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61. India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications

Author:
Arvind Subramanian
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
India changed its data sources and methodology for estimating real gross domestic product (GDP) for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth. Official estimates place annual average GDP growth between 2011-12 and 2016-17 at about 7 percent. We estimate that actual growth may have been about 4.5 percent with a 95 percent confidence interval of 3.5 - 5.5 percent. The evidence, based on disaggregated data from India and cross-sectional/panel regressions, is robust. Lending further credence to the evidence, part of the overestimation can be related to a key methodological change, which affected the measurement of the formal manufacturing sector. These findings alter our understanding of India’s growth performance after the Global Financial Crisis, from spectacular to solid. Two important policy implications follow: the entire national income accounts estimation should be revisited, harnessing new opportunities created by the Goods and Services Tax to significantly improve it; and restoring growth should be the urgent priority for the new government.
Topic:
GDP, Global Political Economy, Economic Growth, and Global Financial Crisis
Political Geography:
South Asia and India

62. Jordan: The Elements of a Growth Strategy

Author:
Ricardo Hausmann, Tim O'Brien, Miguel Angel Santos, Ana Grisanti, Semiray Kasoolu, Nikita Taniparti, Jorge Tapia, and Ricardo Villasmil
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In the decade 1999-2009, Jordan experienced an impressive growth acceleration, tripling its exports and increasing income per capita by 38%. Since then, a number of external shocks that include the Global Financial Crisis (2008-2009), the Arab Spring (2011), the Syrian Civil War (2011), and the emergence of the Islamic State (2014) have affected Jordan in significant ways and thrown its economy out of balance. Jordan’s debt-to-GDP ratio has ballooned from 55% (2009) to 94% (2018). The economy has continued to grow amidst massive fiscal adjustment and balance of payments constraints, but the large increase in population – by 50% between 2008 and 2017 – driven by massive waves of refugees has resulted in a 12% cumulative loss in income per capita (2010-2017). Moving forward, debt sustainability will require not only continued fiscal consolidation but also faster growth and international support to keep interest payments on the debt contained. We have developed an innovative framework to align Jordan’s growth strategy with its changing factor endowments. The framework incorporates service industries into an Economic Complexity analysis, utilizing the Dun and Bradstreet database, together with an evaluation of the evolution of Jordan’s comparative advantages over time. Combining several tools to identify critical constraints faced by sectors with the greatest potential, we have produced a roadmap with key elements of a strategy for Jordan to return to faster, more sustainable and more inclusive growth that is consistent with its emerging comparative advantages.
Topic:
Labor Issues, Women, GDP, International Development, and Economic Growth
Political Geography:
Middle East and Jordan

63. Financing for the Polish economy: prospects and threats

Author:
Andrzej Halesiak, Ernest Pytlarczyk, Mariusz Wieckowski, and Stefan Kawalec
Publication Date:
06-2019
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
In a properly functioning economy, finance has important role to play in making main sectors of the economy – production, trade, services – to thrive. One of the most important – and often unappreciated – channels by which finance affects the processes taking place in the real sector is the selection of investment projects. It is banks and financial intermediaries that to a great degree decide which projects are carried out in the economy at a given moment, and which are not. If financial institutions are excessively conservative (which today is often an effect of the tight regulatory environment), they will prefer low-risk projects with high levels of collateral (e.g. mortgage loans). A financial system oriented this way will rarely be a source of problems, but at the same time not inclined to finance innovative projects with high potential to benefit the economy. Thus for any economy, a very important question is whether its regulatory framework smartly balances both of these aspects: financial system safety and the need to take on risk. When analyzing the functioning of the financial system, it’s worth noting the gradual blurring of certain traditional boundaries. While decades ago households were the main source of savings in the economy, and the borrowers were enterprises and the public sector, today both households and companies are on both sides, as suppliers and receivers of capital. The boundary between the functioning of banks and capital markets is also increasingly blurred. Today banks operate broadly through the capital market, both as acquirers of securities and as issuers. One area that has been developing dynamically in recent years is the flow of financial resources bypassing traditional intermediaries: direct lending through the peer-to-peer (P2P - direct financing of a project by business partners) and crowdfunding platforms (fundraising by collecting money online).
Topic:
Demographics, GDP, Financial Markets, Economy, Banks, Investment, and Trade
Political Geography:
Europe and Poland

64. Corporate Social Responsibility Practice in Bhutan

Author:
Jigme Phuntsho and Sonam Zangmo
Publication Date:
04-2019
Content Type:
Journal Article
Journal:
Journal of Bhutan Studies
Institution:
Centre for Bhutan & GNH Studies (CBS)
Abstract:
Bhutan is one of the fastest growing economies in the world. Its GDP grew from a $167 million (M) in 1985 to approximately $2.51 billion (B) in 2017. Annual GDP growth rate has been between 6-8 percent in the past decade, and with a per capita GDP of $3,096, the country is expected to graduate from the Least Developed Countries (LDC) by 2021. The traditionally agrarian economy is gradually transforming with the declining share of agriculture in respect to the increasing contributions to GDP from secondary and tertiary sectors (Table 1). High economic growth has been driven largely by investment associated with hydropower development and the share of manufacturing and service industry fall below that of comparable middle-income countries (World Bank, 2017).
Topic:
GDP, Economy, Business, Corporate Accountability, and Social Responsibility
Political Geography:
South Asia and Bhutan

65. Economic Growth, External Debt and Export Relationship: The Case of Bhutan

Author:
Jigme Nidup
Publication Date:
04-2019
Content Type:
Journal Article
Journal:
Journal of Bhutan Studies
Institution:
Centre for Bhutan & GNH Studies (CBS)
Abstract:
Bhutan depends mostly on external debt for economic development. Most of its external debt is related to hydropower construction, which in total overshot its GDP by more than 100 percent. This has worried some sections of the society. However, Johansen’s cointegration test suggests that there is no long-term relationship between economic growth, external debt, external debt service and export in Bhutan. Further, findings from the unrestricted VAR indicate that even in the short-term, external debt and external debt service have insignificant relationship with economic growth, while it is the export that substantially helps the economy to grow. The Impulse Response Analysis (IRS) suggests that over a mediumterm period, a shock from external debt, external debt service can positively influence economic growth at least up to four and half years after initial negative effect. Whereas, export is found to positively impact growth all the way up to fourth year. Therefore, Bhutanese government should focus more into producing export-oriented goods and services in order to spur economic growth.
Topic:
Debt, GDP, Economic Growth, and Economic Development
Political Geography:
South Asia and Bhutan

66. Quantifying the Size and Development of the Shadow Economy in Swaziland

Author:
Eswatini Economic Policy Analysis and Research Centre
Publication Date:
03-2019
Content Type:
Policy Brief
Institution:
Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:
The size of the shadow economy has been declining at a slow rate over the past 16 years in Swaziland. The size of the shadow economy was found to be 37.4 % in 2016. This was equivalent to E20.5 billion of the Gross Domestic Product (GDP) in 2016. The key drives of the shadow economy in Swaziland were found to be the tax burden (direct and indirect taxation), self-employment, the importance of the agricultural sector and the institutional quality of governance institutions. For the country to fast tract its developmental agenda (Vision 2022), it is important for the country to enact policies that will harness and transition the shadow economy into the mainstream economy by targeting the drivers of the shadow economy locally.
Topic:
Development, Economics, Governance, and GDP
Political Geography:
Africa and Swaziland

67. Assessing the Relationship between Brain Drain and the Economy of Eswatini

Author:
Zamokuhle Manana
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:
Eswatini has been experiencing the brain drain phenomenon since the early 90s. Previous studies on the phenomenon attribute the brain drain to high unemployment and the labour market’s inability to absorb emaSwati. With that said, there are still no studies have been conducted to quantify the impacts of brain drain on the economy of the country given its upward trajectory. It is on this premise, that this paper quantifies and assess the relationship between brain drain and economic growth in the short-run. To this end, the study employs secondary annual time series data from the World Bank Indicators for the period 1991 to 2017. The study employs the Bounds approach for co-integration and the short-run Autoregressive Distributed Lag (ARDL) model as estimation techniques. The bounds test found that there is no long-run equilibrium relationship between the variables. According to the ARDL short-run model the study found that all other things being equal, when brain drain increases by 1 percent at a given time period, Gross Domestic Product increase by E171 million the following year in the short-run. Furthermore, the Granger causality test reveals a unidirectional relationship running from Gross Domestic Product to brain drain at the 1% significance level, that is, past economic growth trends is an important predictor of future brain drain trends.
Topic:
Economics, Intelligence, GDP, and Unemployment
Political Geography:
Africa and Eswatini

68. Getting Africa’s Urbanization Right

Author:
Jamal Saghir
Publication Date:
12-2018
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University (ISID)
Abstract:
Sub-Saharan African countries are experiencing rapid urban growth challenging policy makers to provide infrastructure and services under tight fiscal constraints. Urbanization has the potential to boost economic growth, attract capital, create jobs, and fight poverty; but cities in Africa are failing to reap these benefits. More than half of SSA population lives in urban areas, but 55% of these citizens are established in informal settlements underserved by public services and threatened by natural disasters. GDP in Africa is mainly concentrated around urban areas proving that national economic growth depends on the productivity of the cities. Urban development should be a national priority sustained by policy reforms, strategic investments in infrastructure, decentralization, and stronger inter-governmental systems and institutions.
Topic:
Development, Urbanization, GDP, and Economic Growth
Political Geography:
Africa

69. Redefining Liquidity for Monetary Policy

Author:
Kyunghun Kim, Il Houng Lee, and Won Shim
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper proposes a monetary aggregate “Liquidity” that could serve as a useful indicator for gauging the appropriateness of monetary policy. If liquidity rises above a certain threshold, it is signaling that monetary policy is losing traction due to structural and other impediments even when the inflation gap remains open. This indicator supplements the financial cycle approach but adds value by providing a benchmark that is derived from the national account, and not based on its own trend. Over the last two decades, each time this measure rose above the threshold range, it was followed by a decline in GDP growth. The latter was greater when accompanied by a high physical asset value to GDP, e.g., an elevated property market.
Topic:
Monetary Policy, GDP, Economic Growth, Property, and Liquidity
Political Geography:
Asia, Korea, and Global Focus

70. Correlating a Country’s Economic Output with its Level of Export Controls

Author:
David Albright, Sarah Burkhard, Allison Lach, Bridget Leahy, and Andrea Stricker
Publication Date:
04-2018
Content Type:
Special Report
Institution:
Institute for Science and International Security
Abstract:
The Peddling Peril Index (PPI) for 2017 is a strategic export control ranking of 200 countries, territories, and entities produced by the Institute.1 It evaluates states as to the effectiveness of their strategic export control systems. In this report, we evaluate the countries ranked in the PPI according to their Volume of Exports and Gross Domestic Product (GDP), both absolute and per capita2. This evaluation uses data on volume of exports and GDP, measured in U.S. dollars, as published by the United Nations and the World Bank. The nature of the exports for each country was not evaluated. The report focuses on the top and bottom 25 percent of countries by export volume (100 countries), GDP (100 countries), and GDP per capita (100 countries). It finds that six countries in particular deserve additional scrutiny due to their weak export controls and high volume of exports. They have very low PPI scores, meaning they do not have adequate export controls in place.3 They are: Indonesia, Nigeria, Kuwait, Viet Nam, Iraq, and Iran (Islamic Rep. of). Two additional countries, Colombia and Egypt, are identified as having relatively high GDP or GDP per capita, but exceptionally low PPI rankings. In general, countries with lower GDP per capita did worse in PPI performance, which highlights the need to tailor export controls in these countries to their resources. Chapter 12 of the PPI report describes several ways in which to do so, ensuring that the countries would have basic but adequate strategic export controls in place.
Topic:
GDP, Economy, Exports, and Illegal Trade
Political Geography:
Iraq, Iran, Indonesia, Colombia, Egypt, and Nigeria