and possibly address the middle-income trap issue. This study assessed the FDI performance of ten middle-income countries and examined the statistical relationships between their performance and their contexts: technological development, economic equality, and during the COVID-19 pandemic. For the former, we employed non-radial data envelopment analysis, taking advantage of its translation invariance property to derive efficiency scores; for the latter, we conducted a series of Kruskal–Wallis tests to examine the statistical relationships. According to the analysis results, we found that (a) most countries, except China and India, showed stable efficiency scores over time, (b) their efficiency scores were statistically significantly associated with the level of technological development (indicated by their technology lifecycle-based sigmoid curves) and economic equality (represented by Gini index and poverty indicator); and (c) their efficiency scores were not associated with the COVID-19 pandemic. The results imply that to improve their foreign direct investment performance, host countries may need to enhance their absorptive capacity in both the technological and economic domains. Full article

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15 pages, 696 KiB

Open AccessArticle

Market-Driven Mapping of Technological Advancements in the Seafood Industry: A Country-Level Analysis

by Abhirami Subash, Hareesh N. Ramanathan and Marko Šostar

Economies 2024, 12(11), 313; https://doi.org/10.3390/economies12110313 - 18 Nov 2024

Abstract

Seafood preservation techniques have evolved from ancient methods to modern innovations like canning, freezing, and surimi production. Canning in the 19th century introduced airtight containers, while commercial freezing technologies like flash freezing extended shelf life. Surimi pastes in the 20th century led to [...] Read more.

Seafood preservation techniques have evolved from ancient methods to modern innovations like canning, freezing, and surimi production. Canning in the 19th century introduced airtight containers, while commercial freezing technologies like flash freezing extended shelf life. Surimi pastes in the 20th century led to affordable imitation seafood products. Emerging technologies continue to enhance seafood preservation methods. Moreover, the integration of digital technology, automation, and data sharing, known as Industry 4.0, is transforming various industries. This integration encompasses blockchain technology, automation, robotics, and big data analytics, aiming to enhance production, sustainability, traceability, and efficiency in fish processing. With a focus on the seafood market dynamics affecting these advances, this research was conducted with the aim to understand how technical breakthroughs in the seafood business are dispersed and implemented across different nations. We aim to determine the correspondence between the technological sophistication of machinery in seafood processing companies and map it across different countries across the globe to obtain an understanding of the generation of technology used in prominence. Variations in adoption rates and technological trends reflect regional market dynamics. The Seafood Expo ASIA 2023 study looked at the use of Industry 4.0 technologies, operational procedures, and technology adoption in the global seafood processing industry. Notably, countries like Norway, the Republic of Korea, Spain, Turkey, and the Netherlands have rapidly embraced Industry 4.0 technologies. The market factors driving these technological advancements across different countries include rising consumer demand for sustainable seafood, economic incentives, and global competition. A correspondence analysis was employed to analyze the correspondence between countries and the level of technological sophistication in the machinery used. We successfully mapped the level of technology utilized in machinery across global seafood processing companies, providing insights into the technological advancements shaping the industry. Full article

(This article belongs to the Special Issue Innovation, Productivity and Economic Growth: New Insights)

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21 pages, 759 KiB

Open AccessArticle

Derivative Markets and Economic Growth: A South African Perspective

by Matthew Stevens and Cobus Vermeulen

Economies 2024, 12(11), 312; https://doi.org/10.3390/economies12110312 - 17 Nov 2024

Abstract

It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and [...] Read more.

It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and economic growth, however, substantially less research has been done on the relationship between derivatives and growth, especially in the emerging-market context. Derivatives can be viewed as a specific category of financial innovation, which may advance economic growth through its specialised functions of risk management and price discovery. This paper contributes to bridging this gap in the literature by exploring the impact of exchange-traded futures derivatives on South African economic growth, output, and economic growth volatility. It employs ARDL bounds tests, Granger causality tests and GARCH volatility modeling to analyse the effects of exchange-traded futures derivatives on various measures of South African economic activity. The main result is that exchange-traded futures derivatives contribute positively to South African economic growth and economic activity. This may suggest that opportunities might exist in other emerging economies, with financial structures comparable to that of South Africa, to encourage the development of organised and well-regulated derivatives markets to unlock economic growth in these economies. Full article

(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)

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12 pages, 3191 KiB

Open AccessArticle

Cost Analysis of Penitentiary Systems and Comparison Between the Countries of the Council of Europe

by Emma Altobelli, Antonello Karim Guergache, Francesca Galassi, Reimondo Petrocelli and Ciro Marziliano

Economies 2024, 12(11), 311; https://doi.org/10.3390/economies12110311 - 15 Nov 2024

Abstract

Background: The objective was to analyze the budgets invested in prisons by the member states of the Council of Europe (CoE) and the relationships between the global cost, the cost incurred per single inmate, the number of inmates per 100,000 inhabitants (PPR), the [...] Read more.

Background: The objective was to analyze the budgets invested in prisons by the member states of the Council of Europe (CoE) and the relationships between the global cost, the cost incurred per single inmate, the number of inmates per 100,000 inhabitants (PPR), the gross domestic product (GDP) and per capita GDP. Methods: The data relating to the variables considered for the year 2020 were obtained from the SPACE-I 2021 of the CoE, the World Bank/OECD, and Eurostat. Regression models were used to evaluate the relationships between the PPR and the GDP, the daily cost per prisoner and per capita GDP, and between the PPR and the per capita GDP. A multiple correspondence analysis was performed to evaluate associations between the PPR, EU membership, cost per day, cost rate, geographical area, and inmate gender. Results: The daily expenditure per inmate in northern European countries reaches very high values, respectively: EUR 330.6 (Norway) and EUR 303 (Sweden), while, in the eastern countries, the values drop sharply (EUR 6.50 in Bulgaria and EUR 8.08 in Azerbaijani). The lowest PPR values are found in northern European countries, and the highest in the following countries: Russia, Turkey, Georgia, and Azerbaijan. Conclusions: Countries with a higher GDP per capita tend to have lower prison population rates and to invest larger amounts of funds for prison systems. Full article

(This article belongs to the Section Health Economics)

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24 pages, 2122 KiB

Open AccessReview

Advancements in Soybean Price Forecasting: Impact of AI and Critical Research Gaps in Global Markets

by Fernando Dupin da Cunha Mello, Prashant Kumar and Erick G. Sperandio Nascimento

Economies 2024, 12(11), 310; https://doi.org/10.3390/economies12110310 - 15 Nov 2024

Abstract

Soybeans, a vital source of protein for animal feed and an essential industrial raw material, are the most traded agricultural commodity worldwide. Accurate price forecasting is crucial for maintaining a resilient global food supply chain and has significant implications for agricultural economics and [...] Read more.

Soybeans, a vital source of protein for animal feed and an essential industrial raw material, are the most traded agricultural commodity worldwide. Accurate price forecasting is crucial for maintaining a resilient global food supply chain and has significant implications for agricultural economics and policymaking. This review examines over 100 soybean price forecast models published in the last decade, evaluating them based on the specific markets they target—futures or spot—while highlighting how differences between these markets influence critical model design decisions. The models are also classified into AI-powered and traditional categories, with an initial aim to conduct a statistical analysis comparing the performance of these two groups. This process unveiled a fundamental gap in best practices, particularly regarding the use of common benchmarks and standardised performance metrics, which limits the ability to make meaningful cross-study comparisons. Finally, this study underscores another important research gap: the lack of models forecasting soybean futures prices in Brazil, the world’s largest producer and exporter. These insights provide valuable guidance for researchers, market participants, and policymakers in agricultural economics. Full article

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37 pages, 4052 KiB

Open AccessArticle

Should South Asian Stock Market Investors Think Globally? Investigating Safe Haven Properties and Hedging Effectiveness

by Md. Abu Issa Gazi, Md. Nahiduzzaman, Sanjoy Kumar Sarker, Mohammad Bin Amin, Md. Ahsan Kabir, Fadoua Kouki, Abdul Rahman bin S Senathirajah and László Erdey

Economies 2024, 12(11), 309; https://doi.org/10.3390/economies12110309 - 15 Nov 2024

Abstract

In this study, we examine the critical question of whether global equity and bond assets (both green and non-green) offer effective hedging and safe haven properties against stock market risks in South Asia, with a focus on Bangladesh, India, Pakistan, and Sri Lanka. [...] Read more.

In this study, we examine the critical question of whether global equity and bond assets (both green and non-green) offer effective hedging and safe haven properties against stock market risks in South Asia, with a focus on Bangladesh, India, Pakistan, and Sri Lanka. The increasing integration of global financial markets and the volatility experienced during recent economic crises raise important questions regarding the resilience of South Asian markets and the potential protective role of global assets. Drawing on methods like VaR and CVaR tail risk estimators, the DCC-GJR-GARCH time-varying connectedness approach, and cost-effectiveness tools for hedging, we analyze data spanning from 2014 to 2022 to assess these relationships comprehensively. Our findings demonstrate that stock markets in Bangladesh experience lower levels of downside risk in each quantile; however, safe haven properties from the global financial markets are effective for Bangladeshi, Indian, and Pakistani stock markets during the crisis period. Meanwhile, the Sri Lankan stock market neither receives hedging usefulness nor safe haven benefits from the same marketplaces. Additionally, global green assets, specifically green bond assets, are more reliable sources to ensure the safest investment for South Asian investors. Finally, the portfolio implications suggest that while traditional global equity assets offer ideal portfolio weights for South Asian investors, global equity and bond assets (both green and non-green) are the cheapest hedgers for equity investors, particularly in the Bangladeshi, Pakistani, and Sri Lankan stock markets. Moreover, these results hold significant implications for investors seeking to optimize portfolios and manage risk, as well as for policymakers aiming to strengthen regional market resilience. By clarifying the protective capacities of global assets, particularly green ones, our study contributes to a nuanced understanding of portfolio diversification and financial stability strategies within emerging markets in South Asia. Full article

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23 pages, 1075 KiB

Open AccessArticle

Does Institutional Quality Enhance the Effect of Health Outcomes on Economic Growth? Insights from Sub-Saharan African Countries

by Hafte Gebreselassie Gebrihet, Yibrah Hagos Gebresilassie and Gabriel Temesgen Woldu

Economies 2024, 12(11), 308; https://doi.org/10.3390/economies12110308 - 14 Nov 2024

Abstract

Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research [...] Read more.

Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research on the interplay between InQ, health, and ECG in Sub-Saharan African (SSA) countries is particularly limited. This study aims to address this gap by evaluating how health impacts ECG, with an emphasis on the mediating role of InQ in the health–growth nexus in SSA. This study examines these interplays across 35 SSA countries from 2012 to 2022. The life expectancy at birth (LEX) and real gross domestic product per capita (GDP) are used as proxies for health outcomes and ECG, respectively. The system generalised method of moments estimator is employed to analyse data. Results show that the LEX has a strong positive effect on economic growth in SSA countries. Furthermore, the InQ indicators (such as control of corruption, government effectiveness, rule of law and political stability, and absence of violence) are positively correlated with ECG. When the LEX interacts with InQ indicators, InQ is identified as a key channel through which LEX influences ECG. The findings confirm that InQ plays a crucial role in the health–growth nexus, with the positive impact of LEX on ECG being more pronounced in countries with higher levels of InQ, while the effect is weaker in countries with lower levels of InQ. The findings of this study have crucial policy implications, highlighting the intricate link among institutional quality, health outcomes, and economic growth. This study’s findings provide essential insights for policymakers to design focused strategies that improve InQ and health outcomes to achieve sustained ECG in SSA. Full article

(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)

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22 pages, 2639 KiB

Open AccessArticle

Quantile Connectedness Amongst Green Assets Amid COVID-19 and Russia–Ukraine Tussle

by Ayesha Rehan, Wahbeeah Mohti and Paulo Ferreira

Economies 2024, 12(11), 307; https://doi.org/10.3390/economies12110307 - 13 Nov 2024

Abstract

With the advent of greening the global economy and the introduction of green financial assets, this study examines the connectedness and spillover effect of green assets using a QVAR approach focusing on the average connectedness and connectedness under extreme market conditions. The time [...] Read more.

With the advent of greening the global economy and the introduction of green financial assets, this study examines the connectedness and spillover effect of green assets using a QVAR approach focusing on the average connectedness and connectedness under extreme market conditions. The time of the study captures the crucial global incidents of COVID-19 and Russia–Ukraine war to investigate the effect of major incidents on the connectedness of green assets. The results of the QVAR analysis reveal that green assets are moderately connected under normal market conditions; however, their connection is strengthened under extreme market conditions. IOTA and SP Green Bonds are the net receivers of shocks from other assets, and SP Green Bonds are connected to green energy indices and green cryptocurrencies during turbulent markets. Since green cryptocurrencies are closely connected, a lower portion of them should be added to portfolios, whereas SP Green Bonds qualify as a good diversifying agent in a portfolio. The study has significant implications for market participants, investors, and policymakers. Full article

(This article belongs to the Special Issue Public Finance and Green Growth)

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13 pages, 332 KiB

Open AccessArticle

The Influence of Firm Characteristics and Macroeconomic Factors on Financial Performance: Evidence from the Portuguese Hotel Industry

by Fernanda Matias, Sandra Rebelo, Georgette Andraz and José Guerreiro

Economies 2024, 12(11), 306; https://doi.org/10.3390/economies12110306 - 13 Nov 2024

Abstract

This study examines the determinants of the financial performance of the Portuguese hotel industry. Despite the economic relevance of the hotel industry and financial performance as an indicator of business survival, academic research on the factors that influence it in the context of [...] Read more.

This study examines the determinants of the financial performance of the Portuguese hotel industry. Despite the economic relevance of the hotel industry and financial performance as an indicator of business survival, academic research on the factors that influence it in the context of this industry, particularly in Portugal, is not extensive. This study encompassed a sample of 738 hotel companies from 2016 to 2021, using data from the Orbis database. This research was based on the assumption that a company’s size, liquidity, the tangibility of its assets, and debt level influence financial performance in the hotel industry, as well as the assumption that gross domestic product and consumer sentiment also affect the business success of hotel companies. By applying a panel data methodology, the findings indicate that all variables showed significant influence on financial performance, except liquidity. The analysis also reveals that smaller companies were more negatively affected by the demand decline induced by the COVID-19 pandemic. To improve the financial performance of the Portuguese hotel industry, the findings suggest that policymakers must work towards ensuring diversified sources of financing for the hotel business, such as investment subsidies, so that companies can minimize debt, especially during periods of slow economic growth. Additionally, companies must promote management strategies that enhance self-financing. Both measures could help companies increase their size, taking advantage of good business opportunities to explore economies of scale. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

18 pages, 809 KiB

Open AccessArticle

The Impact of Economic Factors on Saudi Arabia’s Foreign Trade with BRICS Countries: A Gravity Model Approach

by Houcine Benlaria

Economies 2024, 12(11), 305; https://doi.org/10.3390/economies12110305 - 12 Nov 2024

Abstract

Our investigation, bolstered by the robust gravity trade model and panel data econometric technique, underscores the pivotal factors that influence trade interactions between Saudi Arabia and the BRICS nations—Brazil, Russia, India, China, and South Africa. The study, spanning from 1998 to 2023, delves [...] Read more.

Our investigation, bolstered by the robust gravity trade model and panel data econometric technique, underscores the pivotal factors that influence trade interactions between Saudi Arabia and the BRICS nations—Brazil, Russia, India, China, and South Africa. The study, spanning from 1998 to 2023, delves into key economic metrics such as the gross domestic product, exchange rate fluctuations, inflationary trends, political conditions, and trade deals. We employ a range of econometric strategies, including pooled Ordinary Least Squares (OLS) and fixed effects models, to reveal that the GDP of BRICS states consistently and significantly impacts trade volumes. Specifically, a 1% increase in the GDP of partner countries correlates with a 0.37% rise in trade volume within the pooled OLS model. This effect amplifies to 1.43% when adjusting for temporal and country-specific factors in the fixed effects, underscoring the importance of accommodating unobserved heterogeneity, which refers to the unmeasured factors that can influence the relationship between GDP and trade volume. The political stability of BRICS nations mitigates transactional risks and promotes more stable trade relationships, thereby enhancing trade flows. Fluctuations in exchange rates exert positive and significant effects. This indicates that a more robust Saudi Riyal, an essential policy instrument, can enhance trade by increasing the competitiveness of Saudi exports. This study demonstrates that economic magnitude, political stability, and exchange rates affect Saudi Arabia’s trade with BRICS nations. These results bolster the Kingdom’s Vision 2030 objectives for economic diversification. This research advocates for stable political climates and strategic trade agreements to enhance trade relations. This study asserts that this approach will guarantee sustainable growth and diminish the Kingdom’s reliance on oil exports, instilling optimism in the Saudi economy. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy (2nd Edition))

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41 pages, 3100 KiB

Open AccessArticle

Macroeconomic Uncertainty and Sectoral Output in Nigeria

by Olajide O. Oyadeyi

Economies 2024, 12(11), 304; https://doi.org/10.3390/economies12110304 - 11 Nov 2024

Abstract

The paper examined the impact of macroeconomic uncertainty on the ten largest subsectors of the Nigerian economy using quarterly data from Q1 1981 to Q4 2023. The rationale behind selecting the subsectors is that these sectors constitute about 89 percent of the entire [...] Read more.

The paper examined the impact of macroeconomic uncertainty on the ten largest subsectors of the Nigerian economy using quarterly data from Q1 1981 to Q4 2023. The rationale behind selecting the subsectors is that these sectors constitute about 89 percent of the entire productive activities in the economy. To achieve the objectives, the paper created an index for macroeconomic uncertainty using exchange rate uncertainty, interest rate uncertainty, inflation uncertainty, and real gross domestic product (GDP) uncertainty to create this index. Furthermore, the paper explored the impacts of macroeconomic uncertainty and these individual economic uncertainty indexes on sector output. The study employed the novel dynamic autoregressive distributed lag (novel dynamic ARDL) technique to estimate the results and used the canonical cointegrating regression (CCR) and fully modified ordinary least square (FMOLS) techniques as robustness on the main findings. The findings demonstrated that during periods of recession, macroeconomic uncertainty tends to heighten or reach its peak in Nigeria. Furthermore, the paper showed that the sectors react homogenously to macroeconomic uncertainty. In addition, the impulse response results from the novel dynamic ARDL estimation show that macroeconomic uncertainty can predict robust negative movements in sector output for Nigeria. Indeed, these findings are insightful as they show the importance of macroeconomic uncertainties as key drivers of sector output in Nigeria. The paper argues that the policy authorities should improve their efforts to reduce macroeconomic uncertainty and foster a stable real sector/sectoral output to enhance the macroeconomic environment for Nigeria to aim for higher levels of growth. Full article

(This article belongs to the Special Issue Financial Market Volatility under Uncertainty)

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19 pages, 2668 KiB

Open AccessArticle

Employment Shift in Response to a Technology Shock: An Analysis of Two Rigidities and Two Agents

by Kyuyeon Hwang and Junhee Han

Economies 2024, 12(11), 303; https://doi.org/10.3390/economies12110303 - 10 Nov 2024

Abstract

This paper examines the relationship between a technology shock and employment, considering price, wage rigidities, and heterogeneous agents. To explore this relationship, we utilized a Dynamic Stochastic General Equilibrium (DSGE) model, incorporating households with varying savings rates. For empirical validation, we conducted a [...] Read more.

This paper examines the relationship between a technology shock and employment, considering price, wage rigidities, and heterogeneous agents. To explore this relationship, we utilized a Dynamic Stochastic General Equilibrium (DSGE) model, incorporating households with varying savings rates. For empirical validation, we conducted a Structural Vector Autoregression (SVAR) analysis using data from two economies with distinct savings patterns—the United States and China. This approach allowed us to assess the impact of technology shocks on employment dynamics across different savings environments. Under these conditions, we observe that the effect of technology on aggregate employment is initially positive. Still, it gradually decreases in the mid-term, eventually switching to a negative impact before slowly recovering to equilibrium. The reason for this phenomenon depends on (i) the magnitude of fluctuations in price and wage, precisely, which variable’s fluctuations have a greater magnitude, and (ii) which effect, between income effect and substitute effect, is preferred by restricted and unrestricted households. Due to (i), real wages change, and because of (ii), households make different labor supply decisions, leading to fluctuations in employment in response to technology shocks. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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29 pages, 922 KiB

Open AccessArticle

Start Switch for Innovation in “Construction Sequencing”: Research Funding

by Akifumi Kuchiki

Economies 2024, 12(11), 302; https://doi.org/10.3390/economies12110302 - 8 Nov 2024

Abstract

Clusters of knowledge-intensive industries and manufacturing industries form industrial agglomeration in Step I and activate innovation in Step II. Industry clusters are formed by building segments. “Construction sequencing” in the construction industry refers to the process of determining the sequence of segments to [...] Read more.

Clusters of knowledge-intensive industries and manufacturing industries form industrial agglomeration in Step I and activate innovation in Step II. Industry clusters are formed by building segments. “Construction sequencing” in the construction industry refers to the process of determining the sequence of segments to optimize a project’s resources, budget, and scheduled timeline. The process usually begins by dividing a project into segments. Urban segments consist of public spaces, airports, factories, health, housing, etc. A “segment” is a component of a cluster; the organization of a cluster consists of constructing segments. These segments can be divided into four main categories: human resources, physical infrastructure, institutions, and the living environment. Each segment has a specific function in the process of building a cluster. This study focused on innovation in Step II and extended the Fujita–Thisse model of spatial economics to hypothesize that research expenditure per researcher leads to value being added. The Granger causality was tested for the knowledge and manufacturing industries in nine major countries including China and the U.S. The results showed that the hypothesis was significant in identifying the starting segment of innovation in Step II. Accordingly, it can be concluded that research funding is the start switch that triggers innovation. The policy implication is that activating innovation in cluster policies begins with the establishment of a research fund for researchers in its assigned clusters. Full article

(This article belongs to the Special Issue Industrial Clusters, Agglomeration and Economic Development)

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21 pages, 1538 KiB

Open AccessArticle

Informal Employment, the Tertiary Sector, and the Gross Domestic Product: A Structural Equations Model for the Mexican Economy

by David Robles Ortiz and Raymundo Alexei Ambriz Torres

Economies 2024, 12(11), 301; https://doi.org/10.3390/economies12110301 - 5 Nov 2024

Abstract

In Mexico, approximately 55% of the working population is employed informally, contributing 24.4% to the Gross Domestic Product (GDP) in 2022. This study analyzed the impact of wages, taxes, government spending, and unemployment on the informal economy of Mexico from 1980 to 2022, [...] Read more.

In Mexico, approximately 55% of the working population is employed informally, contributing 24.4% to the Gross Domestic Product (GDP) in 2022. This study analyzed the impact of wages, taxes, government spending, and unemployment on the informal economy of Mexico from 1980 to 2022, as well as its relationship with the tertiary sector’s contribution to the GDP. The methodology of the study was structural equation modeling. The findings of this study revealed that an increase in taxes, the unemployment rate, and the minimum wage in Mexico tends to be accompanied by a rise in informal employment. Finally, a unitary change in the latent variable informality affected the growth of the tertiary sector’s contribution to the GDP by 0.37 units. Full article

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18 pages, 326 KiB

Open AccessArticle

The Effect of Education on Economic Growth in Sub-Saharan African Countries: Do Institutions Matter?

by Mohammed N. Abu Alfoul, Ayman Hassan Bazhair, Ibrahim N. Khatatbeh, Adam G. Arian and Mahmoud N. Abu Al-Foul

Economies 2024, 12(11), 300; https://doi.org/10.3390/economies12110300 - 4 Nov 2024

Abstract

This paper investigates the moderating role of institutional quality on the relationship between education and economic growth in Sub-Saharan Africa (SSA). The study applies the panel ARDL model to data from 18 SSA countries spanning 2000–2020 for its main analysis, along with a [...] Read more.

This paper investigates the moderating role of institutional quality on the relationship between education and economic growth in Sub-Saharan Africa (SSA). The study applies the panel ARDL model to data from 18 SSA countries spanning 2000–2020 for its main analysis, along with a battery of diagnostics test to ensure the robustness of the results. The results reveal that the long-term effect of education on economic growth is statistically insignificant, attributing this finding to high rates of education exclusion and low-quality education. Remarkably, the research emphasizes the moderating role of institutional quality, showing the positive effects of education on economic growth when countries demonstrate robust corruption control and political stability. The study contributes to the existing literature by highlighting specific institutional factors influencing the effectiveness of education in driving economic growth, emphasizing the need for a strong institutional framework alongside educational efforts for sustainable development. The findings highlight that robust institutions form a crucial infrastructure that enhances the effectiveness of education in driving productivity and fostering economic growth. Full article

(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)

19 pages, 307 KiB

Open AccessArticle

Determinants of the Blue Economy Growth in the Era of Sustainability: A Case Study of Indonesia

by Taufiq Marwa, Muizzuddin, Abdul Bashir, Sri Andaiyani and Afriyadi Cahyadi

Economies 2024, 12(11), 299; https://doi.org/10.3390/economies12110299 - 2 Nov 2024

Abstract

The Sustainable Development Goals (SDGs) represent a fundamental global commitment to addressing a wide range of socio-economic and environmental challenges. A key component of these goals is the commitment to ocean sustainability, encapsulated in the concept of the blue economy. The blue economy, [...] Read more.

The Sustainable Development Goals (SDGs) represent a fundamental global commitment to addressing a wide range of socio-economic and environmental challenges. A key component of these goals is the commitment to ocean sustainability, encapsulated in the concept of the blue economy. The blue economy, emerging in an era characterized by intricate dynamics and openness to transformation, is influenced by various determinants. This study utilizes panel data analysis and the pooled least squares method to investigate the factors influencing the share of the blue economy in the archipelagic provinces of Indonesia from 2012 to 2021. With its vast maritime territory and numerous islands, Indonesia provides a highly relevant context for examining these dynamics. The empirical results indicate that information and communication technology (ICT), fisheries capture, and aquaculture production positively impact the blue economy’s share. Conversely, trade openness and electricity consumption exhibit a negative relationship with the blue economy’s share. Moreover, the analysis reveals that investment does not have a significant effect on the blue economy’s share. These findings underscore the critical importance of developing robust infrastructure and implementing stringent regulatory oversight on fishery product trade to enhance sustainable growth within the blue economy framework. Full article

(This article belongs to the Special Issue The Asian Economy: Constraints and Opportunities)

13 pages, 262 KiB

Open AccessArticle

The Impact of AI on International Trade: Opportunities and Challenges

by Ozcan Ozturk

Economies 2024, 12(11), 298; https://doi.org/10.3390/economies12110298 - 30 Oct 2024

Abstract

This study aims to explore the transformative potential of Artificial Intelligence (AI) in international trade, focusing on its key roles in optimizing trade operations, enhancing trade finance, and expanding market access. In trade optimization, AI leverages advanced machine learning and predictive analytics to [...] Read more.

This study aims to explore the transformative potential of Artificial Intelligence (AI) in international trade, focusing on its key roles in optimizing trade operations, enhancing trade finance, and expanding market access. In trade optimization, AI leverages advanced machine learning and predictive analytics to enhance demand forecasting, route optimization, and customs procedures, leading to more efficient logistics and inventory management. In trade finance, AI can automate document processing and risk assessment, increasing access to finance and enhancing transactional transparency, particularly through integration with blockchain technology. In terms of market access, AI-driven analytics can identify consumer trends and competitive dynamics, enabling personalized marketing and overcoming linguistic and cultural barriers. Due to the lack of quantitative data, this study employed qualitative research methods, specifically a multiple-case-study approach. The case studies of leading companies such as Alibaba, DHL, and Maersk showcase how they leverage AI to optimize their trade operations, improve customer service, and achieve greater efficiency. These real-world examples demonstrate AI’s practical applications and significant benefits in the global trade landscape. However, the adoption of AI in international trade is not without challenges. These include issues around data quality, ethical concerns, technological complexity, and public perception. Policy recommendations highlight the need for a robust data infrastructure, establishing ethical AI guidelines, and fostering international cooperation to align data protection regulations. Full article

(This article belongs to the Special Issue Economic Development in the Digital Economy Era)

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