Ruhul Salim

Business expenditures on R&D and trade performances in Australia: is there a link?

This article, empirically examines the dynamic causal link between business research and development (R&D) expenditures and trade performance in Australia. Based on cointegration and error-correction modelling, Granger causality tests, variance decomposition and impulse response functions are used for this purpose. The results show that a long-run relationship exists between the trade variables and R&D expenditure and a unidirectional causality run from R&D expenditure to exports, imports and net exports. Further, the variance decomposition and impulse response functions confirm that, a significant portion of fluctuations in the trade variables beyond the sample period is explained by R&D expenditure. Therefore, government policies that lift expenditures on business R&D are shown to contribute to the narrowing of Australias chronic trade deficits.

Six Decades of Total Factor Productivity Change and Sources of Growth in Bangladesh Agriculture (1948–2008)

This study applies the Fare–Primont index to calculate total factor productivity (TFP) indices for agriculture in 17 regions of Bangladesh covering a 61-year period (1948–2008). It decomposes the TFP index into six finer components (technical change, technical-, scale- and mix-efficiency changes, residual scale- and residual mix-efficiency changes). Results reveal that TFP grew at an average rate of 0.57% p.a. led by the Chittagong, Rajshahi, Rangpur, Dinajpur and Noakhali regions. TFP growth is largely powered by technological progress estimated at 0.74% p.a. Technical efficiency improvement is negligible (0.01% p.a.) due to stagnant efficiency in most of the regions. Decline in scale efficiency is also negligible (0.01% p.a.), but the decline in mix efficiency is high at 0.19% p.a. Decomposition of the components of TFP changes into finer measures of efficiency corrects the existing literature’s blame of a decline in technical efficiency as the main cause of poor TFP growth in Bangladesh. Among the sources, farm size, R&D investment, extension expenditure and crop specialisation positively influenced TFP growth, whereas the literacy rate had a negative influence on growth. Policy implications include encouraging investment in R&D and extension, land reform measures to increase average farm size, promotion of Green Revolution technology and crop diversification.

Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia

This article empirically examines the impact of R&D and climate change on the Western Australian Agricultural sector using standard time series econometrics. Based on historical data for the period of 1977–2005, the empirical results show that both R&D and climate change matter for long-run productivity growth. The long-run elasticity of total factor productivity (TFP) with respect to R&D expenditure is 0.497, while that of climate change is 0.506. There is a unidirectional causality running from R&D expenditure to TFP growth in both the short run and long run. Further, the variance decomposition and impulse response function confirm that a significant portion of output and productivity growth beyond the sample period is explained by R&D expenditure. These results justify the increase in R&D investment in the deteriorating climatic condition in the agricultural sector to improve the long-run prospects of productivity growth.

Foreign direct investment spillovers and technical efficiency in the Indonesian pharmaceutical sector: firm level evidence

The spillovers of Foreign Direct Investment (FDI) on domestic firms’ performances have been highly debated for many years. This article contributes to this debate by analysing spillovers effects on technical efficiency of Indonesian pharmaceutical sector using a unique unbalanced panel of highly disaggregated (at five-digit International Standard Industrial Classification (ISIC)) 210 firms over the period 1990–1995 (1001 observations). The Stochastic Production Frontier (SPF) and the Data Envelopment Analysis (DEA) based on Malmquist Productivity Indices (MPI) have been used to test the spillovers effects of FDI on technical efficiency. The empirical results from the SPF show that foreign firms are more efficient than domestic competitors, and the presence of the former increases the inefficiency of the latter. Similarly the results from the MPI demonstrate that FDI has a negative and significant impact on technical efficiency changes in domestic competitors, but generate positive spillovers to domestic suppliers.

Foreign Direct Investment Spillovers and Productivity Growth in Indonesian Garment and Electronics Manufacturing

Abstract Inflows of foreign direct investment generate externalities that spill over to domestic firms and raise their productivity. This article examines the extent of spillover effects of foreign direct investment for firms in the highly disaggregated garment (ISIC 3221) and electronics industries (ISIC 3832) in Indonesia. Both are export-intensive industries, but differ greatly in technological sophistication and labour intensity. Changes in both the productivity level and rate of growth in each industry are decomposed into the effects of technological change, technical efficiency change and scale efficiency change and then the impacts of spillovers on each component and on total productivity are estimated. The findings suggest that foreign direct investment generates a positive effect on total productivity change, technical efficiency change, technological change, and scale efficiency change in the garment industry. In contrast, foreign direct investment contributes significantly negatively to total productivity, technological change and scale efficiency change, but has no significant effect on technical efficiency change in the electronics industry.

Economic Liberalization and Productivity Growth: Further Evidence from Bangladesh

The impact of economic liberalization reforms on the productive performances of manufacturing firms remains a contentious issue in the literature. This paper attempts to contribute to the debate by empirically estimating productivity growth of Bangladesh food manufacturing using firm level data before and after reform. Empirical results show that the share of output growth was accounted for by input growth in most sectors of this industry. In some sectors, the estimated rate of total factor productivity (TFP) growth is negligible or even negative. Decomposition of the TFP growth shows that technological progress plays a significant role in TFP growth across firms within the sub-sectors of this industry. Empirical results also show that the relative contribution of capacity realization to TFP growth is not substantial in inhibiting the industrys high and sustained growth. These dismal performances indicate that the industries responded a little to the implementation of economic reforms.

Population age structure, saving, capital flows and the real exchange rate: A survey of the literature

This paper surveys the existing literature on the effects of population age structure on saving, capital flows and the real exchange rate. We build on previous surveys of age structure and saving behaviour by including extensive discussion of international linkages, specifically the impact on capital flows and real exchange rates. We also point to unresolved issues that need to be addressed given that population aging has serious policy implications in the developed economies these days.

Declining rates of return to education: evidence for Indonesia

In 1977, American labour economist Richard Freeman documented a fall in the return to education in the US, and attributed it to the expansion of the countrys education sector. This article shows, similarly, that the returns to education in Indonesia generally declined between 1993 and 2007–08, following the large-scale expansion of the sector. The changes, however, were reasonably modest, and sometimes differed between males and females. This suggests that both recent growth in the education sector (which by itself could depress the return to education) and uneven growth across the Indonesian economy (which could differentially increase demand for graduates at various levels of education) have played a role in determining the pattern of change over time in the profitability of education in Indonesia.

Measuring environmental sustainability in agriculture: A composite environmental impact index approach

The present study develops a composite environmental impact index (CEII) to evaluate the extent of environmental degradation in agriculture after successfully validating its flexibility, applicability and relevance as a tool. The CEII tool is then applied to empirically measure the extent of environmental impacts of High Yield Variety (HYV) rice cultivation in three districts of north-western Bangladesh for a single crop year (October, 2012-September, 2013). Results reveal that 27 to 69 per cent of the theoretical maximum level of environmental damage is created due to HYV rice cultivation with significant regional variations in the CEII scores, implying that policy interventions are required in environmentally critical areas in order to sustain agriculture in Bangladesh.

Determinants of renewable energy adoption in China and India: a comparative analysis

This article examines the dynamic relationships among output, carbon emission and renewable energy generation of India and China during the period 1972 to 2011 using a multivariate vector error correction model (VECM). The results for India reveal unidirectional short-run causality from carbon emission to renewable energy generation and from renewable energy generation to output, whereas in the long run, the variables have bidirectional causality. Causalities in China give a rather different scenario, with a short-run unidirectional causality from output to renewable energy and from carbon emission to renewable energy generation. In the long run, for China, unidirectional causality is found from output to renewable energy generation, while bidirectional causality is found between carbon emission and renewable energy generation.