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This paper investigates the main postulations of the R&D based growth models that innovation is created in the R&D sectors and it enables sustainable economic growth, provided that there are constant returns to innovation in terms of R&D. The analysis employs various panel data techniques and uses patent and R&D data for 20 OECD and 10 Non-OECD countries for the period 1981–97. The results suggest a positive relationship between per capita GDP and innovation in both OECD and non-OECD countries, while the effect of R&D stock on innovation is significant only in the OECD countries with large markets. Although these results provide support for endogenous growth models, there is no evidence for constant returns to innovation in terms of R&D, implying that innovation does not lead to permanent increases in economic growth. However, these results do not necessarily suggest a rejection of R&D based growth models, given that neither patent nor R&D data capture the full range of innovation and R&D activities.
Investments: Stocks --- Labor --- Macroeconomics --- Production and Operations Management --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Personal Income, Wealth, and Their Distributions --- Labor Economics: General --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Investment & securities --- Labour --- income economics --- Stocks --- Human capital --- Personal income --- Total factor productivity --- Income --- Labor economics --- Industrial productivity --- United States --- Income economics
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The objective of this study is to investigate the drivers and constraints of growth and productivity in Guatemala and explore areas with high growth potential. Drawing on the historical growth experience of Guatemala and employing a range of analytical tools, this country analysis aims to provide an in-depth study of the drivers and constraints of the country's economic growth. The report first takes stock of the historical growth and macro performance of the country, before moving to a growth accounting exercise to understand the past drivers of the country's growth. In the same vein, the subsequent section analyzes aggregate trends in productivity, the engine of long-term growth, and its relation to the process of structural transformation. The study then uses a cross-country benchmarking and panel data regression analysis based on the growth diagnostic developed by Hausmann and others (2005) to identify the binding constraints to growth. Finally, the analysis presents the links between growth, diversification, and exports. This analysis relies on a wide range of analytical tools, which are applied to each of the six countries in the study to enable cross-country comparisons. Several quantitative methods are employed to provide an objective assessment of the drivers and constraints of growth in Guatemala, including the long-term growth model (LTGM), the computable general equilibrium model (CGE), growth diagnostics, and product space analyses. This same framework, analytical tools, and data are used for each Central American country to conduct a parallel analysis that enables meaningful cross-country comparisons. Therefore, given the wide breadth of the study, in terms of the methodologies used, subjects analyzed, and countries covered, it does not aim to analyze in depth each driver and constraint of growth and provide granular policy recommendations. The core objective of this study is to inform the policy makers and other interested parties about the country's strengths and weaknesses related to its growth, and to establish the analytical basis for subsequent investigations of specific areas.
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Under what conditions should grants be preferred to loans? To answer this question, we present a simple model à la Krugman (1988) and show that, for any given level of developmental assistance, the optimal degree of loan concessionality is positively associated with economic growth if countries are poor, have bad policies, and high debt obligations. We then test our model by estimating a modified growth model for a panel of developing countries, and find evidence supporting our predictions. Finally, we assess the determinants of current aid allocations and find that the degree of concessionality is negatively correlated with countries' levels of development.
Economic assistance. --- Grants-in-aid. --- Economic development. --- Federal grants --- Grants --- Intergovernmental fiscal relations --- Economic assistance, Domestic --- Local finance --- Economic aid --- Foreign aid program --- Foreign assistance --- Grants-in-aid, International --- International economic assistance --- International grants-in-aid --- Economic policy --- International economic relations --- Conditionality (International relations) --- Development, Economic --- Economic growth --- Growth, Economic --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Budgeting --- Exports and Imports --- Industries: Financial Services --- Environmental Economics --- Foreign Aid --- Debt --- Debt Management --- Sovereign Debt --- Economic Growth and Aggregate Productivity: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- National Budget --- Budget Systems --- Environmental Economics: General --- International Lending and Debt Problems --- Finance --- International economics --- Budgeting & financial management --- Environmental economics --- Loans --- Aid flows --- Budget planning and preparation --- Environment --- Concessional external borrowing --- Financial institutions --- Foreign aid --- Public financial management (PFM) --- External debt --- Economic assistance --- Budget --- Environmental sciences --- Debts, External --- United States
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This paper analyzes recent trends in Sweden's labor market regulations in relation to comparator economies and examines the relationship between labor market regulations and outcomes. The paper finds that the Swedish labor market responded more rapidly to the recent global financial crisis than the majority of the European Union economies, which helped Sweden to recover quickly. Sweden's hiring regulations are more flexible than those of many comparator economies, however, fixed-term contracts of short duration might have adverse consequences for the economy. In addition, Sweden's regulations on work during the weekly holidays and mandatory paid annual leave are stricter than those of the majority of comparator economies. Moreover, among the economies of the Organisation for Economic Co-operation and Development, Sweden has one of the largest differences in employment protection between permanent and temporary employees, which could lead to a segmented labor market, where insiders enjoy high job security and outsiders are largely marginalized. This could be cause for concern, given that Sweden has a higher share of involuntary temporary workers among youth and involuntary part-time workers than both the Nordic and European Union averages. While protecting employees is important, excessive protection, particularly if it differs across different types of employment contracts, has been shown to have adverse effects on welfare and economic performance.
Banks and Banking Reform --- Labor Management & Relations --- Labor Market Regulations and Flexibility --- Labor Markets --- Labor Policies --- Markets & Market Access --- Private Sector Development --- Productivity --- Social Protections and Labor --- Temporary Employment --- Unemployment --- Wage Determination
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Using firm-level data from more than 39,000 firms in 111 economies, this paper tests the hypothesis that corruption impedes productivity more at higher levels of regulation. The analysis finds that there is a significant negative relationship between corruption and firm productivity when regulation is high and an insignificant relationship when it is low. These findings are robust to different controls and specifications.
Access to Finance --- Business Environment --- Corporate Governance and Corruption --- Corruption --- Firm Productivity --- Private Sector Development --- Public Sector Development --- Public Sector Reform --- Regulation --- Service Delivery
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This paper analyzes recent trends in Sweden's labor market regulations in relation to comparator economies and examines the relationship between labor market regulations and outcomes. The paper finds that the Swedish labor market responded more rapidly to the recent global financial crisis than the majority of the European Union economies, which helped Sweden to recover quickly. Sweden's hiring regulations are more flexible than those of many comparator economies, however, fixed-term contracts of short duration might have adverse consequences for the economy. In addition, Sweden's regulations on work during the weekly holidays and mandatory paid annual leave are stricter than those of the majority of comparator economies. Moreover, among the economies of the Organisation for Economic Co-operation and Development, Sweden has one of the largest differences in employment protection between permanent and temporary employees, which could lead to a segmented labor market, where insiders enjoy high job security and outsiders are largely marginalized. This could be cause for concern, given that Sweden has a higher share of involuntary temporary workers among youth and involuntary part-time workers than both the Nordic and European Union averages. While protecting employees is important, excessive protection, particularly if it differs across different types of employment contracts, has been shown to have adverse effects on welfare and economic performance.
Banks and Banking Reform --- Labor Management & Relations --- Labor Market Regulations and Flexibility --- Labor Markets --- Labor Policies --- Markets & Market Access --- Private Sector Development --- Productivity --- Social Protections and Labor --- Temporary Employment --- Unemployment --- Wage Determination
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Panama's growth model is at crossroads and the country must be prepared for the new growth model. The objective of this study is to investigate the drivers and constraints of growth and productivity in Panama and explore areas with high growth potential. The value added of the study is to provide an in-depth analysis of the drivers and constraints of Panama's growth using a wide range of analytical tools. The analysis employs several quantitative methods to provide an objective assessment of the drivers and constraints of growth in Panama, including the long-term growth model (LTGM), computable general equilibrium model (CGE), growth diagnostics and product space analyses. The novelty of this study is to employ the same framework, analytical tools, and data to conduct a parallel analysis for each Central American country to allow for a meaningful cross-country comparison. Therefore, given the wide breadth of the study, in terms of the methodologies used, themes analyzed, and countries covered, it does not envisage to deep dive into each driver and constraint of growth and provide granular policy recommendations. The core objective of this study is to inform the policy makers and other interested parties about the country's strengths and weaknesses for its growth, and to establish the analytical basis for a subsequent investigation of specific areas.
Access To Finance --- Corruption --- Economic Growth --- Export Competitiveness --- Innovation --- Labor Market --- Macroeconomics and Economic Growth --- Social Protections and Labor --- Total Factor Productivity
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Despite advances in the growth reform agenda in the last decade, Honduras remains the second-poorest country in Central America, with one of the lowest growth rates in income per capita. The objective of this study is to investigate the drivers and constraints of growth and productivity in Honduras and explore areas with high growth potential. The value added of this study is to provide an in-depth analysis of the drivers and constraints of Honduras's growth using a wide range of analytical tools. According to the growth diagnostics methodology, this report finds that the areas preventing faster growth are: (i) corruption; (ii) security; (iii) property rights; (iv) innovative activities; and (v) access of small firms to finance. Tackling the identified growth constraints can help Honduras in the transition from an exporter of low-complexity products to an economy with higher share complex products. This report has identified several key areas in which Honduras lags its comparator and aspirational countries, but which can help boost productivity and growth over the medium to long term. They include: improving transparency, accountability, and rule of law; reducing crime and violence; creating an enabling environment for innovation; improving the rule of law to better protect property rights and reduce expropriation risk; increasing the access of finance to small firms; and coordinating with the private sector to identify missing public goods and design mechanism to provide them.
Access To Finance --- Business Environment --- Competitiveness and Competition Policy --- Corruption --- Economic Growth --- Export Competitiveness --- Innovation --- Labor Market --- Macroeconomics and Economic Growth --- Private Sector Development --- Property Rights --- Small and Medium Size Enterprises --- Social Protections and Labor --- Total Factor Productivity
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Central America comprises a diverse set of countries, including two high-middle-income countries (Costa Rica and Panama), two of the poorest countries in Latin America and the Caribbean (Honduras and Nicaragua), and two middle-income economies (Guatemala and El Salvador). Low productivity and weak institutions are behind the modest economic growth in Central America in recent years. Both the common features and striking differences among Central American countries provide a fertile ground for exploiting complementarities. Common features include: (i) strong economic links to the United States; (ii) high labor mobility across countries and a high level of informality; (iii) the relatively poor quality of infrastructure, including border crossings; (iv) a concentration of poverty in rural areas, with a low provision of public services, that affect particularly vulnerable groups such as indigenous and Afro-descendent populations; and (v) a high exposure to natural disasters and economic and financial volatility. The economies of each of the six countries in the sub-region were heavily affected by Coronavirus disease 2019 (COVID-19). In order to restore economic activity in the short run and increase potential output over the long run, Central America should launch coordinated policy action in five areas: (i) global value chain (GVCs); (ii) trade integration; (iii) formalization; (iv) management of volatility; and (v) remittances (for the northern Central American countries). The findings and recommendations emerging from the analyses are presented in the report.
Business Environment --- Economic Growth --- Export Competitiveness --- Fiscal Policy --- Foreign Direct Investment --- Global Value Chains and Business Clustering --- Investment Climate --- Labor Mobility --- Macroeconomics and Economic Growth --- Private Sector Development --- Productivity --- Remittances --- Trade Facilitation
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Using novel data on unemployment benefits and active labor market policies in 191 countries in 2019 and 2020, this paper investigates the patterns of unemployment benefits and active labor market policies and their relationship with labor market outcomes. This study is unique in that it covers a large number of developing as well as developed countries and examines the association of both unemployment benefits and active labor market policies with several labor market outcomes at different income levels. According to new data, in the first half of 2020, about 48 percent of countries had an unemployment benefit scheme compared to 82 percent that had some form of active labor market policy. The econometric analyses show that productivity growth has a positive relationship with both unemployment benefits and active labor market policies in upper-middle-income countries and with active labor market policies in low- and lower-middle-income countries, but a negative relationship with both unemployment benefits and active labor market policies in high-income countries. The findings also indicate a consistent negative association of active labor market policies with the rate of self-employment in all income groups and a negative association with the rate of employment in upper middle-income countries. These findings provide new insights on the patterns of unemployment benefits and active labor market policies and their interlinkages with labor market policies at different income levels.
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