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Abstract
The recent successes of the Chinese modernisation strategy are substantiated by an array of indicators showing an impressive improvement. Irrespective of China's current growth deceleration, these indicators suggest a highly effective implementation of an ambitious roadmap that can ultimately help China to catch up and achieve a global technological leadership. Still, some scholars point to deep structural deficiencies, and maintain that these indicators – however impressive they are – merely scratch the surface, while much deeper change is required in order to maintain economic growth. Therefore, the purpose of this paper (finalized before the ongoing COVID-19 crisis) is to contribute to this burgeoning literature – documenting the outcome and analysing the implications of China's efforts to embrace a new growth model – and analyse the chances of the Chinese digital great leap forward, that is the radical transformation of its prior modernisation trajectory. Drawing on a systematic review of the literature, the author maps, presents and analyses existing indicators quantifying China's progress in shifting to this new development trajectory, identifying also the gaps in the conventional measurement approaches. According to the findings of this paper, there are several easy-to-measure indicators, often used in international comparisons, that indeed confirm the optimistic scenario of China's development prospects in the near future. On the other hand, some hard-to-quantify factors, such as the localization of knowledge and the spreading of innovation, need to be also considered. These latter show a closer association with countries' development level as well as development potential. With regards to these latter particularities, China still has a long way to go.
Abstract
In the era of irreversible globalisation, the worldwide economic and political rules of play must take into account of the growing importance of China. Rather than fight the country, one should pragmatically cooperate on solving the mounting global problems. Contemporarily, both China should adapt to the external world and the world itself should adapt to China. There is no possibility of imposing on it a model developed elsewhere, especially that these days liberal democracy is experiencing a systemic crisis in many countries. Neither is there a chance to impose the Chinese model on others, though it seems tempting to a country; it is not an exportable ‘commodity,’ but its elements may prove useful elsewhere. China is not aiming for global domination; instead, it is consistently integrating with the world to maintain its own development. The only reasonable way forward is thorough observation, mutual learning and pragmatic collaboration based on the non-orthodox economic thought.
Abstract
In the 1990s and early 2000s, comparison of transition strategies of China versus those in Central and Eastern Europe raised controversies in the economic and political science literature. However, differences between China and the countries of the former Soviet bloc in their transition strategies resulted not necessarily from a deliberate political choice but from different initial conditions. Low-income and largely rural China, after its first radical step (de-collectivisation of agriculture in 1978), could move more gradually due to its under-industrialisation and retaining administrative control over the economy. The over-industrialised Central and Eastern Europe (CEE) and former Soviet Union (FSU) countries where the previous command system of economic management spontaneously collapsed at the end of 1980s, did not have such an option. They had to conduct market-oriented reforms as quickly as they could, with all the associated economic and social pain. Regardless of speed and strategy of transition, almost all previously centrally-planned economies, including China, completed building basic foundations of a market system by the early 2000s although the quality of economic and political institutions and policies differ between the sub-regional groups and individual countries.
Abstract
Recently, the middle-income trap (MIT) has gained considerable attention – besides European countries, several African, Asian, and Latin-American developing countries are also affected. Many countries have remained in the middle-income bracket for decades, whilst only a few have advanced to high-income status. Felipe et al. in 2012 showed that an annual growth rate of at least 3.5 and 4.7% sustained for a period of 14 and 28 years is required respectively for upper-middle-income and lower-middle-income countries to escape the MIT. Economic growth is influenced by several factors including foreign aid received. Thus, in this study, we aim to answer the question of how aid affects economic growth in middle-income countries and whether aid may contribute to escaping the MIT. Focusing on the countries that have remained in the middle-income group between 1990 and 2017, our analysis confirms that aid contributes to economic growth; however, the impact is positive in the upper-middle-income countries and negative in the lower-middle-income countries. Aid is therefore, likely to be more effective in helping the upper-middle income countries to escape the MIT but not the lower-middle income countries.
Abstract
There is a sharp contradiction between the economic performance of the Hungarian government of Victor Orbán and the institutional framework (toolkit) by which the seemingly stellar performance of the Hungarian economy has been achieved. It looks like as if the economic playground of the government (disciplined fiscal policy, unorthodox monetary policy and contradictory institutional system) and political-institutional order built by the same government during the last ten years, represent two different worlds. This paper provides a possible explanation to resolve this contradiction by identifying reversed relationship between tools and goals of economic policies. The genuine, hidden but most important goal of the present Hungarian government is to make Orbán and his political family wealthy and make their enrichment legitimate. In disguise of a public policy to achieve this (private, personal) goal, this government needs absolute and uncontrolled power certified by the scenery of the parliamentarian democracy. This private effort should be falsified, which could be achieved if his government pretends that it wants to pursue a disciplined economic policy.
Abstract
We investigate the relationship between economic growth and real exchange rate (RER) misalignments within the European Union (EU) during the period of 1995–2016. In addition to the relative price level of GDP, we quantify an alternative indicator for the RER: the internal relative price of services to goods. We interpret RER misalignments as deviations from the levels consistent with the levels of economic development among the EU countries. Using pooled OLS and dynamic panel techniques, we find that within the EU over- (under-) valuations are associated with lower (higher) growth. This is mainly due to developments in the countries operating under the fixed exchange rate regimes. Our results indicate that the level of development does not influence the strength of the growth-misalignment relationship within the EU. Regarding the price level of GDP, we find that the positive relationship between undervaluation and growth diminishes with the degree of undervaluation. We find that overvaluation has a statistically significant negative effect on export market shares and private investments, indicating that both the competitiveness and the investment channels play a role in the relationship between growth and RER misalignments. As an extension, we show that the effects of “wage misalignments” from levels consistent with productivity are also negatively related to economic growth. The policy implications of the analysis point to the importance of a growth strategy avoiding overvaluation on the one hand, and to the futility of aiming at excessive undervaluation, on the other.
Abstract
Are governments able to continuously boost economic growth by spending for decades? Can the state be a more efficient user of income by improving the structure of public spending? The paper analyses the correlation between various types of public expenditures and GDP growth in different countries of the EU. The database was composed from the Classification of the Functions of Government (COFOG) classification of public spending, which contains data of 25 EU economies in the period 1996–2017. Three econometric models were applied in accordance with the empirical practice found in the literature: first-differences general method of moment (GMM), fixed effects panel and ordinary least squares (OLS) models. The expenditures on social protection proved to have a negative, statistically significant and robust impact on GDP growth. The results are similar for general public spending, and while spending on public order also has a significant and robust coefficient, its sign is ambiguous. The novelty of the article relate to the findings on lagged education and health spending, which have a positive impact on GDP growth.
Abstract
The purpose of this article is to study the impact of fiscal policy on economic growth in Bulgaria for the period 1995–2018. The descriptive analysis is focused on the general trends in fiscal policy and tax structure. The influence of government spending and taxation on economic growth is studied through regressions on time-series data. The empirical estimates prove that taxation is a more reliable instrument of fiscal policy than government spending in terms of a small open emerging-market economy. The dilution of the effect of public spending is probably caused by the high negative values of the current account balance that have been maintained for long periods. Thus, when domestic supply is weak, government expenditure cannot stimulate domestic production, as supply is dominated by import goods. Public investments demonstrate a negative effect on economic growth, which suggests a low productivity of investment spending. A factor of great importance is the level of corruption, which is strongly correlated with government investments, but is harmful to their efficiency. The Bulgarian tax system demonstrates consistency with economic growth. The receipts from value-added tax seems growth-conductive. The decrease of the corporate income tax rate exerts a positive impact on economc performance during the analyzed period, while personal income taxation demonstrates a negative effect. Property taxation has no significant relation with the growth of the Bulgarian economy.
