Ali Tahmoorespur; mehdi behname; mahmood Hooshmand; Hasan Tahsili
Abstract
Extended Abstract
1- INTRODUCTION
Insurance is one of the useful tools of risk management to ensure the peace and comfort of people in the community. Considering the role of life insurance in helping people save and invest and its effective role in economic growth, we can understand the importance ...
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Extended Abstract
1- INTRODUCTION
Insurance is one of the useful tools of risk management to ensure the peace and comfort of people in the community. Considering the role of life insurance in helping people save and invest and its effective role in economic growth, we can understand the importance of this field of insurance in the economy of countries (impact on household economy in developed or developing countries). the purpose of this study is to investigate the relationship between growth of life insurance and economic growth in selected countries in the MENA region. Since there was no access to uniform statistics for all countries in the MENA region, the study was used on 13 selected countries in the region using balanced data for the period 1994-2017. In this study, in order to investigate the causal relationship between the growth of insurance industry activities and economic growth, the Demteresco and Herlein (DH) causality model has been used for the data panel.
2- THEORETICAL FRAMEWORK
Considering the important role of the insurance industry, especially life insurance in the economies of countries, the study of the impact and also the impact of life insurance on economic growth in previous research were studied, which are divided into two categories.
2-1- The Impact of Life Insurance on Economic Growth
Four factors (population, natural resources, investment and technology) play an important role in the process of economic growth, the most important of which is capital or financial resources. for this reason, access to financial resources is very important to increase economic growth. one of the most important prerequisites for economic growth in all countries is financial resources for productive investments. access to financial resources can be provided through various means such as foreign borrowing, sale of bonds, etc. but the best way to provide it is to use people's savings. insurance is one of the important channels of savings and important financial institutions, which in addition to providing security for economic activity, also plays a key role in providing investable funds.
The insurance industry leads to the development of investments in economic systems in two ways. on the one hand, by guaranteeing the coverage it provides, it reduces the effects of investment threatening factors that result in the expansion of investments, and on the other hand, insurance companies participate in various economic and commercial activities as investors from the resources at their disposal. this way in paving the paths that lead to the development of the country play an important role. the greater the share of insurance in the economies of countries (insurance penetration rate), the greater the impact on economic growth.
2-2- The impact of economic growth on life insurance
Studies have shown that there is a two-way relationship between economic growth and the growth of the insurance industry. in most studies, the per capita income index is considered as a proxy for economic growth. one of the factors that has a strong impact on increasing the demand for life insurance is the income of individuals. demand for life insurance increases as economic growth increases and, consequently, per capita income increases and, as a result, purchasing power increases. inflation also affects the demand for life insurance in two ways. first, inflation causes life insurance capital to be paid at a much lower real value than at the commencement date of the contract. in the context of inflation, if the insurance companies do not neutralize the negative impact of inflation on the real purchasing power of the insured capital by applying some appropriate methods, the purchase of life insurance policies will decrease day by day. as a result, it diverts people from the demand for life insurance and leads to safer or shorter-term investments. unemployment will have a negative impact on the demand for life insurance and, consequently, the growth of the insurance industry. according to research, one of the main motivations for buying life insurance is to protect family members against the early death of the breadwinner, and the amount of life insurance sales depends on the number of dependents on the breadwinner, which is called the dependency ratio (Campbell, 1980). With increasing population and increasing dependence on the breadwinner of the family, the risk of financial crisis of the family in the event of the breadwinner's death is felt more, so the need for insurance coverage in this area becomes more apparent.
3- METHODOLOGY
The main purpose of this study is to evaluate the causal relationship between economic growth and life insurance growth and their effectiveness. therefore, in order to investigate the causal relationship between the growth of life insurance activities and economic growth, the Demteresco and Herlein (DH) causality model has been used for the data panel. We first determined the effect of the economy and the insurance industry by examining the Demetresco Herlin causality test. then, in order to determine the effect of variables on each other, we used the pattern of simultaneous equations of panel data. to solve problems such as heteroskedasticity and heterogeneity, the research equations are estimated in three modes of primary model, resistant to heterogeneity and clustered (resistant to heterogeneity and heteroskedasticity) and in each of the mentioned models by two methods of estimators of instrumental variables (IV) and torque. Generalized Momentum (GMM) is used.
4- CONCLUSION & SUGGESTION
Undoubtedly, the economic growth of countries leads to higher per capita incomes. this increase in per capita income will increase the demand for life insurance and consequently the growth of life insurance will have a new impact on economic growth. in other words, with the increase in per capita income, we will see a double impact on economic growth. another indicator that affects the growth of life insurance is the level of education. the higher the level of education will cause the higher growth of life insurance. of course, this positive connection can be due to the increase in public awareness and, as a result, the effort to secure their families' future, as well as possibly the greater demand for urbanization. population growth, which has a positive effect on economic growth, can also be affected by per capita income index, life expectancy and education level. one of the important indicators that has a positive effect on the growth of life insurance is the good governance index. this index includes the index of accountability and the right to comment, political stability, the absence of violence / terrorism, the quality of regulation, the rule of law, the effectiveness of government and the control of corruption. undoubtedly, if the governments of this region pay attention to these indicators, we can expect them to face the growth of demand for life insurance as well as the growth of the economy.
Mohammad Salimifar; Mahmoud Hoshmand; Mehdi Behname; Nava Ramezanian
Abstract
Introduction:
It was often believed that countries with natural resource abundance would undergo the process of development with a more accelerated pace in comparison to other countries. The experimental results, however, demonstrate a higher rate of success for countries which lack the said resources. ...
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Introduction:
It was often believed that countries with natural resource abundance would undergo the process of development with a more accelerated pace in comparison to other countries. The experimental results, however, demonstrate a higher rate of success for countries which lack the said resources. The paradoxical effects of the possession, or a lack there of, natural resources on different countries has led scientists to study the correlation between the abundance of natural resources and various aspects of development. To that end, the effects of possessing abundant oil resources on human development were studied for a selection of 20 oil-exporting countries between 2002 and 2012.
Theoretical Framework:
In the economic literature on the resource curse hypothesis (RCH), there are three general views:
One. On one hand, it would appear that the abundance of natural resources should act as a driving force and procure an accelerated pace of development and growth for the possessing countries. The reason for such an expectation is the access these countries have to resources that can bankroll their goals.
Two. On the other hand, most countries with notable natural resources, especially Oil dependent ones, have not fared well in way of achieving development in recent years, whereas a considerable number of countries that have achieved growth and development possess few natural resources.
Three. Passing judgments on the role of natural resources would have been rather easy if all the collected data was consistent with one of the above-mentioned observations. The problem escalates in severity because some countries with significant natural wealth also rank very high in terms of sustainable economic growth and human development.
Since 65 countries in the world have resource-based economies; the question of why having natural resources has led some countries to growth and human development, and others quite the other way is of utmost importance.
Methodology:
Based on the theoretical bases and previous studies, the quantitative model used in this research is specified as follows:
HDIit= αit + β OGSit + γ HPCit + θ GDRit + δ VAIit +ɛit
t= 2002, 2003… 2012
In this model, the dependent variable is the Human Development Index (HDI), and the OGS (main variable) shows a country's dependency upon oil resources. HPC, GDR, and VAI are the control variables in this model and they represent the growth rates of per capita health expenses, gross domestic product growth and the degree of Voice and Accountability, respectively.
The dataset for this study consists of the oil-exporting countries whose share of revenues from oil exports makes at least 50% of their total export revenues, which include a total of 20 countries from Middle East, Central Asia, Africa and North and South America (unbalanced data).
The research methodology for this study is analytic-descriptive, and the econometrics approach is as follows:
According to Levin-Lin-Chu test, all variables are stationary. To select the most appropriate designed estimation model, four tests were used, namely Chow, Hausman, Breusch-Pagan and F-ANNOVA, which their results indicated that the model should be estimated using panel data approach with fixed effects. Also, autocorrelation among error components, collinearity and heteroscedasticity are henceforth examined. Consequently, the HPC variable must be taken out of the model. But, In order to prevent from specification bias, important dummy variable of financial crisis should be added. Moreover, the model must be estimated using AR (1) with Estimated Generalized Least Square (EGLS) method.
The final model is defined as follows:
HDIit= αit + β OGSit + γ DUit + θ GDRit + δ VAIit + λ AR (1) +ɛit
t= 2002, 2003… 2012
Results & Discussion:
According to estimations, there is a significant and positive relationship between the OGS and HDI in the studied countries between 2002 and 2012. This result is consistent with works of Gylfason (2001), Lederman and Maloney (2008) and Pineda and Rodriguez (2010). In addition, it is predicted that GDP leads to a higher level of HDI in the country.
The rate of the GDR reflects the fact that a 1% increase in the rate of economic growth increases the human development index by 0.001 units. Managing resources export revenues in different levels of human development leads to gross domestic product (GDP) having a more significant effect on HDI. Thus, the resource curse hypothesis proposed by Sachs and Warner (1995 and 1997) and Gylfason (1999) cannot be confirmed.
Also, the dummy variable has had a negative impact on the level of HDI for these countries, a result that is also consistent with the theoretical bases of the study. However, the voice and accountability variable, has no significant effect on the human development of oil dependent countries in this model.
Conclusions & Suggestions:
The RCH cannot be approved. Because, first, despite the fact that most of selected countries with abundant natural resources have set a trend in terms of not being successful in achieving development, some of these countries, such as Botswana, Indonesia, Chile, Norway, Australia, Canada and Malaysia have not followed the trend.
Second, it is unclear whether the resource curse and its different aspects are related to a variety of natural resources or just one type.
Third, some studies have reported observations that disprove the resource curse hypothesis, although the same indicators were used in order to present the abundance of natural resources in the studied subjects.
Moreover, when each components of HDI was analysed, the outcomes showed that the effect of oil resources revenues on Human Development Index can be positive (especially on non-income components such as education and life expectancy).
Consequently, development of health education, such as educating the female members regarding their roles in the upbringing of children, and the prevention of contagious diseases in order to improve the human development index is needed. Also, allocating a greater portion of the resources’ revenues to investment in human and physical resources in order to accelerate economic growth is highly recommended.
