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深入了解收敛的过程
表 1中所显示的包括等式和整个时期(1960 - 2008)的FGLS 估计结果是很有趣的，并且都是基于发展文献和其他的实证证据。所有的这些变量都有正确的标志并且具有统计学意义。方程式对核心规范Eqs. (1)和(2)系数的估计(表1,列0)不仅体现了投资和实物资本积累这些基本变量对经济增长和外国直接投资的直接影响，而且也体现了其它制度上的变量的影响。
在Eq.1中(人均收入的增长),初始人均收入的变量是非常重要的,它显示了消极的信号,反映这些国家在给定的时期内的条件收敛。收敛过程可以由另外的两个概念来描述:一方面,收敛速率(或速度)可以定义为人均收入系数β和增长率时间段t;另一方面,半衰期或经济所需来填补将他们从稳定的状态分开的一半变化的时间。在要点估计中,相关的收敛速度为2.2%,非常类似于通常在融合文学中发现的2%，伴有约24年的半衰期。
Insight into the convergence process
The FGLS estimation results reported in Table 1 -for both equations and the entire period (1960-2008) - are interesting and according to growth literature and other empirical evidence. All these variables have the correct sign and are statistically significant. The estimation of Eqs. (1) and (2) coefficients in the Core specifications (Table 1, column 0) embed not only the direct impact of fundamental variables -investment and physical capital accumulation- on economic growth and foreign direct investment, but also other institutional variables.
In Eq. 1 (income per capita growth), the variable of initial income per capita is very significant with a negative sign, reflecting conditional convergence across these countries in the given period. The convergence process can be characterized by two additional concepts: on the one hand, the convergence rate (or speed), which can be defined as, for β the coefficient of income per capita and t the growth rate time period; on the other hand, the half-life or the time necessary for the economies to fill half of the variation that separates them from their steady state: . In the Core estimation, the associated speed of convergence is 2.2%, quite similar to the 2% usually found in the convergence literature, with a half-life of almost 24 years; i.e. at this speed, South American countries will reach convergence in 50 years. This speed significantly accelerates for the last extension of the Eq. 1 model, in column (4), to 3% shortening the half-life measure in some years. These results are similar compared to other empirical references in the subject, for example our β coefficient of 3 percent is similar with the results of Serra el al. (2006) where the β coefficient is 2.8 percent once it controls for sectoral variables (agriculture and manufacturing). The longest period revised is for 100 years, by Astorga et al.(2005), but only for 6 most developed Latin American countries, it founds a lower speed of absolute and conditional convergence of around 1.4%. In the other hand, other regional studies after controlling for exogenous output (agriculture and manufacturing) found a β coefficient of 3%. (Serra et al. 2006).
Regarding the coefficients for the explanatory variables of foreign investment (Eq. 2), international trade policies (real openness) boost capital funds. Similarly the coefficient that represents the accelerator principle (one-period lagged GDP per head growth) has a positive and significant relation with foreign direct investment. Considering the two institutional variables (life expectancy and secondary enrollment), they are also statistically significant. Life expectancy, which reflects convergence in terms of health, is also likely to reveal other important contributing factors of long-term growth, such as the accumulation of human capital and structural and institutional changes. The positive sign of secondary enrollment indicates a direct positive association between growth and human capital accumulation, especially in developing countries, which are actually converging to human capital international standards (Barro and Sala-i-Martín, 1997).
Finally, the external debt coefficient still has a negative impact on South American economies, and it is highly significant as we discussed in the literature review. The empirical results indicate that it is difficult to say whether external debt has a negative or positive effect on economic growth, though much analysis concludes the first. In effect, the debt hypothesis basically indicates that the accumulated debt acts as a tax on future output, discouraging investment plans of the private sector, and it usually demands efforts on the government side. Sachs (1986) indicates that when indebted countries pay their debt, these payments are transfer resources from the private sector to public sector. So if governments want to pay their debt obligations, they need to levy a tax on the private economy or reduce any future project, leading to negative effects on future production and income. Geiger (1990) -for nine Latin American countries- reaches to our same conclusion, i.e. that there is a statistically significant negative relationship between debt and economic growth. In the other hand, Warner (1992) indicates that the reasons behind the decline of investment in many of the heavily indebted countries are declining exports prices, high world interest rates and sluggish growth in developed countries.
Empirical extensions
Table 1 presents through columns 1 to 5 the econometric outcome of a set of exogenous variables on the dependent variables. These results are extensions of the main equations (core equation); this part of empirical results includes other important socioeconomic variables mainly related to development economics. They are included to capture the effects of other factors associated with income growth and foreign investment. For example, the presence of good institutions built strong political institutions that could link growth with welfare and are able to attract foreign capital funds in the internal markets. On the other side, the negative effects of debt overhang problems can create major dislocations on the balance sheet, bringing the regional economy closer to a risky external position.
On the other hand, the export sector’s low diversification of South American economies is one of the key obstacles for sustainable income growth, for example, fuel and mineral exports represent approximately a 37 percent, and, agricultural and manufactures exports are about 25 percent of the sample, that’s why we introduce sectoral exports (manufacture, services and food exports) to check for sectoral production has significant effects on income growth, or if on the other side, oil production has an impact on growth. (See Table 1, column 1). The results are quite interesting especially for manufacture and services exports which are highly significant, with a direct and positive impact on economic growth. It may be due to the impact of the Industrialization Substitution Imports policy which before the 1980s (during our first sub-period) attracted high levels of foreign investment (see also Table 2). Regarding food exports variable, it appears to be one of the most significant factors that attract investment, due to higher foreign prices and better production techniques.
The results of macroeconomic volatility and real exchange rate deviations have a negative effect on both income growth and investment, being highly significant in all equations. On its side, U.S rate has the expected negative sign and it is statistically significant, its negative association with income growth is related with capital outflows due to increments of foreign interest rates (Table 1, column 2), In that way, it also has other important effects on income growth , i.e. if foreign interest rates increases, debtors countries will have to pay more for their external debt, therefore reducing future projects, putting a drag on the recovery and hampering the potential output.
With regards to the presence of terms of trade, we found it influences positively trade and the accelerator principle, on the other hand, surprisingly it boosts secondary enrollment and diminished the impact of life expectancy variable on the investment equation (See Table 1, column (3)).
. In fact, the variable of terms of trade exhibits a negative impact on foreign direct investment (Table 1, column 3). A plausible explanation for our result under the above explanation may be due to the production structure of the region. Since it depends -in some part- by commodities exports, in that way, the effect of macroeconomic disturbances may be more notable in the investment variable due to price changes. Additionally, we consider plausible that foreign investment is attracted to sectors with lower volatility. Finally we suggest that the export promotion strategy leads to a somehow ‘biased’ income growth in countries specialized in exporting commodities; even more, it thus possibly increases the region’s output gap and disparities. A theoretical description on this subject can be found on the sectoral structure of exports. According to the above theory, Bhagwati et al. (1978) find that terms of trade might worsen the country’s capital inflows, resuming that the effect on foreign investments depends on the country’s trading mode, that is, import substitution or export promotion
Reading the outcome from Eq. 1 (Growth equation, Table 1 column 3), terms of trade is positively significant in boosting income growth probably by incrementing the government revenues due to commodity exports, on the hand it has negative impact on manufacture exports reducing its effect on growth and its statistical significance and finally voiding the secondary enrollment variable’s effect on income growth.#p#分页标题#e#
The impact of the exploitation of natural resources on a developing economy traduces into higher income exports and increased import capability that are used as public expenditure source. This kind of economic wealth attracts significant amount of investment and foreign capitals; however the presence of the Dutch Disease [1] could temporally affects export prices, which further leads to overvaluation of the real exchange rate and negative effects on growth, from our results, real exchange rate deviations has major negative impact on investment and also its significance increased with the interaction of terms of trade
Finally in column (4) the inclusion of the Quality institutions variable appears with the correct sign, though it is significantly different from zero at 10 percent. In that way, the presence of a favorable institutional framework is important for economic growth in less developed countries, although institutions are prompt to be affected by rent-seeking behavior especially in those countries with natural resources wealth. This seems to be one of the poverty traps that affect governance and good institutions permanently.
Growth over different sub-periods
An empirical explanation of the division in two sub-periods is the appearance of the debt crisis of the 1980s and the adjustment process followed between 1982 and 1987, which cost real income per capita growth and welfare deteriorations in most countries of the region. The fiscal deficits incurred by these countries in the 1970s produced high levels of foreign borrowing in order to ride out the effects of the oil price rises in 1973 and 1979. Moreover, unfavorable external terms of trade (except for major oil exports) and interest rate shocks resulted in an unleashing of the crisis that brought regional growth to a halt for almost a decade.
According to the conventional view, the fundamental causes were worldwide inflation, which almost tripled global interest rates while the debt-service jumped up to unmanageable levels (Mexico defaulted payment on 1982 and later several other countries followed default problems and were forced to reschedule their outstanding debts).
Table 2 shows the results of the division between sub-periods for each equation. The third column of Table 2 shows a negative and significant result of external debt coefficient on both sub-periods confirming the findings of other studies on this issue, where the result on the first period reflects the initial impacts of the accumulation of fiscal misbalances and debt overhang on the regional economy, which finally exacerbated the debt problems of the 1980s that were greatly compounded by higher levels of external debt and the sudden cut of flow of loans to South America, which increased the risk of recession and debt payments.
On the other hand, Table 2 (second and third columns) shows the importance of secondary enrollment, reflecting that significant progress in human capital accumulation are doing in South American economies, and that the effects of the social strategies in the region have positive effects, increasing population’s welfare and income growth, reducing the human capital gap from other developed regions in the world.
Our paper starts with the economic literature observation that trade openness appears to be beneficial to economic growth on average, whereas its effects vary considerably across countries and depends on a variety of conditions related to the structure of the economy and its institutions [2] .
However, our results on foreign investment equation (Table 2, column 6) show that Real openness has an indirect impact on growth via investment, which is significant during the second period confirming the positive effects of the reforms in the 1990s [3] and trade agreements in the region; on the other hand, the result of the first period is not significant probably as a consequence of the implementation of trade barriers that were part of the strategy of import substitution (1950-1980). In that way, it is well known that protectionist trade policies tend to discourage -rather than promote- the desired diversification of exports. In that way, Edwards (1993) argues that the beneficial impact of openness on Latin America economic growth is larger when society has a more efficient, accountable and honest government, since the presence of solid institutions are more respected and attract foreign investment flows. Therefore, good institutions built strong sociopolitical setting capable to promote income growth with population welfare, which is able to insert and make more competitive the economy in the global markets; for example, the continuous institutional change process of South American economies has an important impact on income growth and it is more noticeable after the debt crises with the democratic regimes (See Table 2 – Growth equation).
Regarding to sectoral exports, we surprisingly found that manufacture and services exports are only significant in the first period of the sample (1960-1982) (Table 2, second column). To begin with, ISI policies had achieved a degree of manufacturing production that normally corresponds to a situation in which the countries seek to generate a trade surplus in manufacturing. In the other hand, in the investment equation (Table 2, column 5), the manufacture export coefficient is highly significant, we believe that this result is due to favorable conditions for investment in the manufacturing sector, which were part of an industrialization strategy during the 1950-1980.. Finally we can better distinguish that food exports attracted foreign investment only in the first period, and we suggest this is as a result of favorable foreign prices.
Respect to the previous results (sectoral exports) we consider interesting to associate them to the case of de-industrialization in South American that is based on the remarkable slowdown in productivity growth of mid-1970s, which would be caused by “mistaken” applied policies and “wrong” structural policy decisions (particularly in the 1980s) that have over intensified the processes of de-industrialization, and damaged long-term growth perspectives for the region (See Palma 2003, 2005).
In the final part of Table 2, regarding to macroeconomic volatility our results show that U.S interest rate has a negative relation with growth during the whole period, indicating that increments in foreign interest rates may produce capital outflows from less developing countries. On the other hand, the real exchange rate deviations show no distinguishable effect among the two sub-periods.
Since it is well known that the mayor macroeconomic distortions in South America were in the first sub-period (e.g. abrupt oil prices changes during the 1970s, and distortions of the protectionist policy), the terms of trade volatility appears to be significant and with a direct negative effect on growth and investment but only in the first sub-period (columns two and five).
Regarding the relation between export and import prices (terms of trade), we found that it has a positive relation with income growth solely on the first period, it is reasonable to suppose that the impact of terms of trade was bigger in the first period due to higher natural resources prices, in that way, it is very likely that the risk of terms of trade volatility on growth was considerable higher and significant during 1960 to 1982..
Moreover, according to the Bhagwati et al. (1978) paradox, we confirm the previous results of Table 1; we found that terms of trade has a negative effect on foreign investment (See Table 2, columns 4 and 6). In that way, we still assuming that despite natural resources wealth (oil, gas, etc.) has an important play attracting capital funds, on the other side, the foreign investment’s behavior strongly depends on the macroeconomic performance and its stability, and, on a favorable and solid institutional framework.
Furthermore, although the region passed through important institutional changes during its history, during the last half century qualitative advances were done in institutional terms. In that way, our results show that they had positive effects on income growth in both sub-periods (though with less statistical confidence than other variables (See Table 2 column 1)).
The results show that the rate of convergence in the first sub period (1960 to 1982) is higher and stronger (3.6 percent) compared to the convergence rate among 1982 and 2008 (2.6 percent). The inclusion of sectoral variables (manufacturing and services exports) and other conditioning variables [4] rises the speed of convergence in the 1960s and 1970s; however, the inclusion of the same set of variables alters the results, indicating that in the 1990s the beta convergence decreased in South America, we highly believe that the rising internal constraints -structural and cyclical- and macroeconomic imbalances exacerbated the inherited economic problems and became more difficult to manage economic policies. At last, by the 2000s the South American economies had achieved moderate growth but there is little evidence of conditional convergence, it appears that income growth was still not high enough for small countries to revert the lower growth path.
Concluding remarks
It is admitted that any conclusion drawn from an empirical exercise like we have here is tentative and suggestive. However, since our sample consists of almost all the most important South American countries, we believe that our results deserve serious attention. In view of the apparent and inevitable process of globalization, the majority of the historical evidence suggests some valuable lessons for South American growth. First, physical capital accumulation (both public and private) is a necessary condition to boost long-term growth, and that a more open economy can be helpful in stimulating investment and physical capital. Second, despite significant advances in life expectancy and basic education access to population, renewed efforts to strengthen the government's role in fostering human capital remains a top priority in developing countries. Third, there is a need to secure macroeconomic stability to set the basis for high and sustained income growth, which includes fiscal and monetary discipline, a predictable real exchange rate, and a diversified export sector to minimize exposure to terms of trade volatility.#p#分页标题#e#
Finally, in a different setting from ours, a low level of inequality, high institutional quality, and sustainable growth are the principal features of the good equilibrium, policy and institutional factors to contribute the long-term economic growth by stimulating productivity growth as well as capital accumulation.
This paper makes an empirical contribution to the study of economic growth for South America considering longer-term perspectives over almost fifty years, especially for the small economies for which there is not much historical empirical evidence regarding the review of statistical literature and examining the determinants of long-run economic growth. Also, we applied a new methodology for terms of trade volatility that brought the expected results according to other empirical works.
Although, data restrictions due to the limitations of existence or access, our results are robust and gain more significant using long time series confirming the findings of previous studies in the subject; in that way, we were able to try out different variables to adjust to better and consistent results using the FGLS technique.
Despite the methodology applied, we found some difficulties founding a proxy for institutions, the Quality institutions variable shows frequently changes by regional political instability during the seventies and eighties, in the other hand,-however, we can highly consider as a good variable of reference, since our results are free of perception effects problems.
Finally, we present our results and economic effects, and at the same time, present some suggestions for a further research.
As discussed in the introduction, previous empirical evidence on the impact of trade on economic growth has failed to reveal undisputed beneficial effects. In fact, we present economic literature in which the barriers to trade need to be accompanied by complementary reforms in non-trade areas to improve income growth. We also agree that the benefits of trade are more visible from mid-1980s during the broad macroeconomic reforms and adjustment process.
On the other hand, the impact of foreign investment is country-specific, but it tends to promote economic growth, when the developing countries adopt an open trade regime, improve education accessibility, and, thereby human capital conditions, and maintain macroeconomic stability. Therefore, the link between foreign investment and growth has an important implication for developing strategies, which leads to capital accumulation (physical and human) and might be able to enhance economic growth through spillover efficiency and technology transfers.
Also our results surprisingly show evidence that the region faced positive changes regarding its export sector, however we found results that the Dutch Disease spread to part of the region, brought on by a drastic switch in the economic policy regime; which was basically as the result of a radical program of trade and financial liberalization within the context of an overall process of economic reform that did not focus deeply on institutional reforms, which latter affected the results of the reforms.
Also the results show a positive effect of food and agriculture exports that attracts foreign investment; however it may be temporal, as we think it is a result of higher commodity prices.
The presence of macroeconomic disturbances is robust in all equations and has a negative effect on both investment and income growth. In that way, we present evidence where the region is still vulnerable to fiscal imbalances, external debt and lack of monetary discipline (exchange rate deviations); in this context, changes in U.S interest rate affect directly on income growth, the presence of external debt in the region still affect the potential output and show some external vulnerability of the economy; finally, real exchange rate disturbances have a negative association with investment decisions, and terms of trade volatility reflects once more the exposure of the region to external shocks.
Signals of conditional convergence within the region showed a tendency of reducing the distance to high-income countries, which at least was more prominent until the mid-1980s, where the economies showed a slight pattern of convergence. However, the 1990s seems to bring a reverse to the previous trend, and by the 2000s, there is again a distinction between higher and lower income economies, in the sense, that not only the distance between them has increased again.
Identifying such common factors (if they exist inside a big and diverse region) might improve our understanding of why some South American countries grow faster than others. Uncovering the income growth behavior in South American economies is the first and probably the easiest step for understanding the development processes, similarities and weaknesses behind these economies. However, the final step, the extraction of policy implications from these patterns is more difficult and may lead to misleading conclusions.
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