Are health factors important for regional growth and convergence? An empirical analysis for the Portuguese districts

The aim of this study is to analyze the impact of health factors on economic growth and convergence across the Portuguese regions at the district level. Like education, health factors could be important for explaining the growth performance of regions through the increase in labour productivity. Therefore, human capital can be seen in a broader perspective encompassing not only educational qualifications but also health conditions. Although this is not a new idea, empirical evidence at a regional level is not robust supporting this issue, with few exceptions. With this study we try to fill this gap and bring additional evidence of the relevance of health on regional growth considering the Portuguese districts. We employ a panel data approach for the period 1996-2006 taking into account specific regional differences. We also analyze whether there are differences between the littoral (coastal) and the interior (in-land) districts in what concerns health conditions and how they affect their convergence process.: Regional growth, health and human capital, panel data.

Human Capital As a Conditioning Factor to the Convergence Process Among the Brazilian States.

This paper examines the convergence process among the Brazilian states using different concepts of convergence and giving special attention to the role of human capital as the conditioning factor to convergence. Different measures of human capital are used in the estimation of the convergence equations and the results show that they play a significant role in explaining the improvement of the standards of living of the Brazilian population. An interesting finding is that different levels of human capital have different impacts on the growth of per capita income depending on the level of development of the Brazilian states. Lower levels of human capital explain better the convergence process among the less developed states and higher levels of human capital are more adequate for controlling differences in the “steady-states†of the more developed Brazilian regions. The impact of the intermediate levels of human capital on growth is stronger in all samples.

The evolution of real disparities in Portugal among the NUTS III regions. An empirical analysis based on the convergence approach.

The aim of this paper is to explain regional convergence in Portugal, at Nuts III level, in terms of per capita income and productivity. In doing so, we employ an alternative estimation approach based on panel data analysis that allows for individual differences across regions, avoiding with this way the omitted variable bias occurred in single cross-section regressions. The known concepts of absolute and conditional convergence are tested between the 30 Portuguese regions, as well as, the importance of some conditioning structural factors related to resource allocation and demand conditions. Our evidence shows that convergence among the 30 regions in Portugal is rather conditional than absolute, both, in terms of per capita income and productivity. On the other hand, labour shares in the main economic sectors as measures of resource reallocation are important in explaining convergence in per capita income and productivity. Output growth, reflecting demand conditions and labour composition by sectors are shown to be relevant conditioning factors in explaining the convergence process in productivity and controlling for differences in regional structures. Our evidence shows a more significant shift of labour from the primary to the tertiary sector and when this element is introduced into the convergence equations, convergence is shown to be higher. Keywords: absolute and conditional convergence, per capita income, productivity, labour shares, panel regressions.

Is foreign trade important for regional growth? Empirical evidence from Portugal

he aim of this study is to investigate whether openness, exports shares or trade balances affect regional growth in Portugal. Human capital is also considered as a conditional factor to growth, expressed by the rate of success in high school education. Thus, we analyse whether the combination of international trade and human capital is relevant to explain regional growth in Portugal and how it affects the convergence process between regions. In the empirical analysis, interaction terms are introduced to explore the existence of different performances between regions of the Littoral and the Interior. As an alternative to the traditional approach that considers the population growth rate, we include the share of sectoral employment aiming to capture labour specialisation in the main sectors of economic activity and measure its impact on regional growth. The empirical analysis estimates the conditional convergence model of the Barro’s type, applied to the Portuguese NUTS3 regions for the period 1996-2005. The GMM estimation approach applied to regional panel data reveals that factors associated with external trade, human capital and sectoral labour share (especially of the industrial sector) are relevant to explain regional growth and convergence in Portugal.conditional convergence, human capital, external trade, employment share, GMM regressions, panel data.

Growth Performance in Portugal Since the 1960’s: A Simultaneous Equation Approach with Cumulative Causation Characteristics

The aim of this paper is to explain growth performance in Portugal in the last decades through a multi-equation system with cumulative growth characteristics. The model uses a demand-orientated approach to determine the main relationships which explain growth through a virtuous cycle. The idea is to identify the driving forces of growth with causal linkages and feedback tendencies that turn the process self-sustained. The multi-equation growth model is estimated by 3SLS to capture more efficiently the interrelations between the main growth forces and to control for the endogeneity of the regressors. Our evidence shows that the proposed model can successfully be used to explain the Portuguese growth performance, highlighting the importance of exports competitiveness as the key factor in this process. The cumulative growth process can be interrupted at some points mainly due to the incapacity of transferring productivity gains into domestic prices and to turn the economy more competitive. Capital accumulation is also shown not to affect productivity growth and domestic prices not to improve exports competitiveness. These are the main drawbacks of the Portuguese economy that could explain the failure to achieve higher growth rates in the last decades.Cumulative growth, multi-equation system, exports competitiveness, productivity gap, 3SLS regressions

How well the balance-of- payments constraint approach explains the Portuguese growth performance: empirical evidence for the 1965-2008 period

The present study aims to verify whether the balance-of-payments constrained growth approach is suitable for explaining the Portuguese growth performance during the last decades. For that, we adopt “Thirlwall’s Law” that predicts actual growth by the ratio of the exports growth relative to the income-elasticity of the demand for imports. The income-elasticity of imports, essential for the entire analysis, is obtained from the estimation of the imports function by 2SLS, assuming that domestic growth is endogenous. To smooth cyclical variations, 15-year overlapping periods are considered in the computation of “Thirlwall’s Law”, assuming that income-elasticity with respect to imports is either constant or variable over time. It is found that the Law is a good instrument for predicting actual growth in Portugal and this result is reinforced by performing the McCombie test. Our results reveal that Portugal grew slightly higher relatively to the OECD countries in the entire period and this is consistent with the income-elasticity of the demand for exports exceeding that of imports, as “Thirlwall’s Law” implies. Portugal also grew slightly faster than the rate consistent with the balance-of-payments equilibrium, accumulating external deficits over time. Dividing the sample in the pre and post-adhesion period to the EU, it is shown that Portugal grew at a lower rate in the latter, and this is consistent with lower export growth and higher income-elasticity with respect to imports. To overcome this problem, policies are needed to improve the supply characteristics of exports related to non-price competitiveness and reduce the imports sensitivity with respect to domestic income changes.balance-of-payments equilibrium growth rate, income-elasticities with respect to trade, overlapping periods, 2SLS regressions

Educational Thresholds and Economic Growth: Empirical Evidence from Brazilian States

This paper examines the convergence process in Brazil over the period of 1985-2004, giving a special attention to the role of human capital as a conditioning factor to convergence. It examines how different levels of human capital influence growth in different regions of Brazil. Different measures of human capital are used in the growth regressions and the results show that they play a significant role in explaining the growth process. The evidence indicates that different levels of human capital have different impacts on the per capita income growth, depending on the level of development of the states. Lower levels of human capital explain better the convergence among the less developed states and higher levels of human capital are more adequate among the more developed states. The impact of the relative intermediate levels of human capital on growth is stronger in all samples, suggesting the existence of threshold effect in education.conditional convergence, human capital thresholds, panel data

Causes of the Decline of Economic Growth in Italy and the Responsibility of EURO. A Balance-of-Payments Approach.

Some countries of the Euro-zone have experienced a declining economic growth more pronounced in the last recent years, like Italy. The aim of this paper is to investigate the causes of the poor growth performance in Italy and the responsibility of the Euro for this crisis. The theoretical approach applied is based on the balance-of-payments constraint hypothesis (known as Thirlwall’s Law) adapted to include internal and external imbalances. Our empirical analysis shows that both the extended model and the original Thirlwall’s Law over-predict the actual growth in Italy suggesting that there are supply constraints that encumber the economy from growing faster. Another conclusion is that part of the decline in economic growth is explained by the loss of competiveness during the Euro period. A scenarios analysis shows that a budget deficit and public debt discipline aiming at achieving the goals of the Stability Pact are not significant stimulus for faster growth. On the other hand, reducing the import dependence of the components of demand, or reducing the import and increasing the export shares in the economy are the most effective policies for fostering growth in Italy.Internal and External Imbalances, Import Elasticities of the Components of Demand, Equilibrium Growth Rates, 3SLS System Regressions.

Growth rates constrained by internal and external imbalances: a demand orientated approach.

Thirlwall’s Law considers that growth can be constrained by the balance-of-payments when the current account is in permanent deficit. The Law focuses on external imbalances as impediments to growth and does not consider the case where internal imbalances (budget deficits or public debt) can also constrain growth. The recent European public debt crisis shows that when internal imbalances are out of control they can constrain growth and domestic demand in a severe way. The aim of this paper is to fill this gap by developing a growth model in line with Thirlwall’s Law that takes into account both internal and external imbalances. The model is tested for Portugal that recently fell into a public debt crisis with serious negative consequences on growth. The empirical analysis shows that the growth rate in Portugal is in fact balance-of-payments constrained and the main drawback is the high import elasticity of the components of demand and in particular that of exports.internal and external imbalances, import elasticities of the components of demand, equilibrium growth rates, 3SLS system regressions.