...ECON3007 Economic Policy Analysis Topic: Institutions and Economic Reforms Wendy Carlin This topic focuses on the role of institutions in economic growth and the implications of this for the design of economic reforms. We examine why some large-scale economic reforms have been surprisingly successful and others have been disappointing. It will be argued that the consistency between existing institutions in the economy and the reforms is an important factor in determining reform success. We look at property rights and contracting institutions, at the experience of transition economies – both in the former Soviet bloc and China and at reform policies including privatization. The empirical techniques that we study include cross-sectional and panel regressions using aggregate (i.e. country-level) data and micro-economic data. Key readings: Institutions and growth: Acemoglu, D., Johnson, S. and Robinson, J. A. (2001) (AJR) “The Colonial Origins of Comparative Development: An Empirical Investigation”. The American Economic Review, Volume 91, Number 5. Use the UCL Economic Journals page and choose the Atypon link. Acemoglu, D., Johnson, S. (2005) (AJ) “Unbundling Institutions” Journal of Political Economy Volume 113, Number 5, 949-995. Use the UCL Economic Journals page. Deaton, A. (2009) ‘Instruments of Development: Randomization in the Tropics and the Search for the Elusive Keys to Economic Development’. NBER Working Paper 14690. Use google. Transition: China and Russia ...
Words: 1359 - Pages: 6
...Introduction In modern economic society, while the global countries economic become more and more integrated, each member country focuses on the financial developments and economic growth, so that they can occupy one position in the modern competitive economic environment. Financial development involve lots of factors, including producing information about possible investments and allocating capital; monitoring the firm performance and corporate governance; trading, diversification, and management of risk; mobilization and pooling of savings; and easing the exchange of goods and service. Usually the financial development level is primarily determined by the local institutional quality, the extent of government police, geographic elements, native income level and cultural tradition. These factors formed the economic environment in which the banks and other financial firms to make decision for investment project and exogenous financing, furthermore, the customers decide whether consumption or saving, moreover, the financial intermediaries finance the fund in which approach from savers to borrowers. The well financial system can perfect the effect of information, enforcement and transaction cost on the saving rate, investment decision and technological innovation, and steady state growth rate. Financial market channel the fund to investment opportunities to get the profit, so if the financial system cannot work well, the economic growth also more or less affected. The essay mainly...
Words: 3225 - Pages: 13
...Even their most ardent supporters now concede that growth has been below expectations in Latin America (and the “transition crisis” deeper and more sustained than expected in former socialist economies). “is that there is no unique universal set of rules…. [W]e need to get away from formulae and the search for elusive ‘best practices’….” (p. xiii).4 The record - RESULTS Here is how Learning from Reform summarizes the surprises of the 1990s. First, there was an unexpectedly deep and prolonged collapse in output in countries making the transition from communism to market economies. More than a decade into the transition, many countries had still not caught up to their 1990 levels of output. Second, Sub-Saharan Africa failed to take off, despite significant policy reform, improvements in the political and external environments, and continued foreign aid. The successes were few—with Uganda, Tanzania, and Mozambique the most commonly cited instances—and remained fragile more than a decade later. Third, there were frequent and painful financial crises in Latin America, East Asia, Russia, and Turkey. Most had remained unpredicted by financial markets and economists until capital flows started to reverse very suddenly. Fourth, the Latin American recovery in the first half of the 1990s proved short-lived. The 1990s as a whole saw less growth in Latin America in per-capita GDP than in 1950-80, despite the dismantling of the state-led, populist, and protectionist policy regimes...
Words: 1654 - Pages: 7
...literature review discusses objectives of financial development and economic growth as well as existing relationship of this concept. Financial development is strongly connected with economic situation, but we do not know for sure if this always implies economic growth. There are many factors which influence relationship between financial development and economic growth and its effects such as financial liberalization, government ownership of the banks, monetary policy and rate of inflation, institutional and regulatory framework of financial markets in particular countries. Many researchers are trying to give the right questions and explanations on this field but still there are unresolved issues and implications which give open space for future investigations. Table of Contents 1. Introduction………………………………………………………….2 2. Literature Review……………………………………………………2 2.1. Relationship between Financial Development and Economic Growth………2 2.2. Empirical methodologies……………………………………………………..5 2.3. Effects of Merger and Acquisitions in Bank Industry on relationship between financial development and economic growth…………………………………7 3. Conclusion…………………………………………………………....8 4. Reference List………………………………………………………..9 1. Introduction Financial system is a basis of current economic trends and there is no possibility of doing businesses and...
Words: 2803 - Pages: 12
...on Businesses Paul C. Batt Liberty University Introduction Important tools that governments use are monetary policies. These policies help regulate economic activity. Marc Labonte (2012) states that the Federal Reserve defines monetary policy “as actions taken to influence the availability and cost of money and credit.” These actions help control the money flow through the policies in which is parallel to the political and economic preferences. Monetary policy can influence the economy regionally and globally. These actions affect prices, employment, growth, and other areas. Through these changes, monetary policy influences consumers and businesses willingness to spend. Goals of Monetary Policy Monetary policy goals are consistent with the policy of the Federal Reserve Act. The Federal Reserve through it’s Board of Governors and Federal Open Market Committee seek certain goals. These goals include stable prices, long-term interest rates, and maximum employment. Stable prices help sustain maximum growth and employment. Stable pricing in the long-term helps control goods, services, and materials from outside influences of inflation. Stable pricing encourages savings and businesses are encouraged to invest more. Stable pricing in the long-run can compromise stability on the short-run. Short-run effects can lessen price pressures, in which this can move to easing in policy. With restrain inflationary pressure could lead to aggravating inflation, this...
Words: 2543 - Pages: 11
...Introduction The goal of the paper is to focus on the countries of the Middle East and North Africa (MENA) region and particularly those of the of the South of the Mediterranean, and examine the relationship between insurance – defined as the capability of covering the cost of future harmful events-and entrepreneurship broadly defined as the capability to start independent businesses activities and possibly introduce new combinations of productive factors. The analysis is based on the distinction between uncertainty and risk that Knight unveiled (Knight, 2012) arguing that risk involves situations where a decision maker face unknown outcomes but known ex-ante probability distributions, while uncertainty is characterized by situations in which the probability distribution of a random outcome is unknown. Consequently, while risk can be covered by insurance, uncertainty normally is not. The other pillar of this research is the role of entrepreneurship; a factor that the economic literature has not considered for long time and that in the last 20 years has become the center of any strategy for economic growth in emerging and advanced economies. The discovery of the role of entrepreneurs dates back to Schumpeter (Schumpeter, 1982a) who regards entrepreneurs as the engine of economic growth. Schumpeter (Schumpeter, 1982a) has a view of the entrepreneur as the one who introduces innovation, but does not bear the risk. The study intends to investigate on two main aspects: whether insurance...
Words: 18799 - Pages: 76
...Abstract Financial intermediation is an important activity in the economy because it allows funds to be channeled from people who might otherwise not put them to productive use to people who will ultimately put the funds to productive uses. In line with the assumption that banking sector plays an important role in financing the investment projects, successive governments in Nigeria have carried out reforms and institutional innovations in the banking sector. The overall intention of these reforms has been to ensure financial stability so as to influence the growth of the economy and also enhance banks to play a critical role of financial intermediation in Nigeria. However, despite the fact that Nigerian banks have undergone series of restructuring/reforms aimed at strengthening the banks’ ability to efficient service delivery and fund the real sector, problems such as; inefficiency in allocating funds to the real sector, lack of long-dated funding, neglect of the core private sector in terms of credit extension, weak capacity of the banks to fund the real sector, low-level activities of banks, and illiquidity still lingers. This study therefore, examines empirically the impact of financial intermediation on the development of the Nigerian economy with the aim of determining the importance of financial intermediaries and its influence. This study found out that the financial intermediaries (banks) in Nigeria exhibit inefficiency and weak capacity in the allocation of funds to finance...
Words: 9809 - Pages: 40
...IMPACT OF DEMOCRACY ON ECONOMIC DEVELOPMENT Impact of Democracy on Economic Development (Student’s Name) Professor (Name) Political Science 25 April 2012 IMPACT OF DEMOCRACY ON ECONOMIC DEVELOPMENT Abstract IMPACT OF DEMOCRACY ON ECONOMIC DEVELOPMENT Impact of Democracy on Economic Development Introduction There is a need to put into proper perspective the impact of democracy on economic development. In recent years, the discourse about democracy and development has gained prominence. Countries with long history of democratic governance have been noted to be doing well economically. It is the view of this author that so far a comprehensive assessment of the full impact of democracy on economic development is yet to be done.Probably, the reason as to why this has been so is because there is an obvious assumption that democracy will always have a positive impact on economic development. It is worthwhile however, to move away from the sweeping generalization and put this issue into proper perspective. It is proper to establish the full impact of democracy. In this study, the author will seek to establish the impact of democracy on economic development. Since its origins in ancient Greece, when Greeks created city states as communities...
Words: 812 - Pages: 4
...examine the relationship between financial development and income inequality. In doing so, we have used Bangladeshi data for the period 1985-2006. We have employed auto-regressive distributed lag (ARDL) methodology for cointegration. We have also carried out sensitivity analysis and stability tests. Our findings suggest that financial development increases income inequality. Economic growth seems to equalize income distribution. Inflation and trade openness also worsen income inequality. Finally, income inequality is being increased by social spending in the country over long run. This study provides new directions for policy makers to reduce income inequality to share the fruits of economic development among the wider spectrum of the society. Keywords: Financial sector, development, trade openness, income inequality, Bangladesh JEL Classifications: D14, D33, F1 INTRODUCTION Economic growth and its correlates have been the focus of a large number of studies over the recent past. These studies primarily put emphasis on various aspects or sources of growth. One of the important correlates of economic growth that has been studied prominently is the extent of financial sector development. The positive and robust relationship between well-functioning financial system and economic growth is empirically a well established fact. Higher levels of financial development are significantly and robustly correlated with current and future rates of economic growth,...
Words: 1726 - Pages: 7
...Relationship between Real Estate and Financial Sectors in Dubai Economy Dr. Eisa Abdelgalil Data Management and Research Department Table of Contents Table of Contents............................................................................................................i ......................................................................................................................ﻣﻠﺨﺺ ﺗﻨﻔﻴﺬيii Executive Summary ..................................................................................................... iii 1. Introduction................................................................................................................1 1.1 Background ..........................................................................................................1 1.2 Objective ..............................................................................................................1 1.3 Research questions...............................................................................................1 1.4 Methodology and data..........................................................................................2 1.5 Outline of the study..............................................................................................2 2. Dynamic of Real Estate Market.................................................................................3 3. Impact of Real Estate on Financial Institutions ........................................................
Words: 6149 - Pages: 25
...CORRELATIONS BETWEEN CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH: THE CASE OF ROMANIA1 Laura OBREJA BRASOVEANU PhD, Associate Professor, Finance Departament, University of Economics, Bucharest, Romania E-mail: laura_obreja@yahoo.com Victor DRAGOTA2 PhD, University Professor, Finance Departament, University of Economics, Bucharest, Romania E-mail: victordragota@yahoo.com, victor.dragota@fin.ase.ro Delia CATARAMA PhD Candidate, Assistant Professor, Finance Departament, University of Economics, Bucharest, Romania E-mail: delia.catarama@fin.ase.ro Andreea SEMENESCU3 PhD Candidate, University Assistant, Finance Departament, University of Economics, Bucharest, Romania E-mail: asemenescu@yahoo.com Abstract: In the literature on endogenous growth, the link between capital markets development and economic growth has received much attention. Although there are many studies regarding this aspect, approaches on emergent ex-communist countries’ economies, especially for Romania, are very few comparatively to the general cases. Our paper examines the correlation between capital market development and economic growth in Romania using a regression function and VAR models. The results show that the capital market development is positively correlated with economic growth, with feed-back effect, but the strongest link is from economic growth to capital market, suggesting that financial development follows economic growth, economic growth determining financial institutions to change and...
Words: 5235 - Pages: 21
...THE EMPIRICAL ANALYSIS OF IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NIGERIA BY OKUNLOLA TUNDE S. MATRIC NO: 139191 September 2011 Being research work submitted to Department of Economics, Faculty of Social Sciences, University of Ibadan, in partial fulfillment of the requirement for the award of Bachelor of Science (B.Sc) in Economics CERCTIFICATION I hereby certify that this work was carried out by OKUNLOLA TUNDE S. of Matric No 139191 in the Department of Economics, Faculty of Social Sciences, University of Ibadan. …………………………………. ……………………………… Date Dr. B. Fowowe Supervisor DEDICATION My sole dedication goes to God almighty whose mercy has never ceased in changing me despite all odds, whose boundless love and vast grace is bringing to pass my childhood dreams and fantasies. ACKNOWLEDGMENT My deepest gratitude goes to my parents who always, tirelessly and sacrificially support me, trust me, care for me and love me despite all my short comings and even when it so difficult. May the lord reward you abundantly. And also to my supervisor, Dr. B. Fowowe, I say thank...
Words: 12592 - Pages: 51
...to execute. Energy, presents itself in diverse forms for the functioning of various machinery. Energy sources all around the world are crucial for production; a relation can thus be drawn between productivity levels and energy consumption. Renewable energy supply form solar, wind, geothermal, bio energy, hydropower, ocean, hydrogen and fuel Cells as well as green power are vital to our survival as a human race. These sources of energy are important because, they are clean and pose little danger to our environment than energy from fossil fuel. Additionally renewable energy...
Words: 7211 - Pages: 29
...Module Code: EO314 Module Title: ISSUES IN INTERNATIONAL ECONOMICS Module Convenor: Stephen Smith ID: 03004367 Topic: INTERNATIONAL TRADE This project will attempt to research and gain an understating of whether there is linkage between trade liberalisation and poverty in (SSA) sub Saharan Africa. The project will contain a balance of key analytical approaches and empirical evidence on trade liberalisation and economic growth. In the world of economics and politics, trade and poverty is one of the major issues which has been debated over last decade. On the international stage, there is a growing concern among super powers, African leaders, and other observers that the independence and credibility of the state continues to be endangered due to the negative balance of trade, heavy dependence on international aid and the high levels of indebtedness in Sub Saharan Africa. The debt relief has come to be viewed not only as a basic condition for arresting Africa’s socio-economic decline but also for stimulating and sustaining development. Consequently, debt has had an adverse impact on the majority of the population, poverty, unemployment and socio-economic, inequalities has increased, physical infrastructures has deteriorated, political and civil conflicts have worsened and corruption has become more persistent. The concern with how to tackle the debt crisis has led to a number of developments, however the main one is for the G-8 countries to have adopted...
Words: 3689 - Pages: 15
...Abstract Developing countries seeking to build their economy commonly look to attracting multi-national corporations (MNCs) through low cost labor and lucrative tax incentives plans in the hopes of creating a mutually benefiting relationship between both parties. However bringing in these outside businesses poses a legitimate threat to elite special interest groups already existing and thriving in the current economic state. MNCs must due their due diligence when selecting a potential host country and then determine the best strategy to deal with these groups in order to mitigate as much risk as possible. Contents Abstract ……………2. Contents……………………………………………………………………………………………………………………………………. 3 Intorduction 4 Literature Review 6 MNCs must determine the political environment 6 Why elite special interest groups exist 8 Strategies for dealing with elite special interest groups 9 Corupption………………………………………………………………………… 9 Assisting host government in creating a functioning economy………………… 11 Methodology 12 Conclusion 12 References 16 Multi-National Corporation’s Strategies for Special Interest Groups within a Host Country Research of developing countries has shown that economic growth is closely correlated to its cash flows and the quickest way for developing countries to increase those cash flows is through attracting new businesses. Technology has played a major role in the globalization of business and has made it much easier for corporations...
Words: 4358 - Pages: 18
