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20 pages, 647 KiB

Open AccessEditor’s ChoiceArticle

COVID-19, Economic Policies and Public Debt Sustainability in Italy

by Pompeo Della Posta, Enrico Marelli and Marcello Signorelli

Sustainability 2022, 14(8), 4691; https://doi.org/10.3390/su14084691 - 14 Apr 2022

Cited by 6 | Viewed by 4132 | Correction

Abstract

We analyze the conditions for public debt-to-GDP ratio stability extending the Domar’s approach by including the interaction between the government’s reaction function and the private sector’s reaction function, and considering the impact of 2020–2021 pandemic shock and the monetary and fiscal policy responses, [...] Read more.

We analyze the conditions for public debt-to-GDP ratio stability extending the Domar’s approach by including the interaction between the government’s reaction function and the private sector’s reaction function, and considering the impact of 2020–2021 pandemic shock and the monetary and fiscal policy responses, with simulations applied to the Italian case. The outcomes of the numerical simulations show the crucial importance of ECB extraordinary monetary policies, of the NGEU and, to lesser extent, of national expansionary fiscal policies adopted during pandemic shock; both European wide monetary and fiscal policies actually increase the sustainability area avoiding the high risk of sovereign debt crisis in Italy (and other peripheral Eurozone countries). The stabilizing effect of GDP growth, hopefully resulting from the NGEU policy, is also simulated in the paper. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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22 pages, 1046 KiB

Open AccessArticle

The Effect of Labor Reallocation and Economic Growth in China

by Shengqin Wu, Degang Yang, Fuqiang Xia, Xinhuan Zhang, Jinwei Huo, Tianyi Cai and Jing Sun

Sustainability 2022, 14(7), 4312; https://doi.org/10.3390/su14074312 - 5 Apr 2022

Cited by 5 | Viewed by 2363

Abstract

In recent years, China’s economic growth rate has slowed down significantly, exceeding the normal range of cyclical fluctuations in terms of declining rate and period. However, the research on the structural problems of the economic slowdown from the sector level is still limited. [...] Read more.

In recent years, China’s economic growth rate has slowed down significantly, exceeding the normal range of cyclical fluctuations in terms of declining rate and period. However, the research on the structural problems of the economic slowdown from the sector level is still limited. This paper uses a novel index decomposition method to decompose the covariant effect according to the influence of factors. It separates the labor input effect (LIE), labor reallocation effect (LRE), and labor productivity effect (LPE) from China’s economic growth rate from 1989 to 2019. The evolving characteristics and influence of these effects are revealed. It also focuses on the structural problems of the economic slowdown caused by the LRE. The study found that: (i) the economic contribution rate of LIE declined during the study period and had recently shown a negative value; (ii) the economic contribution rate of LRE peaked in 2014 and then rapidly declined; (iii) LPE has always been an essential contributor to China’s economic growth, with an annual contribution rate of 80%. The key factors behind China’s downward economic growth are the decline of the new labor force input, the weakening of LRE, and the technological progress rate in some sectors that have declined. The analysis of the LRE found that 37% of the economic slowdown could be explained by it. The reason behind economic slowdown lies in how the labor force transfers: (i) from agriculture to non-modern services without manufacturing; and (ii) from high-productivity sectors (usually manufacturing) to low-productivity sectors (usually non-modern services). In order to reduce the downward pressure of economic growth, future development intervention measures should focus on improving the employment absorption capacity of manufacturing, enabling enterprise innovation, correcting distorted industrial development policies, and prudently treating environmental protection policies and industrial upgrading policies. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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11 pages, 210 KiB

Open AccessArticle

The Unintended Consequences of Urban Community Infrastructure Investment for Consumption in China

by Congliang Wu and Ning Zhang

Sustainability 2022, 14(6), 3661; https://doi.org/10.3390/su14063661 - 21 Mar 2022

Viewed by 1727

Abstract

Background: At a critical stage of the shift of economic growth, this work studied urban community infrastructure’s driving role in consumption, discusses the causes and action mechanisms of infrastructure in promoting residents’ consumption. Methods: Based on micro-household survey data, applying probit regression. Result: [...] Read more.

Background: At a critical stage of the shift of economic growth, this work studied urban community infrastructure’s driving role in consumption, discusses the causes and action mechanisms of infrastructure in promoting residents’ consumption. Methods: Based on micro-household survey data, applying probit regression. Result: We found that community infrastructure, divided according to either its engineering or its service nature, has a great positive externality, significantly increasing the proportion of residents’ consumption, and that the driving force behind consumption in urban central areas, transportation, and environmental protection infrastructure is more obvious. Good urban community infrastructure facilitates residents’ production and promotes the efficient circulation of information, resources, and factors; improves residents’ subjective expectations; and brings more consumption opportunities so that community infrastructure significantly improves residents’ probability of consumption. Conclusion: In the context of economic transformation to a high-quality economy, we should pay attention to the key role of community infrastructure investment in structural transformation and choose urban central areas, capital-intensive industries, and transportation and environmental protection infrastructure as the investment focus so as to improve the consumption returns brought by infrastructure and achieve the transformation of the economy from an investment-driven one to an innovation-driven one. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

30 pages, 1470 KiB

Open AccessArticle

How Does New Infrastructure Investment Affect Economic Growth Quality? Empirical Evidence from China

by Xin Du, Hengming Zhang and Yawen Han

Sustainability 2022, 14(6), 3511; https://doi.org/10.3390/su14063511 - 16 Mar 2022

Cited by 29 | Viewed by 21136

Abstract

The current phase of the technological revolution and the accelerated rate of industrial change have encouraged the structural transformation of global infrastructure investment. This study aims to identify and evaluate the impact of new infrastructure investment on economic growth quality. This paper explains [...] Read more.

The current phase of the technological revolution and the accelerated rate of industrial change have encouraged the structural transformation of global infrastructure investment. This study aims to identify and evaluate the impact of new infrastructure investment on economic growth quality. This paper explains the theoretical mechanisms in terms of their effects on technological innovation, industrial structure, and productivity, using the three-dimensional analysis framework of economic growth conditions, process, and results. We then carry out an empirical examination based on provincial panel data for China from 2004 to 2019. The findings demonstrate that new infrastructure investment can significantly improve economic growth quality, and this conclusion still seems valid after conducting endogeneity treatments and robustness tests. Further mechanism evaluations indicate that new infrastructure investments contribute to boosting economic growth quality in terms of the condition, process, and results of economic growth by promoting technological innovation, improving industrial structure, and enhancing production efficiency. Moreover, the magnitude and mechanism of the positive effects differ depending on the heterogeneity of the region examined. In terms of the nonlinear change characteristics, the significant dual-threshold effect reveals that the marginal effects of new infrastructure investment on economic growth quality tend to be incremental under the threshold condition. This study provides a theoretical and factual basis for governments to enforce new infrastructure investments in the digital economy era, and it also has some value as a reference regarding the economic sustainability of developing countries. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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15 pages, 935 KiB

Open AccessArticle

Key Drivers of Public Debt Levels: Empirical Evidence from Africa

by Seth Nana Kwame Appiah-Kubi, Karel Malec, Joseph Phiri, Mikhail Krivko, Kamil Maitah, Mansoor Maitah and Luboš Smutka

Sustainability 2022, 14(3), 1220; https://doi.org/10.3390/su14031220 - 21 Jan 2022

Cited by 8 | Viewed by 5302

Abstract

The rising public debt level in Africa and the sustainability of that debt remains an important research agenda. As such, understanding the factors that impact the rising public debt level in Africa remains an important research agenda. Our paper investigates the key determining [...] Read more.

The rising public debt level in Africa and the sustainability of that debt remains an important research agenda. As such, understanding the factors that impact the rising public debt level in Africa remains an important research agenda. Our paper investigates the key determining drivers that have a direct and indirect impact on the rising level of public debt in Africa from a panel of 47 African nations for the period 2000–2018. Using the generalized method of moments (GMM) and fixed effects two-stage least squares (IV-FE) methodological approach the study confirms that a rise in the corruption level leads to an increase in the public debt in Africa. Our findings additionally indicate that government investment enhances the positive and significant association with public debt levels in the sampled countries. Our result revealed that government consumption and tax revenue have a significant negative relationship with the levels of public debt in Africa. Lastly, our results showed that military expenditure has a positive but insignificant relationship with public debt levels in Africa. In terms of policy recommendation, the study suggests African countries should intensify the fight against corruption and strengthen political and governance institutions that will help reduce public debt levels and promote economic growth and development. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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16 pages, 319 KiB

Open AccessArticle

Linking FDI and Sustainable Environment in EU Countries

by Adina Dornean, Irina Chiriac and Valentina Diana Rusu

Sustainability 2022, 14(1), 196; https://doi.org/10.3390/su14010196 - 25 Dec 2021

Cited by 11 | Viewed by 4266

Abstract

The aim of this study is to emphasize the link between the foreign direct investments (FDIs) and the sustainable environment in EU countries. We also focus on investigating the influence of other factors related to business environment on FDIs, considering the investors’ sustainable [...] Read more.

The aim of this study is to emphasize the link between the foreign direct investments (FDIs) and the sustainable environment in EU countries. We also focus on investigating the influence of other factors related to business environment on FDIs, considering the investors’ sustainable choice for the host countries, grouped according to FTSE Russell criteria. Using panel methodology and applying Ordinary Least Squares (OLS) method of data analysis, the authors reached the conclusion that a better-rated business environment, with concern for sustainability, has more of a chance to attract larger sums of FDIs, mostly in the case of developed economies. This fact proves that the main advantage considered by a foreign investor in developed EU countries is represented by CO₂ emissions (sustainable environment) and a good ease of doing business environment. The study highlights the factors that influence the decision of investing in developed countries, rather than in emerging and frontier ones. This paper contributes to the existing literature by identifying the group of countries which need a more sustainable approach to attract a large amount of FDIs, given that the inflow of FDIs is a crucial factor of economic growth, a possible source of innovation and technology, and a way to reduce poverty. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

18 pages, 388 KiB

Open AccessArticle

The Use of Decomposition Methods to Understand the Economic Growth Gap between Latin America and East Asia

by Beatriz Barrado, Gregorio Gimenez and Jaime Sanaú

Sustainability 2021, 13(12), 6674; https://doi.org/10.3390/su13126674 - 11 Jun 2021

Cited by 2 | Viewed by 2082

Abstract

Understanding how growth factors contribute to explaining the large differences in growth rates across countries remains an important research agenda. The common approach to exploring this issue is based on the use of multiple linear regression analyses. This work contributes to growth literature [...] Read more.

Understanding how growth factors contribute to explaining the large differences in growth rates across countries remains an important research agenda. The common approach to exploring this issue is based on the use of multiple linear regression analyses. This work contributes to growth literature by applying a new perspective based on the use of variance decomposition procedures: Shapley–Owen–Shorrocks and Oaxaca–Blinder. These methodologies have four main advantages with respect to traditional methodologies: they make possible the quantification of the relative contribution of each factor to economic growth, they allow us to estimate the efficiency in the use of the endowments of each factor, they can be used with any functional form and they can be used with estimation methods that are robust regarding endogeneity issues. We illustrate these advantages by analyzing the causes of the economic growth gap between Latin America and East Asia over the period 1980–2014. We find that the economic growth divergence between the two regions can be primarily explained by the differences in institutions and physical capital. In addition, the results indicate that the higher East Asian performance is not only due to its higher levels of endowments in these factors, but also to the higher efficiency in its use. We connect our results with the 2030 Agenda for Sustainable Development. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

18 pages, 2494 KiB

Open AccessArticle

Defence Expenditure–Government Debt Nexus in the Context of Sustainability in Selected Small European Union Countries

by Gitana Dudzevičiūtė, Vida Česnuitytė and Dalia Prakapienė

Sustainability 2021, 13(12), 6669; https://doi.org/10.3390/su13126669 - 11 Jun 2021

Cited by 6 | Viewed by 3107

Abstract

This paper explores the relationship between defence expenditure and government debt in small European Union countries that are members of NATO, such as Luxembourg, Lithuania, Latvia, Estonia, DRenmark, Slovakia, and Slovenia. The investigation used Eurostat data in relation to gross government debt, as [...] Read more.

This paper explores the relationship between defence expenditure and government debt in small European Union countries that are members of NATO, such as Luxembourg, Lithuania, Latvia, Estonia, DRenmark, Slovakia, and Slovenia. The investigation used Eurostat data in relation to gross government debt, as well as NATO information regarding defence expenditure as a share of GDP and its distribution by main category for the period between 2005 and 2019. The authors applied descriptive statistics and methods of multivariate statistics: Spearman’s correlation, the ANOVA test, and Life tables. Taking into consideration the tendencies of variables in all examined countries, the results show that the share of defence expenditure in GDP correlates statistically significantly and negatively with government gross debt. Latvia, Slovakia, and Slovenia revealed statistically significant relationships between variables, while Luxembourg, Denmark and Lithuania insignificant. In Estonia, the relationship between variables is strong and positive. Additionally, the investigation shows that, whether for increasing defence expenditure or for stable or decreasing defence expenditure, the trajectories of government debt have no clear interrelation in explored countries. Therefore, the cause of government debt by means of defence expenditure alone can only be partially explained. The insights that were drawn from this study could be applied to government finance management processes, as well as to ensure both national security and the achievement of the Sustainable Development Goals 2030. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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16 pages, 452 KiB

Open AccessArticle

Investment Portfolio, Democratic Accountability, Poverty and Income Inequality Nexus in Pakistan: A Way to Social Sustainability

by Muhammad Shahid Hassan, Haider Mahmood, Muhammad Ibrahim Saeed, Tarek Tawfik Yousef Alkhateeb, Noman Arshed and Doaa H. I. Mahmoud

Sustainability 2021, 13(11), 6411; https://doi.org/10.3390/su13116411 - 4 Jun 2021

Cited by 10 | Viewed by 2900

Abstract

Institutions help to streamline the economic activity-related procedures, where government intervention might be involved. Institutions also play a significant role in social sustainability. The findings using the Autoregressive Distributed Lag approach to cointegration for the period from 1984–2019 reveal that investment portfolio and [...] Read more.

Institutions help to streamline the economic activity-related procedures, where government intervention might be involved. Institutions also play a significant role in social sustainability. The findings using the Autoregressive Distributed Lag approach to cointegration for the period from 1984–2019 reveal that investment portfolio and democratic accountability reduce poverty in Pakistan both in the long and short run. Moreover, democratic accountability helps to reduce income inequality, but the investment portfolio’s role is not significant. The literacy rate helps to reduce income inequality, and inflation increases poverty and income inequality. The remittances increase income inequality, and urbanization increases poverty. To eradicate poverty and income inequality, the governments should be accountable for their actions to the general public while they remain in power. If they do not deliver as per their manifestoes, they will not be reelected in the next election. Moreover, there is a dire need to redefine the role of an investment portfolio to reduce the risk of investment. So, investments would increase economic activities and could reduce poverty and income inequality. This study contributes to the literature by inquiring about the role of the investment portfolio and democratic accountability in social sustainability by reducing poverty and income inequality. This study only considers Pakistan’s economy due to limitations of poverty data availability in other countries. The scope could further be broadened by accessing data for a wider Asia region to test the role of the investment portfolio and democratic accountability to reduce poverty and income inequality. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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24 pages, 583 KiB

Open AccessArticle

Are International Indices Good Predictors of Economic Growth? Panel Data and Cluster Analysis for European Union Countries

by Manuel Carlos Nogueira and Mara Madaleno

Sustainability 2021, 13(11), 6003; https://doi.org/10.3390/su13116003 - 26 May 2021

Cited by 12 | Viewed by 3022

Abstract

Every year, news about the publication of rankings and scores of important international indexes are highlighted, with some of the most prestigious being the Global Competitiveness Index (GCI), the Human Development Index (HDI), the Ease of Doing Business (EDB), the Environmental Performance Index [...] Read more.

Every year, news about the publication of rankings and scores of important international indexes are highlighted, with some of the most prestigious being the Global Competitiveness Index (GCI), the Human Development Index (HDI), the Ease of Doing Business (EDB), the Environmental Performance Index (EPI) and the Global Entrepreneurship (GEI). A country’s progression in these indices is associated with economic growth, especially since several empirical studies have found evidence to reinforce these beliefs, the indices having been built based on the scientific literature on economic growth. Building a database on these indices for European Union countries between 2007 and 2017 and using panel data methodologies and then 2SLS (Two-Stage Least Squares) to solve the problem of endogeneity, we verify empirically through panel data estimates, what is the relationship between the mentioned indices and the European Union countries’ economic growth for the period. However, as the European Union is made up of diverse countries with different economic and social realities, we divided the countries into six clusters and made an individual interpretation for each one. We found that human development and competitiveness play an important role in economic growth, and entrepreneurship also impacts this growth. Regarding income distribution, applying the Gini index, we found that only human development mitigates inequalities. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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17 pages, 782 KiB

Open AccessArticle

Does Foreign Institutional Equity Participation Instigate Sustainable Corporate Investment Efficiency? Evidence from Emerging Economies

by Sabahat Riaz, Mohamed Hisham Hanifa and Fauzi Zainir

Sustainability 2021, 13(8), 4190; https://doi.org/10.3390/su13084190 - 9 Apr 2021

Cited by 4 | Viewed by 4678

Abstract

This study examines the impact of overall foreign institutional equity participation and its two types—foreign institutional pressure-resistant and pressure-sensitive—on firm sustainable investment efficiency for non-financial listed domestic firms of three emerging economies over the period of 2009–2018, using an unbalanced panel of 733 [...] Read more.

This study examines the impact of overall foreign institutional equity participation and its two types—foreign institutional pressure-resistant and pressure-sensitive—on firm sustainable investment efficiency for non-financial listed domestic firms of three emerging economies over the period of 2009–2018, using an unbalanced panel of 733 firms with 4468 firm-year observations. It also investigates the impact of varying levels of foreign equity participation on investment efficiency. We used the regression estimation technique with robust standard errors clustered at the firm level. We also used the second-stage instrumental variable (IV) method to control potential endogeneity. Empirical findings reveal that overall foreign institutional equity participation and foreign institutional pressure-resistant ownership have a positive and significant impact on corporate investment efficiency, whereas foreign institutional pressure-sensitive ownership has a positive but insignificant impact. When we divided the overall institutional foreign equity ownership and its two types into five levels, we found a positive and significant impact of overall foreign institutional ownership at all levels. The foreign institutional pressure-resistant ownership has a positive and significant impact on investment efficiency when it is greater than 10%. However, we found a weak relationship of foreign institutional pressure-sensitive equity ownership with investment efficiency at all varying levels of investments. These results are robust when we controlled for endogeneity. Our results have implications for policymakers, regulators, academicians, and potential foreign equity participants. These results can be generalized to those emerging economies that have the potentials for attracting foreign equity inflows. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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21 pages, 345 KiB

Open AccessArticle

The Negative Impact of Uncertainty on R&D Investment: International Evidence

by Yuchen Lin, Daxin Dong and Jiaxin Wang

Sustainability 2021, 13(5), 2746; https://doi.org/10.3390/su13052746 - 3 Mar 2021

Cited by 8 | Viewed by 2600

Abstract

Previous studies have not provided consistent conclusions regarding the impact of uncertainty on research and development (R&D) investment. While most of the previous literature has focused only on one or a small group of countries, this study examines the effect of uncertainty on [...] Read more.

Previous studies have not provided consistent conclusions regarding the impact of uncertainty on research and development (R&D) investment. While most of the previous literature has focused only on one or a small group of countries, this study examines the effect of uncertainty on R&D on the basis of a sample covering 109 countries from 1996 to 2018. The country-level uncertainty is measured using the “World Uncertainty Index”, which has recently been developed by Ahir et al. (2018). By estimating a panel data fixed-effects regression model, it is found that uncertainty has a significantly negative impact on R&D investment at the country-level aggregate scale. We also find that uncertainty depresses the number of R&D personnel and patent applications, although the effect on R&D personnel is not statistically significant. These findings imply that high uncertainty poses a considerable threat to global innovation and technological progress. Heterogeneity analyses across different country groups demonstrate that, although the impact of uncertainty on R&D is not statistically significant in some country groups, its effect is always negative and no positive effect is observed. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

21 pages, 374 KiB

Open AccessArticle

Is Gender Inequality a Barrier to Economic Growth? A Panel Data Analysis of Developing Countries

by Amaia Altuzarra, Catalina Gálvez-Gálvez and Ana González-Flores

Sustainability 2021, 13(1), 367; https://doi.org/10.3390/su13010367 - 3 Jan 2021

Cited by 28 | Viewed by 13587

Abstract

This study provides empirical evidence about the effects of various dimensions of gender inequalities (education, labour market and institutional representation) on economic growth. We use data from the World Bank Development Indicators database for the period 1990–2017. We initially use a large panel [...] Read more.

This study provides empirical evidence about the effects of various dimensions of gender inequalities (education, labour market and institutional representation) on economic growth. We use data from the World Bank Development Indicators database for the period 1990–2017. We initially use a large panel of 105 developing countries. Subsequently we study a panel with the sub-Saharan African (SSA) countries since this region is one of the poorest regions in the world. We estimate cross-country and panel regressions. The results suggest that gender equality in education contributes to economic growth and this is a common feature in developing countries. The contribution of equality in education to growth seems to be greater in the SSA countries than in the entire sample of developing countries. The female–male ratio of labour market participation is not statistically significant. We also find a significant link between the presence of women in parliaments and growth in the sample of all developing countries, while this relationship is negative for the SSA countries. It is likely that despite the increased participation of women in the political arena in these countries, women may still encounter major obstacles to altering political priorities and affecting economic growth. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

20 pages, 1830 KiB

Open AccessArticle

Major Crises of the XXIst Century and Impact on Economic Growth

by Iulia Cristina Iuga and Anastasia Mihalciuc

Sustainability 2020, 12(22), 9373; https://doi.org/10.3390/su12229373 - 11 Nov 2020

Cited by 13 | Viewed by 2647

Abstract

Global economic growth is noted to have been severely affected by the Great Recession in 2009, reaching its lowest level since the series began in 2019. This low was exceeded in 2020, in the sense that the level of economic growth in Q1 [...] Read more.

Global economic growth is noted to have been severely affected by the Great Recession in 2009, reaching its lowest level since the series began in 2019. This low was exceeded in 2020, in the sense that the level of economic growth in Q1 and Q2 2020 is well below 2009 due to countries’ efforts to stop the COVID-19 pandemic. Cases of coronavirus that have occurred since February–March 2020 have started to produce significant effects on economic growth, and the evolution of the economic growth indicator is in decline for the countries analysed. The article is aiming to develop two models (using Empirical Regression Model) that analyse the influence of macroeconomic indicators on economic growth. Our study covers EU member countries in Central and Eastern Europe from 2001–2020 Q2. Using the same variables and coefficients for both models, six for the first model and seven for the second model with the addition of coronavirus cases, we see a change in the behaviour of independent variables. The authors consider that this variable influences the economic situation in a country because it has caused the change in the unfavourable direction of certain macroeconomic indicators with a direct influence on economic growth. By adding cases of coronavirus (Cc) the equation becomes broader and contains several variables that explain the evolution of economic growth. Each of the indicators changes its value, but it is noted that variables with negative coefficients decrease further (e.g., Cs, GvS). Our findings in this article confirm that of all the determinants analysed, CsGw, Ret, GvS, and Cc overwhelmingly influence economic growth. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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16 pages, 458 KiB

Open AccessArticle

The Dynamic Relationship between Inequality and Sustainable Economic Growth

by Hwan-Joo Seo, HanSung Kim and Young Soo Lee

Sustainability 2020, 12(14), 5740; https://doi.org/10.3390/su12145740 - 16 Jul 2020

Cited by 19 | Viewed by 4316

Abstract

This study empirically tests the effects of income inequality on growth for 43 countries from 1991 to 2014 based on a cumulative growth model. The results show that, first, the estimation results using a reduced equation reveal a positive correlation between the income [...] Read more.

This study empirically tests the effects of income inequality on growth for 43 countries from 1991 to 2014 based on a cumulative growth model. The results show that, first, the estimation results using a reduced equation reveal a positive correlation between the income inequalities of lagging countries and the respective growth gaps with the frontier country. This confirms that the increase in income inequality negatively affects growth. Secondly, a cumulative growth model using 3SLS estimation shows that income inequality has a negative effect only on investment. However, we fail to find correlations between technological innovation and income inequality and between human capital accumulation and income inequality. Considering that investment has a positive impact on productivity, we conclude that income inequality has a negative impact on investment and that the resulting sluggish investment has a negative impact on productivity, which in turn negatively influences growth. Third, contrary to Kaldor and Barro’s prediction, we find that income inequality in developing countries is negatively correlated with growth, particularly for investment. The effects of income inequality on investment are found to be similar in both developed and developing countries. We also find region-specific differences in the paths through which income inequality affects sustainable economic growth. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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10 pages, 279 KiB

Open AccessTechnical Note

The Tragedy of the Commons as a Prisoner’s Dilemma. Its Relevance for Sustainability Games

by Alessio Carrozzo Magli, Pompeo Della Posta and Piero Manfredi

Sustainability 2021, 13(15), 8125; https://doi.org/10.3390/su13158125 - 21 Jul 2021

Cited by 8 | Viewed by 5479

Abstract

In the current battle for sustainability and climate, understanding the nature of sustainability games is of paramount importance, especially to inform appropriate policy actions to contrast the harmful effects of global climate change. Relatedly, there is no consensus in the literature on the [...] Read more.

In the current battle for sustainability and climate, understanding the nature of sustainability games is of paramount importance, especially to inform appropriate policy actions to contrast the harmful effects of global climate change. Relatedly, there is no consensus in the literature on the proper game-theoretic representation of the so-called Tragedy of the Commons. A number of contributions have questioned the prisoner’s dilemma as an appropriate framework. In this work, we provide a representation that reconciles these two positions, confirming the ultimate nature of the Tragedy as a prisoner’s dilemma, rather than a coordination issue, and discuss the ensuing implications for sustainability policy interventions. Full article

(This article belongs to the Special Issue Investment, Growth and Sustainability)

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