Economics Research

Abstract  Financial instability poses a challenge for developing countries, particularly oil-dependent developing nations, due to their reliance on windfall oil revenues. During periods of abundant oil income, governments tend to increase spending under political pressures, while during times of declining revenues, they struggle to reduce expenditures proportionally due to spending rigidities. In this context, institutional quality appears to influence fiscal sustainability by fostering fiscal discipline. Accordingly, this study examined the impact of institutional quality on fiscal sustainability in 11 oil-producing developing countries and 16 non-oil developing countries from 2010 to 2020, using panel regression models and the PCSE technique. To measure institutional quality, three indicators were used: control of corruption, rule of law, and regulatory quality, while fiscal sustainability was measured by budget deficit volatility. The estimation results indicate a negative relationship between budget deficit volatility and institutional quality indicators. Furthermore, a comparative analysis revealed that the effects of corruption control and regulatory quality are stronger in oil-producing developing countries, whereas the rule of law has a greater impact on budget deficit volatility in non-oil developing countries.
Introduction
The mismatch between the growth of government revenues and expenditures has turned fiscal instability into a serious challenge in developing countries, particularly in many oil-dependent developing nations. In these countries, governments control windfall oil revenues and, disregarding their finite and volatile nature, expand their expenditures—especially consumptive spending—to gain political support, thereby exacerbating fiscal instability. Iran, too, has faced fiscal instability due to its long-term reliance on windfall oil revenues, which the government has used to expand consumptive expenditures (through hiring, wage payments, subsidies, etc.), as well as to finance the legacy of the eight-year Iran-Iraq war. Therefore, this research aims to examine how institutional quality affects the fiscal sustainability of governments and how this effect differs between oil-rich and non-oil developing countries.
Method
The present study estimates the aforementioned model once for oil-rich developing countries and once for non-oil developing countries using panel data models and the PCSE technique, with Stata 17. After estimating the models, the results of the two models were compared using a Z-test.
Results
Since the Hausman test confirmed the fixed-effects model, the Wald test confirmed the presence of heteroskedasticity, and the Wooldridge test confirmed first-order autocorrelation in the error terms for both groups of countries, and given that the number of cross-sections (N) is larger than the time periods (T), the PCSE estimator is used for estimation. The results for oil-rich developing countries indicate a negative relationship between the rule of law, corruption control, regulatory quality, and budget deficit fluctuations. In non-oil developing countries, a negative relationship between institutional quality indicators and budget deficit fluctuations was confirmed. A comparison of the results between the two groups shows that the impact of corruption control and regulatory quality on budget deficit fluctuations is stronger in oil-rich developing countries.
Conclusion
According to the findings, the effects of corruption control and regulatory quality on budget deficit fluctuations are stronger in oil-rich developing countries, while the effect of the rule of law is stronger in non-oil developing countries.
 

Abstract  This paper aims to empirically assess Schumpeter's view that access to credit is vital for entrepreneurial activities. Credit allocation refers to the allocation of bank credits by the monetary authorities to non-financial economic activities. To measure the scope and penetration of entrepreneurship, two common indicators are used: The New Business Entry Density (ED) of the World Bank (WB) and Total Early-stage Entrepreneurial Activity (TEA) of the Global Entrepreneurship Monitor (GEM). Our sample for the first case includes 66 countries over the period 2006 to 2016, and for the second case, 54 countries during the period 2001 to 2016. The results rejects the hypothesis of the impacts of credit allocation on entrepreneurship in the case of former indicators, but do not reject it in the case of the latter indicators.  Furthermore, the sensitivity of the results to the choice of entrepreneurship measure indicates that further inquiries as well as alternative indicators are required to address the Schumpeterian hypothesis.

Abstract Economic sanctions, by causing economic problems for states and influencing their revenues and spending policies, can undermine the quality of life and health for common people. Sanctions can negatively affect the total amount of available resources in a country and the proportion of it allocated to public domains such as healthcare. Thereby sanctions can increase vulnerability of citizens. This study aims at investigating the impact of economic sanctions on public health expenditure in developing resource-exporting countries by applying dynamic panel data method over period 1996 to 2012. The result shows that both minor and major economic sanctions significantly decrease public health expenditure as a percentage of government expenditure. In addition, our findings indicate that major economic sanctions significantly increase public health expenditure as a percentage of gross domestic product. This can be attributed to the fact that major economic sanctions have had a greater impact on gross domestic product than on public health expenditure. Overall, the results of this study show adverse effects of sanctions on the health of citizens by reducing allocated public expenditure to healthcare sector.

Abstract Research and development expenditure is a key indicator of resources allocated to science and technological activities, so knowledge about its features and factors underlying firm decision about R&D expenditures have great importance. According to international comparisons, R&D intensity in Iranian manufacturing firms is low compared to developing countries and emerging-market economies. Therefore, the aim of the paper is to analyze factors determining R&D intensity in Iranian manufacturing firms. Using data covering 1995-2014 based on two-digit ISIC data of Iranian manufacturing firms, we have developed a panel-data model to analyze R&D intensity. Our results show that high-tech companies with higher ratio of human resources with tertiary education are more open to foreign trade, have greater size and also have higher ratio of investment to value-added. The results show that profitability of high-tech companies and their value-added growth have no significant effect on their decision to make R&D activities. In mid- and low-technology companies, none of explanatory variables has significant effect on R&D intensity. This shows that these industries in Iran are not developed enough to be sensitive about R&D in their strategies. Based on these results and considering very different variables that affect decisions of companies about R&D, it is necessary to implement different policies for industries with different level of technology.

Abstract Tourism Industry has important role in the job creating and economic development. Because of it, identifying effective factors on foreign tourism demand and attractiveness of tourism destinations is important. We used panel data of incoming tourist and characteristics of tourism destinations in 147 countries between years 2007 to 2015 to examine which factors have significant effect on foreign tourism demand. We used three aggregate indices to identify characteristics of tourism destinations that are regulatory framework, business environment and infrastructure, and human, cultural and natural resources.  Our results show that business environment, tourism infrastructures such as air and ground transportation infrastructure and price competitiveness have significant effects on foreign tourism demand. We have also used thirteen more detailed indices of tourism destination characteristics and show that safety and security (such as the costliness of common crime and violence as well as terrorism, and the extent to which police services can be relied upon for protection from crime) ,  natural and cultural resources (such as cultural heritage and nationally protected areas)  and price competitiveness indices have a significant effect on foreign tourism demand.

Abstract  
The aim of this study is to estimate the effect of e-commerce on employment and productivity in Iran, with an emphasis on B2C. The methodology of econometrics in this research is panel-data approach, based on provincial seasonal data from 2013 to 2015. Evidence shows that there are 14 million online shoppers and 17,000 online shops in Iran, and 2.4 percent of GDP and 11 percent of the retail trade is done electronically. Estimate in different ways indicate that e-commerce with an emphasis on B2C, increases economic productivity. The elasticity of productivity with respect to e-commerce, is estimated to be between 0.006 to 0.0108. In other hands, one percentage increase in share of e-commerce would increase GDP per capita in provinces between 0.006 to 0.0108 percent. The impact of e-commerce on employment is negative but statistically insignificant. Due to the positive effects of e-commerce on GDP per capita and its insignificant effect on unemployment rate, we conclude that e-commerce improved the productivity of labor during period under study.

Abstract In general, development of infrastructures and implementation of economic projects require financing. However, the exchange rate fluctuations lead to increasing costs of financing through conversion, transaction, economic, credit and liquidity risks. Hence, in this study, the effect of the exchange rate volatilities has been investigated on financing practices of companies listed in Tehran Stock Exchange using autoregressive distributed lags method during monthly period 2006-2015 and then, the effect of this variable has been determined on foreign direct investment (FDI) inflow in economic sectors of Iran using panel data method during 1994-2015. According to the results, the value of assets, stock price index, economic freedom index, inflation rate and exchange rate volatilities are identified as determinants of firms’ financing. Also, the pattern of FDI is a function of sectoral value-added growth, capital productivity index, inflation rate, economic freedom index and the exchange rate volatilities where the coefficients are significant and consistent with theoretical expectations. Furthermore, increasing exchange rate fluctuations can decrease domestic and foreign financing because exchange rate fluctuations lead to different risks.

Abstract Evaluating performance of the Islamic financial and economic institutions and identifying their mechanisms can help to have a better policy-making in banking system. In this regard, different variables can be considered to measure the profitability of banks. Among these, return on assets as one of factors affecting profitability of banks is influenced by two categories of internal and external variables. This research aims at identifying the factors affecting the return on assets in Islamic banks. Data are collected from 29 Islamic banks in 10 Islamic countries over the period of 2004-2011 and are analyzed by using panel data regression in linear models. The results indicate that among 9 variables included in the model, there is a strong, positive, and significant relationship between degree of investment and return on assets. Moreover, there is a strong, negative, and significant relationship between expenses management ratio and return on assets.

Abstract The current study, drawing on mathematical modeling, aimed at uncovering factors influencing life expectency (as a proxy of health) among OIC (Organisation of Islamic Cooperation) countries. More specifically, this article tried to examine health criteria set in the Muslim world in homogeneous income countries. In doing so, we initially depict a conceptual model, and then investigate the various factors affecting health issues by the use of a generalized model developed by Grossman in those countries. The findings of the study ( in a period from 1995 to 2009) revealed that the effective factors were the varibles of GDP per capita, the ratio of total health costs in GDP, out of pocket, malnutrition, and the rates of adolescent fertility. That is, the medical, economic, social, and environmental factors were reported as those influencing the healthy issues in these countries. Moreover, except for upper middle average income Muslim countries, the health conditions of  homogenous groups of income ( i.e. low income, lower-middle-income, middle-income and high-income) have been improved by reducing the rate of teen childbearing variables (social development) and risk of malnutrition (living conditions), though they have not been affected  by these two factors. The implications of this study discussed the growing income trend with increasing GDP per capita and the ratio of health spending to gdp (economic inputs), and this fact, in turn, shows the effects of the economic inputs on the improvement of health status in Muslim countries.

Abstract In recent decades and especially in developing countries, the trade of services has faced an increasing trend. The export of services can improve trade balance, economic growth, employment as well as development of merchandise sector. This paper uses a descriptive and analytical approach and intends to evaluate performance and factors affecting the total export of services and particularly the export of technical and engineering services in OIC selected countries by applying panel data method. The results of estimating the performance indicators and comparative advantage of technical and engineering services export indicate that between years 1994 to 2010, Iran's position among these countries has improved. In our analysis, factors such as GDP per capita, real effective exchange rates, inflow of foreign investments, communication infrastructures and also being member of two trade blocs -ECO and D8- have significant and positive effect on the total export of services and also the export of engineering services. Thus, it is necessity for governmental institutions and private sector in Iran to plan and prepare to further develop the export of services.

Abstract In economic studies, fiscal decentralization theories are used to increase productivity and efficiency of government and to improve the balance between different regions and it is mentioned as one of the fundamental tools in the way of transition to a market economy in developing countries. After Islamic Revolution in Iran and especially after Iran-Iraq war, fiscal and economic decentralization was officially considered as a strategic policy for the development of Iran’s provinces. Firstly, the Provincial Planning Councils were founded and then the provincial revenue-expenditure system was devised to increase the degree of decentralization. But the main concern of economic planners was to investigate the mechanism of which the fiscal decentralization had an impact on economic growth and income distribution. In this paper, by using augmented Solow model, the direct and indirect effects of fiscal decentralization on economic growth is evaluated. After testing for the stationary of our panel of data, it is confirmed that there is a long-run relationship between variables of the model by using Pedroni and Kao tests. After estimating the model by using generalized least squares (GLS) method, it was shown that during the period of 1379-1386, fiscal decentralization (based on two measures of decentralization of national investment expenditures and decentralization of provincial investment expenditures) had a positive effect on economic growth and income distribution in provinces. This effect was in a way that one percent increase in fiscal decentralization would increase economic growth rate up to 0/04 percent. In addition, fiscal decentralization improve income distribution in provinces and indirectly affects economic growth of different regions.

Abstract Given the importance of economic effect of governmental expenditure at the national level, several studies has been done to identify the factors affecting the extent and composition of government expenditure.
In the present article, the effect of fiscal corruption on government expenditure along with other factors has been studied. For this purpose, a panel which includes the annual data for years 2000- 2007 for 31 selected developing countries has been considered. In the first stage, stationary properties of variables and long-term relation between them is investigated. Then by using the method of panel data regression, the impact of fiscal corruption on the composition of government expenditure has been investigated.
Findings of our econometric models show that fiscal corruption has a meaningful effect on composition of government expenditure. In other words, reduction in fiscal corruption index will lead to increase in the relative share of current expenditure, the share of expenditure on human capital and the share of expenditure on education and health in GDP. Also we have found a reduction in the relative share of military expenditure and capital expenditure in GDP.

Abstract Doing business improvement influence on economic growth with increase entrepreneurship, investment, property right and decrease production cost, price of domestic production, informal sector, fiscal corruption, smuggled goods. In this paper, factors affecting economic growth, especially doing business, have been analyzed using panel data models for 68 countries during 2003 ! 2006. Results show weakness on seven components of doing business; i.e, Closing a business, Registering property, Paying taxes, Trading across borders, Enforcing contracts, Employing workers and Starting a business have negative effect  on economic growth. Three other components  of doing business; i.e, Dealing with licenses, Getting credit and Protecting investors have not expected effects on economic growth.

Abstract This paper analyzes the Granger causality between economic growth and Foreign Direct Investment (FDI) inflows in the three income groups of 112 developing countries over the period of 1980 to 2006. For this purpose, panel data techniques, including panel unit root, panel cointegration, and panel vector error correction model, have been applied. The research findings indicate that; firstly, there is a positive and statistically significant relationship between economic growth and FDI inflow in each of three groups. Secondly, these findings, also, provide strong evidence from gtanger causality between these two variables in all income groups.

Abstract Fluctuations of the housing prices during the past 15 years in the country and provincial level, has been remarkable. In this paper, factors affecting housing price level (long term) and its fluctuations (short term) in the provinces during the period 1370-1385(1991-2006) has been studied. For this purpose we used method of panel data. The analysis shows that in short-term, factors of the housing price fluctuations are: stock market price index, the general price level in the previous period, the price of land, construction costs, oil prices, the amount of private sector investment, household spending and interest rate on loan. Also in the long term, factors of the housing price fluctuations are: housing prices in the previous period, the number of households, stock market price index, household spending, the gold prices, land and housing prices and so on. Other results in this paper show that in determining housing prices and its variations the land price, the general price level of the previous priod, interest rate on loan and oil prices had the greatest effect, respectively.  

Abstract The formation and appearance of  the concept of knowledge-based economy seems bring changes in the national economies all over the world.  Developed countries are experiencing a shift from traditional energy-based economies to knowledge economy based on of intellectual property factors. Innovation plays an important role in the economic structures of knowledge-based (developed) as well as developing economies.           Assessing the eminent role of innovation in economic growth, this paper tries to investigate the importance of intellectual property rights on innovation. For this purpose, we use data of the period of1975- 2005 of Islamic developing countries and employ panel data methodology to analyze intellectual property rights on innovation. Results indicate a positive significant effect of intellectual property rights on innovation in the Islamic developing countries.