ACTA ECONOMICA

INDUSTRIAL POLICY IN ASIAN NEWLY INDUSTRIALIZED COUNTRIES: CONTROVERSIES, REVIEW AND LESSONS

Dejana M. Gajinov — Thu, 04 Jul 2024 00:00:00 +0200

The paper’s aim is to use the successful example of the newly industrialized Asian countries, as well as the countries of the East Asian region in general, to prove the need to implement industrial policy in many countries, both those lagging behind in industrial development and those that have reached the technological frontier. The paper describes the evolution of industrial policy in these countries and what distinguishes them from other developing countries that were unsuccessful in its implementation: the developmental state, which recognized timely the turning point from the strategy of import substitution to the strategy of export promotion, implemented both strategies simultaneously, picked winners, provided support to infant industries through selective interventions, but also disciplined the recipients of its support, tracked its own comparative advantages and anticipated their changes, with a strong synergy between the state and private sectors, and looking at Japan as a model of industrial development, i.e. the lead goose. Industrial policy is one of the most controversial issues in economics. There has been a long debate between two schools of thought - orthodoxy and heterodoxy - as to whether there is a need for industrial policy in general, as well as the role of the state in the process of its creation and implementation, as opposed to the free market model of development in which there is no place for industrial policy, and if it appears it can be only of a general nature, and by no means in the form of selective interventions. Over the last 10 to 15 years, there has been a revision both at the academic level and in the real world that has made industrial policy more acceptable, and thus the debate about it has become less ideologically colored and more pragmatic and nuanced. At the theoretical level, the market fundamentalist view of little theoretical justification for industrial policy has lost its dominance. Despite maintaining neoliberal orthodoxy as the advice of international financial institutions in the process of creating economic policy in developing countries, industrial policy remained important for the promotion of industrial development, especially the infant industries. It is accepted that there are many types of market failures that must be addressed through industrial policy. It is increasingly recognized that industrial policy is not just a highly idiosyncratic practice associated only with the miracle economies of East Asia, but what most of today’s developed countries used when they were in the position of the catching-up countries. As a conclusion, the paper discusses the possibility of transferring the East Asian model to other countries, and sheds light on the determinants of industrial policy success and failure. The key conclusion is that there is room for successful industrial policy even in countries that have reached the technological frontier and want to push it further, as well as in countries lagging behind in industrial development, although the global context in which industrial policy is situated has changed over time. A special commentary is referred to the economic and industrial development of the former countries of Yugoslavia.

REMITTANCE INFLOWS AND EXCHANGE RATE IN KENYA: AN EMPRIRICAL INVESTIGATION

Mercy T. Musakwa, Nicholas M. Odhiambo — Thu, 04 Jul 2024 00:00:00 +0200

This study investigated the impact of remittances on the nominal exchange rate in Kenya, using annual data from 1980 to 2020. The study was motivated by the need to find out how remittances affect the exchange rate in Kenya based on an increase in remittance inflows in low- and middle-income countries, including Kenya. This is important as Kenya continues to build a stable macroeconomic environment that supports economic growth and other milestones specified in the Sustainable Development Goals. Methodology: The study used the autoregressive distributed lag approach to examine this linkage. Results: The study, therefore, concludes that remittance inflows in Kenya are not associated with the appreciation of the currency, as predicted by some previous studies. Conclusion: The study, therefore, concludes that remittance inflows in Kenya are not associated with the Dutch-disease phenomenon. Recommendation: It is recommended that Kenya may continue to implement policies that support remittance inflows to realize an improvement in the balance of payments in the country.

INFLATION AND ECONOMIC GROWTH TRENDS: GLOBAL AND SOUTH AFRICAN PERSPECTIVES

Shelton Masimba Tafadzwa Mandeya, Sin-Yu Ho — Thu, 04 Jul 2024 00:00:00 +0200

This paper explores the global inflation and economic growth trends, with a special focus on South Africa, from the 1970s – the period marked by the crumbling of the Bretton Woods system and the ensuing stagflation – to 2022. Our exploration reveals that global inflation is driven mainly by advanced economies, and there are signs of a negative correlation between the levels of income and inflation rates. We observed a structural break in global inflation in 1995 when inflation substantially decreased and became more stable than before. Our analysis links this structural break and stability in inflation to the emergence of strict monetary policy regimes like inflation targeting. Emerging and developing economies experienced a substantial decrease in inflation after they adopted inflation-targeting policies, as compared to advanced economies. In contrast, AEs benefitted from a significant rise in their economic growth. For South Africa, the trends in inflation and economic growth displayed a different picture. Although negligibly, South Africa’s inflation rose three years after adopting inflation targeting. During the same period, the South Africa experienced rising economic growth. To better understand the relationship between inflation and economic growth, we suggest the use of extensive data and models to investigate the structural breaks experienced.

ECONOMICS OF EDUCATION: THE EXAMPLE OF THE BALKAN COUNTRIES

Ognjen Erić, Slaviša Kovačević, Jelena Bjelić, Dejan S. Molnar — Thu, 04 Jul 2024 00:00:00 +0200

Economic growth is an economic topic that attracts a lot of attention in science and research. This is a consequence of the emergence of increasingly frequent regional and global instabilities, which often develop into open economic crises of a larger scale. Therefore, today’s economic stability is largely threatened due to the slowdown in GDP growth. Economic growth is influenced by various economic factors, with education being one of the most important, which undeniably boosts productivity, competitiveness, and growth. Among the first, this topic was elaborated by Solow. In this research, regression analysis was used to analyze the influence of several selected variables that determine the state of education. The research results are presented in two models. The dependent variable is Gross National Income per capita (GNIpc), and the independent variables in the first model are years of education, macroeconomic stability, and ability to accept information technologies. In the first model, none of the independent variables is individually significant for the movement of GNIpc. The continuation of the analysis (second model) excludes the variable of macroeconomic stability. The final results are significant for the movement of GNIpc and show that an increase of one year in education leads to an increase in GNIpc by 4408 units, while an increase in the speed of ICT adoption leads to an increase in GNIpc by 543 units. Thus, the research results show a positive and significant influence of the selected independent variables on the economic growth of the Balkan countries.

PRINCIPAL COMPONENT ANALYSIS OF GENERATIONAL PREFERENCES REGARDING OVERTHE- TOP SERVICES – A HUNGARIAN CASE STUDY

Vinkóczi Tamás, Majczán Lili Anna, Miklós Petra, Koltai Judit Petra — Thu, 04 Jul 2024 00:00:00 +0200

The rise of video streaming services has not only increased the popularity of the platforms available, but has also changed the way households consume content, displacing the options offered by traditional television. The orientation was to apply a specific interdisciplinary scientific approach, combining economics and sociology, due to the research area of the study. The advantages/disadvantages of streaming platforms may play a role in the perceptions of different age groups of users by the service provider they choose. The aim of the research is to focus on the different video streaming consumption habits of the various generations (Generation X, Generation Y, Generation Z) as customers of Netflix, HBO Max, and Disney+, the widely known video streaming providers as reflected in the literature review. A Likert-scale questionnaire survey was considered the most appropriate method to achieve this objective. In order to test the hypothesis on the relationship between generations and video streaming usage a principal component analyses by generation was applied. The separation of variables resulted in the establishment of two groups, namely manipulation (indicating the influence of the traditional way of life) and enjoyment (influencing the choice and customer retention of service providers). The results of the study indicate that the generational characteristics of consumers partly show different patterns of service use, and that the impact of service use on traditional lifeways differs between generations. The analysis highlights the importance of further researches in this area, as the factors explored can be extended to other important issues in the future.

OPTIMIZING THE ECONOMIC BENEFITS OF PUBLIC SPENDING FROM NATIONAL YOUTH DEVELOPMENT AGENCY GRANT FUNDING

Asanda Fotoyi, Ronney Ncwadi — Thu, 04 Jul 2024 00:00:00 +0200

This study examined the economic benefits of the National Youth Development Agency (NYDA) grant funding, in the Eastern Cape, using cost benefit analysis (CBA) and least absolute deviation (LAD) regression analysis on a sample size of 253 respondents. The study found that public investment towards youth entrepreneurship through NYDA grant funding yields positive social returns. The study further found that the development of youth entrepreneurship should go beyond just NYDA grant funding to include favorable policies towards closing gender gaps, supportive education systems as well ensuring diverse economic sectors.

THE QUALITY OF INSTITUTIONS IN THE COUNTRIES OF SOUTHEAST EUROPE: A COMPARISON WITH THE MEMBERS OF THE EUROPEAN UNION

Jelena Trivić — Thu, 04 Jul 2024 00:00:00 +0200

The purpose of this paper is to show the importance of the development of institutions and the institutional environment in a globalized world. The methodology used to measure the quality of institutions are components of the World Governance Indicators Database developed by Kaufmann, Kraay & Mastruzzi (2010) where we performed a comparative analysis of the quality of institutions for three samples of countries, the countries of Southeast Europe (countries of the region), the newest members of the EU and the countries of Central Europe and the Baltic States. After that, we showed the degree of correlation between economic development measured by GDP per capita in purchasing power parity and each of the six indicators of the quality of institutions. The results show that the countries of the region lag significantly behind the countries we call New Europe (Central Europe and the Baltics), but also lag behind the youngest members of the European Union in terms of the quality of institutions, i.e. the rules of the game. When it comes to correlation between economic development and institutional environment, for all 6 indicators of instituional environment, a strong and positive correlation was shown, especially between the rule of law and economic development. The conclusion is that the countries of the region must strengthen the rule of law, fight against institutional corruption, ensure political stability so that the economic standard of their citizens could improve.

EXPLAINING THE CORRELATES OF CHILD’S MULTIDIMENSIONAL POVERTY IN SOUTH AFRICA USING THE ALKIRE-FOSTER APPROACH

Thonaeng Charity Molelekoa, Abayomi Samuel Oyekale — Thu, 04 Jul 2024 00:00:00 +0200

Child’s poverty remains one of the major concerns in the Sustainable Development Goals (SDGs). This study analyzed the determinants of child’s multidimensional poverty in South Africa using the 2017, 2018 and 2019 General Household Survey (GHS) datasets. The Alkire- Foster’s methodology was used to compute child’s Multidimensional Poverty Index (MPI), and its correlates were analyzed using the Tobit regression. The results revealed that some regional and areas of residence factors significantly influenced MPIs across the periods (p<0.05). Also, being a Coloured, Indian/Asian, and White child and biological children of the households’ heads significantly reduced MPIs (p<0.05). Conclusively, policies and programs to address child’s poverty must among others, be sensitive to some racial, provincial and gender factors. It is therefore recommended that the government needs to critically come with strategies to facilitate achievement of some SDGs as a prerequisite for reducing child’s multidimensional poverty.

EFFECTIVENESS OF RISK MANAGEMENT IN NIGERIA’S MANUFACTURING ENTERPRISES

Thu, 04 Jul 2024 00:00:00 +0200

This study seeks to examine the effectiveness of enterprise risk management (ERM) implementation in the Nigerian manufacturing sector. The objective of this study is to analyze the risks faced by manufacturing firms in Nigeria and to recommend actions to address and reduce anticipated hazards. This research used both inferential and descriptive statistics to examine the effectiveness of ERM application in Nigeria’s manufacturing sector. The data for this study were collected from the financial statements of manufacturing firms and other relevant publications by manufacturing firms in Nigeria from 2016 to 2020. The study found that ERM has a positive relationship with financial performance indicators such as return on investment, dividend, earnings per share, market capitalization, price earnings ratio, and dividend per share. The study recommends that manufacturing companies in Nigeria should implement ERM as an ongoing activity to improve their risk management practices, enhance their effectiveness, and ensure their long-term sustainability. This study contributes to the literature on ERM implementation in the Nigerian manufacturing sector and provides valuable insights for policymakers, regulators, and business managers.