(Luận văn) the determinants of economic growth, a case study of six southeast asian countries

t to ng hi ep ISS-INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM w n lo ad VIETNAM-NETHERLANDS PROGRAMME FOR MASTER’S DEGREE IN DEVELOPMENT ECONOMICS ju y th yi pl ua al n THE DETERMINANTS OF ECONOMIC GROWTH: A CASE STUDY OF SIX SOUTHEAST ASIAN COUNTRIES n va ll fu oi m : at z NGUYỄN KIỀU GIANG MDE-K16 z PRESENTED BY : DR NGUYỄN MINH ĐỨC nh SUPERVISOR ht vb k jm om l.c gm n a Lu HO CHI MINH CITY, DECEMBER 2012 n va y te re t to ng hi ep ACKNOWLEDGMENT w n I’ve experienced the great time in this course with acquire academic knowledge, lo open-mind to approach new things, and be straightforward to express ideas I’ve ad guided by open-mind lecturers who always encourage us to express our opinions and y th discuss it This is really quality and extensive course We’re encouraged to be ju ourselves and be self-confident to discuss ideas, it’s really meaningful thing yi Sincerely, I would like to take this opportunity to express my honest thanks to the pl Vietnam-Netherlands Master Program for Economics of Development for the al ua interesting and extensive curriculum, as well as sincere thanks to all of people who n engage in this course such as management board of this program, lecturers, tutors va To fulfill this course, I’ve received the help and support from many people such as n fu director and vice director of this program, lecturers, tutors, my supervisor, ll classmates, friends, course administrators, librarians of MDE & Fulbright, and other m oi people who give me the instructions, comments, advices, supports, sympathies, and nh encouragement during the course process Without these things, I could not fulfill at the Thesis and finish the course z First of all, I would like to express my gratitude to my supervisor – Dr Nguyen z vb Minh Duc, who always remind me to finish the Thesis timely and make me ht determine to finish the Thesis with high effort, very patient and sympathy with me k comments and correct the Thesis mistake by mistake From bottom of my heart, I jm for delaying the time of submitting Thesis, spent his valuable time to help me, give actively and efficiently, take care of us step by step And special thanks to Dr Pham n the valuable advices and encouragement to finish the thesis a Lu Khanh Nam steps with us to overcome obstacles in thesis process honestly, give us om Program, Vice Principal of UEH He fosters us to study and finish the course l.c I would like to express my special thank to Dr Nguyen Trong Hoai - Director of the gm sincerely thank him for all n va y te re i t to ng hi ep Thanks to TRD board defense give me valuable comments and advices to continue this topic Thanks to Dr Phan Minh Ngoc supplies me materials at my TRD time w Thanks to Dr Le Dinh Truc gives me valuable comments and advice on panel n technique in Eview And thanks to tutor Phung Thanh Binh for helping us honestly lo ad in the course y th Thanks to all classmates in MDE-K16, all of you support me unconditionally with ju discussions, talks, shared materials, team working playing, and other Thanks to yi friends Thu Huyen and Thanh Tien, your sharing materials are very useful for me pl Hope all of you fulfill this course and get success in your life al ua Lastly, I would like to thank to my dear family, warm friends that supports and n sympathies with me for spending most time on studying this course va Thanks all for all, hope you will be happy and successful in life n ll fu I pledge to take full responsibilities for mistakes, errors, omissions and oi m shortcomings of the study at nh z z ht vb k jm om l.c gm n a Lu n va y te re ii t to ng hi ep ABTRACT w This study based on the neoclassical growth theory, an extended version of this n lo model As common trend, Cobb-Douglas production function is used to evaluate the ad robustness of determinants of economic growth in a dataset of six Southeast Asian y th countries from 1993 to 2009 The fixed effect model (FEM) is used to estimate this ju model The results indicate that the most important source of economic growth of yi these countries is capital accumulation and labor pl ua al Keywords: Economic growth, determinants, Capital, Labor, Population growth, Government expenditure, Southeast Asian countries, Neoclassical Model, Cobb- n Douglas production function, FEM n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re iii t to ng hi ep TABLE OF CONTENT CHAPTER 1: INTRODUCTION w n 1.1 Problem statement lo 1.2 Research structure ad CHAPTER 2: RESEARCH OBJECTIVES & RESEARCH QUESTIONS y th 2.1 Research objectives ju yi 2.2 Research questions pl 2.3 Research scope ua al 2.4 Research contribution CHAPTER 3: LITERATURE REVIEW n va 3.1 General Overview n 3.1.1 Concept and Definitions ll fu 3.1.2 Traditional methods of examine determinants of economic growth 13 m 3.1.3 Measurement indicator group of development and growth 14 oi 3.1.4 Overview of economic development theory 15 z Endogenous Theory z Neoclassical model at Classical theory nh 3.1.4.1 Classify theories by time 15 vb 3.1.4.2 Classify theory by four main classes 21 ht Structural change theory n 3.2.4 Capital Fundamentalism 30 a Lu 3.2.3 Neoclassical model-Solow model 29 om 3.2.2 Harrod-Domar Growth Model 28 l.c 3.2.1 Production function Cobb-Douglas 26 3.2 Theoretical Framework 26 gm Neoclassical counter revolution theory k International dependence theory jm Linear stages of growth theory n va y te re iv t to ng hi ep 3.3 Empirical Review 30 3.3.1 Development and growth of Vietnam and Southeast Asia 30 w 3.3.2 Review the empirical studies 33 n CHAPTER 4: RESEARCH METHODOLOGY 39 lo ad 4.1 Analyzed Framework 39 y th 4.1.1 Model 1- Traditional neoclassical model 39 4.1.2 Model 2- Extend neoclassical model 40 ju 4.1.3 FEM is selection for estimation 40 yi pl 4.2 Variables 44 al 4.2.1 Dependent variable: GDP per capita 44 ua 4.2.2 Independent variables 44 n 4.3 Data Description - Data collection – Data analysis 50 va CHAPTER 5: DATA ANALYSIS AND DISCUSSION 52 n ll fu 5.1 Descriptive Statistics Analysis 52 5.1.1 Descriptive Statistics m oi 5.1.2 Correlation Matrix 54 nh 5.2 Econometric Analysis 54 at 5.2.1 Whether FEM or REM is more suitable 54 z 5.2.2 Model – Traditional model 58 z 5.2.3 Model - The Extened Neoclassical Model 59 vb 5.3 The limitations of data, and modeling techniques 61 ht om APPENDICES 71 l.c REFERENCE 67 6.3 Limitations and future research 65 gm 6.2 Managerial Implications and Policies 64 k 6.1 Main findings 63 jm CHAPTER 6: CONCLUSION AND POLICY RECOMMENDATION 63 n a Lu n va y te re v t to ng hi ep APPENDICES w n A: Data of GDP, Capital, Population growth, Labor, Government expenditure 70 lo ad B: Descriptive statistics of each country 77 y th C: Correlation Matrixes of each country 79 D: Residual Graph 81 ju E: Regression Results 82 yi pl F: Main Empirical studies Summary 92 n ua al E: Regression results 81 n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re vi t to ng hi ep LIST OF TABLES w Table 3.1: Sources of Growth in East Asia, by Country and Period 37 n Table 4.1 Estimated Capital-Output ratio some Asian Countries 1980 45 lo ad Table 4.2 Range forecast of COR for countries 46 y th Table 4.3 Summary of variable 49 Table 5.1 Sample observations - Descriptive statistics - sample: 1993 2009 54 ju yi Table 5.2 Correlation on the sample observations 54 pl Table 5.3 Model - A comparison of results with FEM 55 ua al Table 5.4 HAUSMAN TEST for MODEL 55 Table 5.5 Model - A comparison of results with FEM 57 n Table 5.6 HAUSMAN TEST for MODEL 57 va n Table 5.7 Estimated results for FEM with tradition model (Model 1) 58 ll fu Table 5.8 Estimated results for FEM with extended model (Model 2) 60 oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re vii t to ng hi ep LIST OF FIGURES Figure 3.1: Population of 1993 of countries w n Figure 3.2: Population of 2009 of countries lo Figure 3.3: GDP per capita of 1993 of countries 10 ad Figure 3.4: GDP per capita of 2009 of countries 10 y th Figure 4.1: Conceptual Framework of the study 39 ju Figure 5.1: GDP per capita of countries for the period of 1993-2009 52 yi Figure 5.2: Capital per capita GDP per capita for the period of 1993-2009 53 pl Figure 6.1: An overview of determinants of economic growth of countries 64 n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re viii t to ng hi ep ABBREVIATIONS : Capital output ratio w COR : The fixed effects method ad : Gross Capital Formation y th GCF : Developed (high-income) countries lo FEM n DCs : Gross fixed assets formation GDP : Gross Domestic Product ICOR : Incremental capital output ratio LDCs : Less developing countries LICs : Low-income countries LSDV : The least-squares dummy variable OLS : Ordinary Least Square PCI : Province Competitiveness Index REM : Random Effect Model ju GFCF yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re ix t to ng hi  Log(gdp_sg/labor_sg) = 0.91 + 2.88 + 0.58*Log(capital01_sg/labor_sg) 0.025*lLog(pop_growth_sg) + 0.61*govexp_gdp_sg ep w Table E.8: FEM Regression Result of Model – Extended model, Capital Series No.2 n lo ad ju y th Dependent Variable: LOG(GDP?/LABOR?) Method: Pooled EGLS (Cross-section SUR) Sample: 1993 2009 Included observations: 17 - Cross-sections included: Total pool (balanced) observations: 102 Linear estimation after one-step weighting matrix Cross-section SUR (PCSE) standard errors & covariance (d.f corrected) yi Coefficient Std Error C LOG(CAPITAL02?/LABOR?) LOG(POP_GROWTH?) GOVEXP_GDP? Fixed Effects (Cross) _VN—C _TL—C _IN—C _PH—C _MA—C _SG—C 4.247387 0.468949 0.012514 -0.047431 al pl Variable Prob 125.7477 92.82679 1.226370 -0.310276 0.0000 0.0000 0.2232 0.7570 n ua 0.033777 0.005052 0.010204 0.152869 t-Statistic va n -0.776387 -0.234902 -0.334493 -0.269033 0.461306 1.153510 ll fu oi m Effects Specification nh Cross-section fixed (dummy variables) at Weighted Statistics z -113.8130 367.8510 100.8457 1.117863 ht Mean dependent var S.D dependent var Sum squared resid Durbin-Watson stat vb 0.999840 0.999826 1.041327 72730.10 0.000000 z R-squared Adjusted R-squared S.E of regression F-statistic Prob(F-statistic) jm Unweighted Statistics k 0.997684 0.362106 Mean dependent var Durbin-Watson stat 8.518719 0.352677 om l.c gm R-squared Sum squared resid n a Lu n va y te re 87 t to ng hi * REM Regression Results ep Table E.9: REM Regression Result of Model – Traditional model, Capital Series No.1 w n Dependent Variable: LOG(GDP?/LABOR?) Method: Pooled EGLS (Cross-section random effects) Sample: 1993 2009 Included observations: 17 Cross-sections included: Total pool (balanced) observations: 102 Wansbeek and Kapteyn estimator of component variances lo ad ju y th Coefficient C LOG(CAPITAL01?/LABOR?) Random Effects (Cross) _VN C _TL C _IN C _PH C _MA C _SG C 2.715650 0.617873 Std Error yi Variable pl Prob 6.808434 17.05201 0.0000 0.0000 n ua al n va -0.455981 -0.342186 -0.239890 -0.129791 0.338448 0.829400 0.398866 0.036235 t-Statistic Effects Specification oi 0.299031 0.145042 0.543095 0.246952 z Mean dependent var Durbin-Watson stat 8.518719 0.006387 k jm 0.865715 20.99984 ht vb Unweighted Statistics R-squared Sum squared resid z Mean dependent var S.D dependent var Sum squared resid Durbin-Watson stat at 0.744396 0.741840 0.073695 291.2305 0.000000 nh Weighted Statistics R-squared Adjusted R-squared S.E of regression F-statistic Prob(F-statistic) 0.9795 0.0205 m 0.509268 0.073753 Rho ll Cross-section random Idiosyncratic random fu S.D om l.c gm n a Lu n va y te re 88 t to ng hi Table E.10: REM Regression Result of Model – Traditional model, Capital Series No.2 ep w Dependent Variable: LOG(GDP?/LABOR?) Method: Pooled EGLS (Cross-section random effects) Date: 11/28/12 Time: 08:48 Sample: 1993 2009 Included observations: 17 Cross-sections included: Total pool (balanced) observations: 102 Swamy and Arora estimator of component variances Cross-section SUR (PCSE) standard errors & covariance (no d.f Correction) n lo ad ju y th Coefficient C LOG(CAPITAL02?/LABOR?) Random Effects (Cross) _VN C _TL C _IN C _PH C _MA C _SG C 3.744019 0.517358 Std Error yi Variable pl Prob 11.16612 15.79582 0.0000 0.0000 n ua al n va -0.685629 -0.254360 -0.300456 -0.224779 0.420695 1.044529 0.335302 0.032753 t-Statistic S.D fu Effects Specification Rho ll 0.9177 0.0823 oi 0.206116 0.061733 m Cross-section random Idiosyncratic random 0.617178 0.164862 0.557197 0.236007 Mean dependent var Durbin-Watson stat 8.518719 0.003894 k jm 0.784037 33.77294 ht vb Unweighted Statistics R-squared Sum squared resid z Mean dependent var S.D dependent var Sum squared resid Durbin-Watson stat z 0.797024 0.794994 0.074646 392.6683 0.000000 at R-squared Adjusted R-squared S.E of regression F-statistic Prob(F-statistic) nh Weighted Statistics om l.c gm n a Lu n va y te re 89 t to ng hi Table E.11: REM Regression Result of Model – Extended model, Capital Series No.1 ep w Dependent Variable: LOG(GDP?/LABOR?) Method: Pooled EGLS (Cross-section random effects) Sample: 1993 2009 Included observations: 17 - Cross-sections included: Total pool (balanced) observations: 102 Wansbeek and Kapteyn estimator of component variances n lo ad Variable y th 2.656089 0.607836 0.890469 -0.015914 ju Std Error t-Statistic Prob 0.425831 0.043771 0.855253 0.039787 6.237418 13.88688 1.041177 -0.399966 0.0000 0.0000 0.3004 0.6901 yi n ua al -0.448404 -0.364902 -0.231585 -0.147043 0.339061 0.852874 pl C LOG(CAPITAL01?/LABOR?) GOVEXP_GDP? LOG(POP_GROWTH?) Random Effects (Cross) _VN C _TL—C _IN—C _PH—C _MA—C _SG—C Coefficient va Effects Specification n S.D m 0.284242 0.144414 0.529863 0.284281 z z Unweighted Statistics Mean dependent var Durbin-Watson stat 8.518719 0.006899 ht 0.860377 21.83469 vb R-squared Sum squared resid at Mean dependent var S.D dependent var Sum squared resid Durbin-Watson stat nh 0.748450 0.740749 0.073531 97.19484 0.000000 oi Weighted Statistics R-squared Adjusted R-squared S.E of regression F-statistic Prob(F-statistic) 0.9814 0.0186 ll 0.534936 0.073635 fu Cross-section random Idiosyncratic random Rho k jm om l.c gm n a Lu n va y te re 90 t to ng hi Table E.12: REM Regression Result of Model – Extended model, Capital Series No.2 ep w Dependent Variable: LOG(GDP?/LABOR?) Method: Pooled EGLS (Cross-section random effects) Sample: 1993 2009 Included observations: 17 Cross-sections included: Total pool (balanced) observations: 102 Wansbeek and Kapteyn estimator of component variances n lo ad Std Error t-Statistic Prob 4.179636 0.470157 0.353900 0.022771 11.81023 20.64753 0.0000 0.0000 ju yi n ua al -0.773605 -0.243428 -0.334809 -0.265479 0.463174 1.154147 pl C LOG(CAPITAL02?/LABOR?) Random Effects (Cross) _VN—C _TL—C _IN—C _PH—C _MA—C _SG—C Coefficient y th Variable va Effects Specification S.D Rho n 0.697328 0.061733 0.9922 0.0078 ll fu Cross-section random Idiosyncratic random 0.182863 0.140917 0.380941 0.341203 z 8.518719 0.003172 ht Mean dependent var Durbin-Watson stat vb 0.737973 40.97664 z Unweighted Statistics R-squared Sum squared resid at Mean dependent var S.D dependent var Sum squared resid Durbin-Watson stat nh 0.810062 0.808163 0.061720 426.4885 0.000000 oi R-squared Adjusted R-squared S.E of regression F-statistic Prob(F-statistic) m Weighted Statistics k jm om l.c gm n a Lu n va y te re 91 ad ju y th yi pl n ua al Objectives Countries m ll Authors fu Table F.1: Main Empirical Studies Summary Ord No n va APPENDIX F: Main Empirical Studies Summary Period Type data & model Growth accounting framework with the production function Dependent variable TFP TFP growth and its sources in the Malaysian economy from 1981 to 2001; identify the factors affecting TFP growth at the national level Malaysia 1981-2001 Achara Chandrachai & Tubtimtong Bangorn & Kanjana Chockpisansin (2004), “Total Factor Productivity Growth Survey Report-Thailand”, p297-321 Calculate the TFP from the energy crisis (1977-81), beginning of the expansion period (1982-86), boom period (1987-91), declining period (1992-96), and recession period after the financial crisis (1997-99) Thailand 1977-1999 Growth accounting method TFP growth Caesar B Cororaton (2004), “Total Factor Productivity Growth Survey Report-Philippines, - Quantify TFP growth and its contribution to overall economic growth - understand the Philippines 1967-2000 Growth accounting TFP growth oi Ab Wahab Muhamad (2004), “Total Factor Productivity Growth Survey Report-Malaysia” P210-232 at nh Independent variable - Demand intensity - Education and training - Capital structure - Technical progress - Economic restructuring z z k jm ht vb om l.c gm - Growth of openness - growth of labor in the non-agriculture sector - ratio of FDI to gross fixed capital formation Result an Lu - The growth rate of GDP was 6.6% from 1991 to 2001 - Annual employment growth of 1.9% - Capital stock growth of 3.1% - TFP growth was 1.5% per annum Mainly due to demand intensity which contributed 35.5%, followed by education and training (34.3%), capital structure (15.1%), technical progress (13.9%), and economic restructuring (1.2%) - The economic growth increased continuously since 1977 except during financial crisis in 19971999 - 1977-1986: main source of economic growth was the expansion of capital and labor - 1987-1999: main contribution to the economic growth came from capital - TFP growth played a very insignificant role in the contribution to growth - Mostly negative TFP - The contribution of TFP growth to economic growth consistently improved from -4.26% in the mid1980s to +0.93% in 1998-2000 va n y te re ac th si 92 - Export - Import - FDI - R&D - Price change - Share of eg cd jg hg ad ju y th yi pl n ua al 1947-1973 Vietnam 1986-1998 Production function Real Production output oi - Real Capital input - Real Labor input - total factor productivity - Times at nh z z k jm ht vb Economic growth - Capital stock - technical progress - “Doi moi” Lu Production function om l.c gm The effect of Doi Moi on Vietnam's GDP - Our principal finding is that differences in growth rates of real product in 1960-73 are associated with differences in growth rates of real factor input Increases and decreases in growth rates of real product are associated with increases and decreases in growth rates of real factor input - That very rapid growth of real product is associated with rapid growth of both real capital input and real labor input, and that slow growth of real product is associated with slow growth of both inputs - Moderate growth of real product can be associated with rapid growth of real capital input, rapid growth of real labor input, or moderate rates of growth of both inputs - Doi Moi appeared to have a significant positive effect on productivity, which by 1998 accounted for a 42% increase in GDP - Financial crisis exerted a strong negative impact on the economic growth about 3.6% in 1998 - High GDP growth in 1990s could be explained mostly by increase in investment and improvement of productivity under the Doi Moi an Le Thanh Nghiep, Huu Quy (2000) “Impact Of DoiMoi” countries: United States, Canada, France, Germany, Italy, Japan, Korea, the Netherland s, and the United Kingdom m ll fu Laurits R Christensen, Dianne Cummings, and Dale W Jorgenson 1980 “Economic Growth, 1947-73; An International Comparison” manufacturing n possible factors that might have caused changes in TFP growth - International comparison of postwar patterns of aggregate economic growth - Assess the role of growth in real capital input and in real labor input in accounting for aggregate economic growth va p-255-279 va n y te re ac th si 93 eg cd jg hg ad ju y th yi pl n ua al Economic growth Sri Lanka 1980-2006 Growth accounting framework Economic growth Measure the contribution of Capital, Labor and Technological Progress to Economic Growth Vietnam 1975-2005 Production function Economic growth - Capital stock - Human capital - Labors at nh z z k jm ht vb - Capital stock - Labor force - Human capital - TFP om l.c gm Phan Minh Ngoc (2006) “The Role of Capital and Technological Progress in Vietnam’s Economic Growth” Production function with cross-country data oi 1960-1985 m ll Nombulelo Duma (2007) “Sri Lanka's Sources of Growth” 121 countries fu - Examines whether the Solow growth model is consistent with the international variation in the standard of living - Examines implications of Solow model for convergence in standards of living: whether poor countries tend to grow faster than rich countries Assess Sri Lanka’s sources of growth n N Gregory Mankiw, David Romer and David N Weil (1992) “A contribution to empirics of economic growth” va an Lu - Solow model is consistent with the int’ evidences if one acknowledge the important of human as well as physical capital These three variables explain most ofnt’s variation - holding population growth and - Solow model that includes accumulation of human as well as physical capital provides an excellent description of the crosscountry data - Accumulation of capital stock has a larger impact on income per capita than Solow model implies in textbook - Labor was the dominant factor contributing to growth in the 1980s; later, TFP took over as the main contributor - A higher growth path over the medium term will depend on securing a stable political and macroeconomic environment; implementing structural reforms necessary to improve productivity and efficiency of investment; attaining fiscal consolidation; and creating space for the private sector - Capital is main factor contributes to economic growth account for 85% for economic growth - Technology progress seem absent in growth va n y te re - Physical capital - Labor - Technology progress ac th si 94 eg cd jg hg ad ju y th yi pl n ua al at Extended Endogenous economic growth z - Physical capital - Labor - Technology progress - Doi moi - The most important source of economic growth is capital accumulation - Technological progress was statistically absent in the growth Economic growth - Government Consumption Services ( that not enter into households' production functions - Per capita growth - Investment in physical - Human capital - Population growth - Government expenditures - Maintenance of the rule of law - Free markets, small government consumption, - Human capital - Initial Level of GDP - Initial Level of Human Capital, - Educational spending, Expected sign is negative relation between grow rate of GDP per capita and level of government consumption expenditure per GDP z jm ht vb 120 countries 1960-1985 Models of endogenous for Data across countries Economic growth 100 countries 1960-1990 Panel data Economic growth k Public investment tends to be positively correlated with growth and private investment, property rights affect growth, strong negative interaction between population growth and investment in human capital - Democracy is not the key to economic growth, it enhances growth at low levels of political freedom but depresses growth when a moderate level of freedom has already been attained Democracy on growth is weak negative - Political freedoms tend to erode over time if they are out of line with a country's standard of living Improvements in the standard of living substantially raise the an Lu va n y te re ac th si 95 om l.c gm Robert J Barro, 1994 “Democracy and Growth” Economic growth nh 12 Production function oi 11 1975-2003 m ll Rober J Barro, 1988 “Government Spending in a Simple Model of Endogenous Growth” Robert J Barro, 1989 “A cross - country study of growth, saving and government” Vietnam fu 10 - Measures the contribution of capital formation, labor, and technological progress to the economic growth - The impact of Doimoi on economic growth Figure out relation between growth rate GDP per capita & government consumption expenditure per GDP n Phan Minh Ngoc (2007), “Sources of Vietnam’s Economic Growth” va eg cd jg hg ad ju y th yi pl n ua al n va - Fertility Rate, - Government Consumption - Investment Ratio - Terms of Trade - Democracy 14 Robert J Barro (1996)“Determinants of Economic GrowthA Cross-Country Empirical Study” Measure the contribution of factor to Economic Growth 116 countries 1965-1985 Panel data Economic growth at Sources of growth nh Robert J Barro & Jong Wha Lee, 1993 “Losers and Winners in Economic Growth” oi m ll fu 13 z z k jm ht vb om l.c gm probability that political freedoms will grow - If economic freedom can be established in a poor country, growth would be encouraged & the country would tend eventually to become more democratic on its own - Ratio investment - A country growth faster if begin per GDP with lower GDP per capita relative - Ratio Government to initial level of human capital consumption to - Positive effective on growth: GDP Investment per GDP, Life- Black-market expectancy, premium - Negative effective on growth: - Initial GDP large government, Black-market - Male secondary premium, revolutions school - Female education has negative - Female secondary effect on fertility school - Male attainment has positive - Life- Expectancy effect on primary school - Revolution enrollment - Female and male attainment have positive effect on life expectancy, negative on infant mortality, positive on enrollment at second and higher levels - Initial_GDP level - Growth rate will get higher with - Male seocondary higher initial schooling, higher life & HighSchool expectancy, lower fertility, better - Life Expectancy maintenance of rule of law, lower - Fertility rate inflation, terms of trade - Government improvement, and lower Consumption to government consumption, lower GDP Ratio initial level of real GDP per capita - Rule of Law Index Economic growth va Panel dataset, Neoclassical model an 1960-1990 Lu 100 countries n y te re ac th si 96 eg cd jg hg ad ju y th yi pl n ua al n va fu One objective is to assess whether the Asian financial crisis had a long lasting effect on growth prospects and other dimensions of economic performance for the two groups of Asian economies 10 economies: Indonesia, Malaysia, South Korea, The Philippines , Thailand, China, Hong Kong, Japan, Singapore, Taiwan 1960-2000 Panel analysis focuses on the immediate and long-term effects of the Asian financial crisis on economic performance in east Asia Economic growth 16 Shandre Mugan Thangavelu (2004), ”Total Factor Productivity Growth Survey Report-Singapore” The importance of productivity growth will be an important component of longterm growth in the East and Southeast Asian countries as they structurally adjust toward higher value-added production Singapore 1971-1998 Baseline model TFP growth 17 Susan M Collins and Barry Establishing which as below is correct East Asia countries: 1960-1994 The neoclassical Economic growth oi at nh z z k jm ht vb gm om l.c Robert J Barro, 2001 “Economic Growth in East Asia Before and After the Financial Crisis” m ll 15 - Term of trade Change - Democracy Index - Inflation rate - Investment Ratios for real investment (private plus public) relative to real GDP - Stock-Market Prices: computed by converting local currency values of stock-market indexes to U.S dollars and then dividing by a measure of the U.S price level - FDI to GDP ratio - Government expenditure on education - share of foreign equity ownership - share of exports to GDP - The Asian financial crisis was associated with a sharp reduction of economic growth in east Asia - Currency and banking crises with contemporaneously reduced values of economic growth and investment - Rates of economic growth in east Asia have rebounded in 1999-2000, but the permanence of this recovery is uncertain crisis had a long-term adverse effect an Lu - Labor quality in terms of skilled workers improves TFP growth - The key component of the longterm growth in the Singaporean economy is the quality of education of the labor force: skill and education forms an important component - The negative relationship between capital accumulation and TFP growth, thus suggest that must be sufficient "gestation" or "learningby-doing" effects in the economy before there are signs of positive TFP growth - Physical capital contribute most - Next to TFP on average, then to va n y te re ac th si 97 - Physical capital - Human capital eg cd jg hg ad ju y th yi pl n ua al Indonesia, Malaysia, Philippines ,Singapore, Thailand, Taiwan, Korea with production function - TFP Human capital - Philippines: TFP have negative effect on growth in most times n oi m ll fu at nh z z k jm ht vb om l.c gm an Lu va n y te re is a crucial first step in extracting appropriate lessons from East Asian growth experiences: (1) Asian growth the maintenance of high rates of physical and human capital accumulation over a number of decades a willingness to make the sacrifices of current consumption necessary to invest for the future? (2) Or has the key been the less costly approach of adopting existing technologies from more advanced economies, which may be associated with increased capital accumulation along the way? va P.Bosworth (1996) ”Economic Growth in East AsiaAccumulation versus Assimilation” ac th si 98 eg cd jg hg ad ju y th yi pl n ua al Svetlana Ledyaeva and Mikael Linden, 2008 “Determinants of Economic Growth: Empirical Evidence from Russian Regions” 74 Russian regions; Utilize both panel and crosssectional data 1996-2005 19 Tran Tho Dat (2004) “Total Factor Productivity Growth Survey Report-Vietnam”, P322-350 focuses mainly on TFP and its determinants Vietnam 1986-2000 20 Yan Wang, Yudong Yao - Investigating the determinants of China 1952-1999 n va 18 Economic growth Growth accounting Economic growth - Natural logarithm of per capita domestic investment - Natural logarithm of per capita export - Natural logarithm of resource index - Natural logarithm of per capita FDI oi m ll fu Dynamic Panel data examined empirically determinants of short-run economic growth in Russian regions 19962004; modified Barro Sala-IMartin empirical framework for the neoclassical production function model Growth accounting framework based upon an aggregate production function at nh z z k jm ht vb TFP om l.c gm - Human capital - Technology an Lu - Initial conditions (conditional convergence), domestic investment and exports are the most important ones for stimulating economic growth in Russia - Natural resource not contributed significantly, although the Russian economy is traditionally considered to rely heavily on natural resources - Export-led growth seems to be important in Russia during transition - FDI seems not to be important as a growth determinant in Russia FDI has positive effect on economic growth while in high-income regions it has negative effect - To achieve sustainable growth, the economy needs a second wave of reforms concentrating on greater improvement in efficiency rather than on more inputs - Efficiency growth has greatly contributed to GDP growth In addition, labor productivity suggest the sustainable nature of economic growth in Vietnam - (1) labor reallocation in economic restructuring can greatly improve overall productivity; - (2) Combination of FDI and absorption capacity of the economy plays an important role in efficiency gains - The contribution of physical capital is the most important source va n y te re ac th si 99 - Human capital - TFP eg cd jg hg ad ju y th yi pl n ua al framework of output growth, with a 56.8% share for the pre-reforrn period, with a 48.3% share for the reform period - The accumulation of human capita was quite rapid and contributed significantly to growth and welfare, but declined significantly in the reform period in 1978-99 - The growth of TFP still plays positive and significant role during the reform period, but the negative productivity growth during the prereform period 1952-1977 n oi m ll fu at nh China's growth - Shed light on the relative importance of factor accumulation (physical capital, labor and human capital) versus the growth of TFP va (2001) “Sources of China's economic growth, 1952-99incorporating human capital accumulation” z z k jm ht vb - The End - om l.c gm an Lu va n y te re ac th si 100 eg cd jg hg t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 101