Publications in Refereed Journals
- Financial Development and Governance: A Panel Data Analysis Incorporating Cross-sectional Dependence. Economic Systems (2021). (with Muhammad Shafiullah). (Full text can be viewed here)
This study investigates bidirectional causality between governance and financial development using panel data of 101 countries from 1984 to 2013. The financial development–governance nexus is explored using econometric methods robust to cross-sectional dependence, and the relationship between different levels of development and openness is analyzed. Long-run equation estimates show clear evidence that financial development positively affects governance, and this positive impact is found to be robust to three different measures of governance. Further analysis shows that improving governance quality has positive effects on financial development, while Granger causality tests demonstrate bidirectional causality between financial development and the governance measures. Last, the impact of financial development on governance is dependent on a country’s level of development and openness. These findings underscore the crucial role of financial development in bringing about good governance reforms and economic growth that, in turn, can further develop the financial sector. As such, a symbiotic and synergistic relationship can persist between good governance, growth, and financial development. The findings provide significant motivation for policymakers to encourage openness and financial sector development to lift the standard of living, especially in emerging economies.
- A Nonparametric Analysis of Energy Environmental Kuznets Curve in Chinese Provinces. Energy Economics. 2020. (with Muhammad Shafiullah, Muhammad Shahbaz and Malin Song). (link) (Full text can be viewed here or here)
Energy resources are an important material foundation for the survival and development of human society, and the relationship between energy and economy is interactive and complementary. This paper analyzes the energy consumption–economic growth nexus in Chinese provinces using novel and recent nonparametric time-series as well as panel data empirical approaches. The dataset covers 30 provinces over the period of 1980–2018. The empirical analysis indicates the presence of a nonlinear functional form and smooth structural changes in most of the provinces. The nonparametric empirical analysis validates the presence of a nonlinear unit root problem in energy consumption and economic growth, and nonlinear cointegration between the variables. Additionally, the nonparametric panel cointegration test reports evidence of convergence in energy consumption and economic growth patterns across the provinces. The nonparametric regression analysis finds economic growth to have a positive effect, on average, on energy consumption in all provinces, except for Beijing. Further, the energy environmental Kuznets curve exists between economic growth and energy consumption in 20 out of 30 Chinese provinces. The Granger causality analysis reveals the presence of a mixed causal relationship between economic growth and energy consumption. The empirical findings have important implications for Chinese authorities in planning for improving energy efficiency, decoupling between economic growth and energy consumption, and reducing the environmental footprint of provinces.
- Regaining International Tourism Attractiveness After an Armed Conflict: The Role of Security Spending. Current Issues in Tourism (Online First). (with Luke Emeka Okafor). (link) (Full text can be viewed here)
This paper investigates how long it takes a country to regain international tourism attractiveness after an armed conflict using gravity panel data. This includes examining the influence of security spending as proxied by military spending in the underlying negative relationship between international tourism and armed conflict. The results show that security spending cannot reverse the negative impact of armed conflict on international tourist flows in a destination country in a short period of time. Security spending, however, can reverse the negative impact of conflict after about eight years following the onset of the conflict as international tourist flows increase. Armed conflict is very costly and should be avoided by all means possible. In the event of an unavoidable conflict, effective utilization of security spending can help to restore peace after some time, which in turn would lead to an increase in international tourist flows.
- Military Spending and Economic Growth in Turkey: A Wavelet Approach. Defence and Peace Economics (Online First). (with Olivier Habimana) (link)
This paper employs a wavelet approach to investigate the relationship between economic growth and military spending in a time-frequency domain for the case of Turkey. Turkey presents an interesting case for analysis of military spending and economic growth, as its geopolitical position and history of insurgencies and separatist violence oblige the country to devote an unusually large share of the central government budget to national defence. Timescale regression analysis reveals that military expenditures have significant negative effects on growth in per capita GDP at business cycles of 16 years and longer. Timescale Granger causality analysis indicates that per capita GDP growth responds to movements in military expenditures at business cycles of eight years and above and that this result is very significant. Wavelet coherency analysis corroborates these findings, indicating a significant negative long-run co-movement at business cycles of 16 years and longer. Thus, the neoclassical prediction that military spending may promote growth does not hold in the case of Turkey, at least in the long run. Furthermore, the analysis reveals that, in the long run, military spending has been leading rather than lagging economic growth.
- The Effects of Economic and Financial Crises on International Tourist Flows: A Cross-Country Analysis. 2020. Journal of Travel Research, 59 (2), 315-334. (with Muhammad Shafiullah and Luke Emeka Okafor). (link) (Full text can be viewed here)
This article investigates the effect of different economic and financial crises, such as inflation crisis, stock market crash, debt crisis, and banking crisis on international tourism flows using a panel gravity data set of 200 countries over the period 1995 to 2010. The results show that the inflation crisis has a dampening effect on international tourism flows in both the host and origin countries. The results also show that domestic debt crisis encourages international tourism arrivals in the host countries, whereas its impact on international tourism services in originating countries is negative. Further, the impact of these crises on tourism is region dependent. In particular, banking crisis depresses international tourism flows in host countries situated in regions such as America and Latin America and Caribbean, whereas its impact on originating countries located in regions such as Asia and the Middle East is insignificant.
- Armed Conflict, Military Expenditure and International Tourism. 2019. Tourism Economics, 30 (2), 238-251. (with Luke Emeka Okafor and Nusrate Aziz). (link) (Full text can be viewed here)
This article uses a gravity model to explore whether military spending has any moderating effect on the link between armed conflict and international tourist flows. The data set consists of a panel of 188 countries over the period 1995 to 2015. We show that the moderating effect of military spending depends on the levels of relative military spending as well as geographical location. Specifically, in the presence of armed conflict, ‘moderate’ level of relative military spending helps to promote the international tourism attractiveness of destination countries, whereas ‘high’ level of relative military spending cannot reverse the negative impact of armed conflict, it rather fuels the problem. In general, countries in regions such as Southeast Asia that allocate ‘moderate’ amount of resources for security attract more international tourists relative to countries in regions, such as the Middle East and North Africa, that spend a larger share of GDP on security.
- Armed Conflict, Military Expenses and FDI Inflow to Developing Countries. 2019. Defence and Peace Economics, 30(2), 238-251. (with Nusrate Aziz) (link)
This paper investigates the relationship between military expenditure and FDI inflow conditioning on the exposure of a country to armed conflict in the long run. We apply the band spectrum regression estimator, and the maximal overlap discrete wavelet transform, to a panel of 60 developing countries, for the years 1990 to 2013. The estimated results indicate that military expenditure, in the absence of armed conflict, reduces FDI inflow. However, the negative effect is mitigated by increased military expenditure, in the presence of armed conflict. We also show that the effect of military expenditure on FDI is time sensitive, in that it takes time for military expenditure to affect FDI inflow. FDI inflow in response to higher military expenditure is higher for the country that faces higher armed conflict than the country that faces lower armed conflict. The findings are robust in the case of overall as well as internal conflict. These results are also robust to the alternative specification, subsample analysis with different armed conflict thresholds, and the estimation using the time variant long-run models.
- Determinants of International Tourism Demand: Evidence from Australian States and Territories. 2019. Tourism Economics, 25 (2), 274-296. (with Muhammad Shafiullah and Luke Emeka Okafor) (link) (Full text can be viewed here)
This article explores whether the determinants of international tourism demand differ by states and territories in Australia. This is the first attempt at econometric modelling of international tourism demand in the states and territories of Australia. A demand model is specified where international visits to states and territories is a function of world income, state-level transportation costs, stock of foreign-born residents, the Australian real exchange rate and the price levels of international and domestic substitutes. Panel and time series econometric techniques are employed to test the model variables for stationarity, cointegration and direction of causality. Panel and time series cointegration tests show that the model is cointegrated. The causality analysis indicates that all explanatory variables Granger cause international visits to the Australian states and territories. Further, we show that the impacts of the determinants of international tourism vary by states and territories. The results underscore the importance of targeted policymaking that takes into account the economic and social structure of each state and territory instead of designing tourism policies on the basis of one-size-fits-all approach.
- Are Capitalists Green? Firm-ownership and Provincial CO2 Emissions in China. 2018. Energy Policy, 123, 349-359. (with Fredrik N.G. Andersson and Sonja Opper) (link)
In China, a large private sector has evolved alongside a still sizeable state-owned sector that is subject to government control. Several studies have found that in this mixed economy, the private sector is economically more efficient than the state-owned sector. In this paper, we investigate whether private firms are also more carbon efficient than state-owned firms. Using a macroeconomic panel data model with provincial data from 1992 to 2010, we confirm that private firms emit less carbon dioxide than state-owned firms. Our results imply that future reforms, such as ongoing privatization, introduced to increase the economic efficiency of state-owned companies will also mitigate emissions growth. The policy lesson, not only for China but for developing countries maintaining a large state-owned sector, is that economic efficiency and energy efficiency are conjoined mutual benefits.
- Common Unofficial Language, Development and International Tourism. 2018. Tourism Management, 67, 127-138. (with Luke Emeka Okafor and Terence Then) (link)
We employ a gravity framework to examine whether the use of common unofficial language promotes international tourist flows while considering the influence of the levels of development and regions in the underlying relationship. The empirical analysis is based on a panel data set of bilateral tourism flows among 200 countries over the period 1995 to 2015. Results show that common unofficial language is a significant determinant of international tourist flows after controlling for common official language and other classical determinants of tourist flows. This finding holds irrespective of the levels of development of different countries. Further, we show that a common unofficial language is a more significant determinant of international tourist flows than a common official language in Europe. Policies that create an enabling environment for multilingual societies to emerge in a country would help to boost international tourism.
- The Effect of Trade and Political Institutions on Economic Institutions. 2017. The Journal of International Trade & Economic Development, 26(1), 89-110. (link)
This study examines the relationship between trade and the quality of economic institutions under different political institutions. It uses panel data of 138 countries from 1984 to 2010 and employs instrumental variables and identification through heteroscedasticity to mitigate the problem of endogeneity. The findings suggest that the effect of trade on economic institutions reduces significantly in the presence of extractive political institutions. The findings indicate that â€˜tradeâ€™ is not a sufficient tool for improving economic institutions; rather, trade policies need to be embedded in distinct political institutions to trigger the substantive improvement of economic institutions.
Research Projects and Grants
- Tourist behaviour to shocks and building tourism resilience in UAE. 2020-2022.
Funded By: United Arab Emirates University under the Startup grant. AED 240,000.
PI: Usman Khalid
The purpose of this study is to investigate the impact of internal and external shocks on tourist behaviour in the UAE. This includes identifying effective policy interventions that can help to lessen the negative effects of shocks on international tourist flows.
- Risk preference and choice of career: the role of subjective wellbeing, religiosity and social values. 2019-2020.
Funded By: Fundamental Research Grant Scheme (FRGS), Ministry of Higher Education, Malaysia. RM 80,000.
PI: Usman Khalid
This research project aims to analyze the relationship between subjective well-being/life satisfaction, entrepreneurial attitudes and risk averseness in Malaysia in the light of ethnolinguistic fractionalization in the country.
- Understanding the Impact of Ethnic Fractionalization on the Level and Growth Rate of Labor Productivity: Does Firm-size Matter? 2020. (with Mohammad Amin). (link)
The literature has identified both the positive and negative effects of greater ethnic fractionalization on economic outcomes. We argue that the positive effects that are associated with skills complementarity in the production process apply to firms that have a complex and diversified production structure, as in large firms. The negative effects such as poorer quality of public goods and higher transactions costs impact small firms more than large firms as the former relies more on public provision of goods and have poorer access to institutions. Thus, we predict that greater ethnic fractionalization hurts small firms more or benefits them less than large firms. We test this idea for the level and growth rate of labor productivity of manufacturing firms in a large cross-section of developing countries. Our results not only confirm the stated prediction but also show a contrasting effect of higher ethnic fractionalization; that is, a negative effect on the level and growth rate of labor productivity of the relatively small firms and a positive or no effect for the relatively large firms. We discuss how empirical analysis based on firm-level surveys that fail to capture the firm-size heterogeneity while exploring the effects of ethnic fractionalization can provide an inaccurate picture of the overall effects of ethnic fractionalization and its distribution between small and large firms.
- Decomposing the Labor Productivity Gap between Upper-Middle-Income and High-Income Countries. 2019. World Bank Policy Research Working Papers. (with Mohammad Amin and Asif Islam). (link)
Using firm-level survey data on registered private firms collected by the World Bank’s Enterprise Surveys, this paper compares the level of labor productivity in 22 upper-middle-income countries and 11 high-income countries for which comparable data are available. The results show that labor productivity in the upper-middle-income countries is about 57.5 percent lower than in the high-income countries. The productivity difference is robust and holds for firms of different sizes and industries. The analysis uses the Oaxaca-Blinder decomposition to identify the sources of the productivity gap. It finds that the endowment effect and the structural effect contribute roughly equally to the productivity gap. Several firm- and country-level variables determine the productivity gap. The biggest contributors via the endowment effect include tertiary education attainment, law and order, and quality management proxied by international quality certification. Factors that contribute most via the structural effect include market size, secondary education attainment, and law and order. Thus, the results underline the importance of human capital, institutions, and market size for closing the productivity gap between the upper-middle-income and high-income countries.
- Catch-up in Institutional Quality: An Empirical Assessment. 2016. CREDIT Research Paper No. 16/04. (link)
There is a growing consensus among economists and policy makers that institutions matter for economic development and that institutional reforms should be a priority for developing economies. Considering the emphasis on institutional reforms, this study asks whether a catch-up in institutional quality has occurred across countries. The study uses data on 81 countries from 1985 to 2010 and tests the catch-up hypothesis using three different measures of institutional quality that capture both political and economic dimensions of institutions. The results indicate that a catch-up in economic institutional quality has occurred and that most countries with weak economic institutions have a higher rate of change than that of countries with strong economic institutions. In contrast, for political institutions, the catch-up process lasts only a few years.
- Are capitalists green? Firm ownership and provincial CO2 emissions in China. 2015. Asian Economic Panel, Lund, Sweden. (with Fredrik NG Andersson and Sonja Opper).
- Essays on Institutions and Institutional Change. 2016. Lund Economic Studies, 191. (link) (Full text can be viewed here)