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No. 361 |
October 2010 |
Vol. XIC |
ISSN 0019-5170 |
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Contents
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Balance of Payments Adjustment in the Countries of the West African Monetary Zone: Evidence from Panel Data
Patricia A. Adamu and Osi C. Itsede
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This study was undertaken to determine the dynamics of balance of payments adjustment in the six countries of the West African Monetary Zone (WAMZ), namely, The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone, using a panel data approach. The new concept of 'fear of floating' in the management of exchange rates, exhibited by policy makers of many countries, was also comprehensively analyzed. Time series and panel data technique was utilized to investigate the applicability of the monetary approach to the balance of payments adjustment in the countries of the WAMZ. Annual data for each of the six countries on change in foreign reserves, rate of change of exchange rate, end period inflation rate, growth rate of real income, and rate of change of domestic credit of the central bank covering the period 2001-2006 were utilized. Our findings revealed that inflation was the most important variable explaining balance of payments adjustment process in all the countries studied. Secondly, balance of payments is highly sensitive to changes in domestic credit in the WAMZ countries under review. Therefore, the monetary approach to the balance of payments can be confidently used to explain the dynamics of balance of payments adjustment in the WAMZ countries. Therefore, a tight rein on domestic credit creation is a necessary condition for maintaining stability in the balance of payments over time in these countries.Furthermore, in order to control inflation, monetary authorities should provide a nominal anchor through inflation targeting.Finally,stability in exchange rate is essential for growth in foreign trade and accumulation of reserves.
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Intellectual Capital: Currency of New Millennium National Intellectual Capital Index
Inderjeet Singh and Amritpal Katir
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The competitive advantage within the new economies has shifted from material and financial assets to intangible capita! and intangible assets in general and to intellectual capital in particular. Intellectual Capital (IC) is a core factor. Much of the current academic literature on intellectual capital theory and its accompanying frameworks, constructs and measures stems from an accounting and financial perspective, focusing on the firm level of analysis. Very few-studies are available that deal with economics of intellectual capital at a macro level. The paper deals with measurement and analysis of national intellectual capital. The paper is an attempt to design and empirically prognosticate a model to calculate the National Intellectual Capital Index (NICI) and its component indices.
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The Determinants of Bangladesh's Imports : A Gravity Model Analysis under Panel Data
Mohammad Mafizur Rahman
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This paper applies the generalized gravity model to analyze the Bangladesh's import trade with its major trading partners using the panel data estimation technique. Our results show that Bangladesh's imports are determined by the inflation rates, per capita income differentials and openness of the countries involved in trade. Also the country's imports are found to be influenced to a great extent by the berder between India and Bangladesh. The country specific effects show that the influence of neighbouring countries is more than that of distant countries on Bangladesh's imports.
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Labour Management in India Since 1990's
Prabhavathi M. C
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The impact of the reform process in improving the conditions of labour, in improving industrial relations, in increasing/decreasing the regular employment of labour as against casual employment is the current issue. The reform process harp on 'hire and fire' policy and it does not promise a better share for labour as the growth process gathers. However, the paper explains the adverse effect on labour management in India since 1990s. For labour, it has meant more lockouts, more retrenchments, layoffs and closure. It has also given more freedom to employers to use contract labour. In this regard, the reform process given unbridled power, to the business classes to exploit labour, deny the legitimate share in value-added and bring about greater proletarianisation of labour. By downsizing labour, the share of labour in the unorganized sector in the economy has increased. This unhealthy trend should be a process in the economy.
To put in a more forthright manner, an analysis of reforms in India reveals that liberalisation, privatization and globalization that should be treated as means for building a healthy society based on democracy, growth and equity, are being practiced as ends in themselves move so in case of labour. This necessitates a reexamination of the reform process so that the goals of development i.e. higher growth rate, full employment, a sharp reduction of population living in poverty,promotion of equity leading to a better deal for the poor and less privileged, reduction of regional disparities, can be achieved.
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Electricity Demand and in Punjab: A Forecasting Supply Exercise
Nisha Bhargava , Gurdip Sharma and
Shakuntla Gupta
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Considering the indispensability of electricity in modern times, its demand and supply forecasts assume special significance. Though various techniques have been used to forecast electricity demand and supply, yet none of them is considered perfect due to various reasons. The present study forecasts the two for the state of Punjab and reaches the conclusion that existing power shortages may continue in coming years therefore both demand and supply management measures are required to control electricity demand as they benefit not only the consumers and power utilities but also the environment by reducing generation requirements. This is especially beneficial in Punjab where conventional sources of generating electricity have already been exhausted and capacity can be increased only by resorting to non-conventional and renewable sources.
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The Impact of Public Expenditure on Kenya's Economic Growth: An Econometric Analysis
David O. Oima, Simeo O. Okelo and Isaiah Ogwe
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Public spending changes (both in magnitude and the rate of growth) are one of the most remarkable features of contemporary economies. Where as it is assumed that public expenditure growth leads to commensurate economic growth and other social benefits, it remains difficult to understand why growth rates may rise as public expenditure grows and at times the growth rates decline even with the growth of public expenditure. The study examines the impact of public expenditure on Kenya's economic growth to help unravel the dilemma. The study was correlation and exploratory in nature and used time series secondary data for a period of 37 years (1970-2007), purposively selected and was estimated using OLS method. The study also performed various econometric tests such as Dickey Fuller (DF) and Augmented Dickey Fuller (ADF) unit root test. Other diagnostics tests like multicollinearity were performed. The study found government expenditure to be positively related to economic growth hence useful in formulating policies as regards allocation and level of government expenditure that optimises service delivery. The study found the country to be experiencing high budget deficit hence recommends prudent financial management and enhanced revenue collection by revenue authority especially by broadening tax base and proper management of tax collected.
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Growth and Productivity Trends in Organised Manufacturing Sector of Punjab: A Study of Selected Industries
Manjit Sharma
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The present study has been carried out for the period of 1980-2003 for selected industries of organised manufacturing sector of Punjab. Organised manufacturing sector experienced negative growth rate in employment in post reform period i.e. era of 'jobless growth'. The economic reforms have no doubt ushered in an economic broom but this has not created enough jobs. Capital picked up slowly in the post reform period and is yet to be fully reflected in output and value addition. Growth rate Of total factor productivity is higher in pre-reform period as compared to post-reform period for all the selected industries except basic metal and alloy industry. Food industry that has the potential to develop could not grow to their capacity owing to the laxity of the state government. Textile industry that enjoyed the captive market from the erstwhile Union Soviet Sangh of Russia, couldn't pick up in the productivity growth in the post reform period. Transport equipment and parts industry, which has considerable share in employment, now puts a question mark on further production capacity.
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Impact of ICT on TFP: Evidence from Major Indian States
M. Mallikarjun
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The debate on impact of the 'New Economy' on output and productivity growth has engulfed many scholars. Now it is an established fact that growth in productivity is attributed either due to capital deepening or due to improvement in total factor productivity (TFP) growth. There are evidences from countries where investment in Information and Communications Technology (ICT) equipment had a significant impact on productivity growth in the 1990s through the capital deepening channel. The direct and indirect effect of IT industry on the economy has been looked into by numerous scholars measuring the impact of IT at various levels. In this paper an attempt has been made to look for evidence of the impact of ICT on TFP across major Indian states using ASI Factory Sector Data.
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The Effects of Hand-Woven Carpet Exports in the Value Added of Carpet Sector in Iranian Economy
Pahiavani, Mosayeb, Akbari, Ahmad and Moteii, Reza
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One of the goals of the major development-programs in Iran is expanding the non-oil exports and as Hand-Woven Carpet products are on of the main source of non-oil exports, its significance development of Hand-Woven Carpet sector and development of the country's economy is obvious. So, extending the scientific studies on this matter is necessary. Considering the fact that handicraft and related sectors are one the most important and effective variables in macro economy of this country, it seems relevant to study the role of carpet exports sector in value added on fifty years ago (1959-2007) in Iran. In this study we used Augmented Dickey-Fuller test (ADF) and also Phillips-Perron Test (1989) to check whether some variables are stationary or non-stationary. Then we used unit root test in the presence of structural breaks to show that about half of the variables which were non-stationary by using conventional tests, would be stationary if we consider the presence of structural break. Thus, according to Pesaran & Shin (2001). by using ARDL cointegration, long term and short term estimates, compatibility between variables is found.The empirical results based on the ARDL test show that carpet exports have positive and meaningful relationship with value added in Hand-Woven carpet and the results show that while the effects of Hand-Woven Carpet export is highly significant,as expected, gross capital formation have an even smaller effect than had been anticipated.Also, ECM coefficient is less than one which means there's a long term relationship from samples variables to value added in Hand-Woven carpet.
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Composition, Growth and Prospects of Finances of local Bodies in Orissa - A Case Study of Bhawanipatna Municipality in Kalahandi District
Murali Dhar Majhi
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In view of the continuing and rather deepening financial crisis in local bodies of Orissa, the government at urban area has come to a stand still. The scarcity of revenue and inefficient municipal expenditure is the crux of the problem. Poor collection and low service standards forms a vicious circle, each leading to the other. For this there appears in municipal institutions a loss of credibility and a great mismatch between finances and facilities has emerged. However this fiscal paradigm can be corrected either through measures adopted for expenditure austerity or by augmenting own-source revenues to the maximum potential. Against this background, the purpose of this paper is to bring out certain fundamental issues that are afflicting the municipal system from the view point of resource generation, financial management, service delivery and the quality of human resources.
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Corruption, the Business Environment, and Small Business Growth in India
Maddalena Honorati and
Taye Mengistae
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This paper estimates a dynamic business growth equation on a sample of small-scale manufacturers. The results suggest that excessive labor regulation, power shortages, and problems of access to finance are significant influences on industrial growth in India. The expected annual sales growth rate of an enterprise is lower where labor regulation is greater, power shortages are more severe, and cash flow constraints are stronger, The effects of each of the three factors on business growth seem also to depend on a fourth element, namely, corruption. Specifically, labor regulation affects the growth only of enterprises for which corruption is not a factor in business decisions. By contrast, power shortages seem to be a drag on the growth only of enterprises self-reportedly held back by corruption. Lastly, sales growth is constrained by cash flow only in businesses that are not affected by labor regulation, power shortages, or corruption.
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