Revisiting the threshold effect of remittances on total factor productivity growth in South Asia: a study of Bangladesh and India

Both Bangladesh and India are among the top recipient of remittances in absolute terms. However, in relative terms – remittances as a per cent of GDP – the two countries stand at 6.1% and 2.8%, respectively, well below the levels of the top 10 recipients. In this article, we explore the effect of remittances on the total factor productivity (TFP) growth considering Bangladesh and India, as reference countries over the periods 1980–2012 and 1977–2012, respectively. We examine the presence of a long-run association between remittances and TFP using a number of tests. The results indicate that remittances have threshold effects on TFP growth in both countries. Despite the two countries receiving substantial amount of remittances, we note that Bangladesh has a U-shaped relationship whereas India has an inverted U-shaped relationship with TFP growth. For Bangladesh, a minimum threshold of remittances (% GDP) is 5.3% and for India, a tipping point of remittances (% GDP) is at 1.8%. The causality tests confirm a bidirectional effect, which implies that remittances and TFP growth are mutually reinforcing. Interestingly, while the two economies have similar remittances impact in regards to causality, the study highlights two different tipping points of remittances

Exploring the effect of ICT and tourism on economic growth: a study of Israel

In this paper, we explore the impact of information and communications technology (ICT) and tourism on per worker output over the period 1960–2016 by using an augmented Solow (Quart J Econ 70(1): 65–94, 1956) framework estimated through the autoregressive distributed lag procedure for cointegration (Pesaran et al. in J Appl Econ 16(3):289–326, 2001). The results show that mobile cellular subscriptions (measure of ICT pervasiveness) and visitor arrivals as a percent of workers (measure of tourism) are cointegrated and positive, however, only ICT is statistically significant in the long-run. The long-run elasticity coefficient of ICT and tourism is 0.03 and 0.05, respectively. We note a unidirectional causality from ICT to output per worker, from tourism to output per worker, from capital per worker to tourism, and from ICT to tourism. From the results, we emphasize that focusing on technology advancement and tourism expansion will provide the necessary support for economic growth in the country

Exploring the Relationship between Tourism and Economic Growth in Small Island Economies: A Study of Fiji

This study examines the effect of tourism, measured by visitor arrivals) on the economic growth of Fiji, a small island economy, over the period 1975 to 2015. We use a neoclassical framework and regression analysis to examine the short-run and the long-run effects of tourism whilst accounting for structural breaks. We confirm the presence of a long-run association using the two-step procedure of Engle and Granger (1987) and the ARDL bounds test of Pesaran, Shin and Smith (2001). From the long-run results, we note that a 1% increase in visitor arrivals contribute about 0.22% to the GDP per capita. The short run elasticity is noted to be 0.19%. The study finds evidence of a unidirectional causality from economic growth to tourism, and mutually reinforcing effect between capital investment and tourism. Thus, we can expect greater impact of tourism on the economic growth through tourism related investment activities such as improvements in airports, roads, transportation, financial sector and telecommunications, and parks and beaches

Profitability determinants of the insurance sector in small Pacific Island States: a study of Fiji’s insurance companies

We examine the determinants of profitability of insurance companies in Fiji as a reference country. In Fiji, insurance companies and the services have grown over the years. The study uses a financial evaluation approach. Profitability is measured by the return on assets and the return on equity. Using the two measures and the data published in the key disclosure statements as a mandatory requirement by the Reserve Bank of Fiji, we develop regression models. The fixed-effects regression model and a balanced panel are considered for the analysis. The sample comprises eight insurance companies’ financial data over the period 2010–2015. First, a base model is estimated, followed by additional models which include interaction effects as part of the sensitivity analysis and further insights. The general outcome of the estimation is that premium income, underwriting expenses, administrative expenses, and volume of capital are positively associated with profitability, whereas leverage measured by total liability over equity, and contingent liability are negatively associated with profitability. Inclusion of interaction effects provides results consistent with the base model. The study is a first attempt to analyse Fiji’s insurance sectors and provides useful information in terms of financial management of the sector. The findings can assist the insurance sector and the policy makers to formulate strategies for revenue and cost management

Why does currency denomination in external liabilities of small island developing states matter? Evidence from Fiji

The valuation effects on international investment position induced by the exchange rate volatility are not uniform or easily manageable in small and vulnerable economies when compared with larger developing or developed countries. To investigate the underlying dynamics, we developed a foreign currency exposure index over the period 2006–2019. The positive reading of the index suggests that though Fiji has a high net negative international investment position (90% of its GDP), it does not pose any serious risk. To ascertain determinants of Fijiʼs exposure index, we applied fully modified ordinary least square and autoregressive distributed lag bounds test. We have compared both estimates for consistency. Our findings suggest that the underlying determinants of Fijiʼs currency exposure are foreign debt, trade openness and exchange rate. This article bridges the gap in the literature on currency exposure risks in small island developing states and is the first study of its kind for the Pacific region

Relationship between ICT and international tourism demand: a study of major tourist destinations

In this article, we study the effect of ICT on tourism demand in nine major tourist destinations based on visitor arrivals. Mobile and broadband subscriptions are used to proxy for ICT. Additionally, we account for price, source country’s income, and the destination’s income. Balanced panels for the period 1995–2017 and 2002–2017 are used for mobile and broadband subscriptions, respectively. The pooled mean group approach is used for estimation. The results indicate a 1% increase in mobile subscriptions and broadband would increase international visitor arrivals by 0.04% and 0.11%, respectively. The elasticity coefficients of price and income are −0.71 and 1.58, respectively, based on the mobile subscription model, and −0.88 and 1.83, respectively, based on broadband subscription. The destination’s income has only a short-run positive association with tourism demand. The causality results indicate that ICT cause tourism demand, and support for technology-led growth hypothesis in the major tourist destinations

Fair grade allocation to unfair students: an application of the shapley value to solve the free - rider problem

This study applies the Shapley value within the context of class-group based peer assessments by treating it as a cooperative game and giving fairness to each group member to cushion the effect of coalitions. Based on scenario analysis, the Shapley Value method is used to identify the fair marks which should be given/allocated to individuals with in groups where there is uneven participation. Scenarios are presented using two and three student member cases with situations under pinning the free rider problem. The Shapley value concept as applied in this study provides what may be viewed as a contribution consistent mark allocation for group assignments

Income thresholds in the remittances-growth association? a case study of Fiji

Research indicates that remittances have mixed effects on growth. In this study, we investigate the role of income thresholds in this association for Fiji. Income thresholds are measured by thresholds in per-worker real GDP and are identified using the self-exciting threshold autoregression model over the period 1980 to 2017. A threshold autoregressive distributed lag model is subsequently developed. A single threshold in per-worker real GDP is estimated at US$5891. Remittances promote growth if income exceeds the threshold but is negative otherwise. Hence, remittances support growth-enhancing activities at high-income levels but may finance imports at the expense of domestic production at lower income levels

Energy consumption and economic growth in small island economies

Petroleum is the primary source of energy used in transportation and electricity generation for many small Pacific island economies. Noting the growing demand for transportation and infrastructure services, we investigate the long-run association between petroleum consumption and output per worker in Fiji, a small island economy in the Pacific. We use a Cobb-Douglas framework and the ARDL bounds procedure with sample periods from 1980 to 2013. The results show that a 1 % increase in petroleum consumption results in 0.08 % increase in the long run economic growth. The granger non-causality results show that energy consumption causes economic growth, thus confirming energy-led growth hypothesis. The overall results underscore the need for efficient use of energy in general with the impetus to focusing on renewable energy as an important source of economic growth. We argue that energy in whichever form (renewable or non-renewable) is an integral input for economic growth for small island countries in the Pacific. Furthermore, the country is an importer and redistributor of petroleum to other neighbouring islands. The petroleum products comprise of motor gasoline, jet fuel, kerosene, distillate fuel oil, residual fuel oil, and liquefied petroleum gases (LPG). The operations of airlines, ferries, cruise liners and other types of transportation are linked with tourism industry and heavily rely on petroleum. Also, petroleum is used for generating electricity, and the usage increases during the hot and dry season to support the hydro power plants. Considering Fiji as a reference and petroleum as a major type of energy, the study examines the relationship between energy and economic growth, whilst accounting for capital and labour stock, and structural breaks. This study aims to provide impetus to efficient use and management of energy in the Pacific with the overarching aim to promote economic growth and fostering policies to gradually phase out non-renewable energy sources

Modelling tourism competitiveness in small Pacific island countries

This study models overall and bilateral tourism competitiveness in small Pacific island countries (PICs), namely, Cook Islands, Fiji, Tonga, Samoa and Vanuatu. The pooled mean group approach, which corrects for cross-sectional dependence and non-stationarity, is used for estimation with quarterly data from 2002 to 2019. The findings indicate that for Fiji and Vanuatu, other PICs are competing destinations and that Fiji and Vanuatu face the strongest bilateral competition amongst the selected PICs. Cross-price elasticities are insignificant for Tonga and are generally negative for the Cook Islands and Samoa. Thus, while for Fiji and Vanuatu, the Cook Islands is a competing destination, Fiji and Vanuatu are complementary destinations for the Cook Islands. Therefore, destinations that more closely resemble each other face stronger competition, and the nature and strength of competitive behaviour between two destinations are different for each concerned destination