Distributive trade and economic growth: EU28 evidence for the period 2008-2015
Abstract
The purpose of this paper is to appoint the causality between economic activity in the sector of distributive trade and the economic growth of 28 European Union nations. Specifically, it examines the impact of changes in turnover per employee in the distributive trade sector in EU member states on the tangible economic growth rate. The determination to adopt this approach stems from the fact that existing studies mainly explore indirect relationship between economic activities in distributive trade and economic development, with less focus on the direct impact of distributive trade on economic growth. The paper utilizes information for the period from 2008 to 2015. The research relies on multiple regression model, with the Hausman test its robustness. The results indicate that a hike in turnover per employee in the distributive trade sector by 10 euros per year in one EU member state increases its real economic growth rate by 0.15% in that same year. The significance of the made results is reflected in the fact that the survey takes into account the last economic crisis, and highlights negative effects of final consumption expenditure of general government % GDP on the tangible economic growth rate in EU member states.
Keyword : distributive trade, service sector, retail, wholesale, economic growth, economic development, European Union
How to Cite
Sokolov Mladenović, S., Mladenović, I., & Ćuzović, D. (2019). Distributive trade and economic growth: EU28 evidence for the period 2008-2015. Journal of Business Economics and Management, 20(3), 489-506. https://doi.org/10.3846/jbem.2019.9857
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Capello, R., & Fratesi, U. (2013). The service sector in the new globalization phase: Evidence from European regions. In J. R. Cuadrado-Roura (Ed.), Service industries and regions: Growth, location and regional effects (pp. 43-64). Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-35801-2_3
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Clemes, M. D., Hu, B., & Li, X. (2016). Services and economic growth in China: an empirical analysis.Journal of the Asia Pacific Economy, 21(4), 612-627. https://doi.org/10.1080/13547860.2016.1190492
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Daniels, P. W., & Bryson, J. R. (2005). Sustaining business and professional services in a second city region. The Service Industries Journal, 25(4), 505-524. https://doi.org/10.1080/02642060500092220
Delogu, M., Docquier, F., & Machado, J. J. (2018). Globalizing labor and the world economy: the role of human capital. Journal of Economic Growth, 23(2), 223-258. https://doi.org/10.1007/s10887-017-9153-z
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Garcilazo, E., Mouradian, F., & Oliveira-Martins, J. (2013). Patterns and trends in services related activities in OECD regions. In J. R. Cuadrado-Roura (Ed.), Service industries and regions: Growth, location and regional effects (pp. 65-108). Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-35801-2_4
Ghavidel, S., & Sheshkalany, A. N. (2017). Cost disease in service sector. The Service Industries Journal. 37(3-4), 206-228. https://doi.org/10.1080/02642069.2017.1306056
Grossman, G., & Helpman, E. (1994). Endogenous Innovation in the Theory of Growth. Journal of Economic Perspectives, 8(1), 23- 44. https://doi.org/10.1257/jep.8.1.23
Hendrik, V. B., & Lewer, J. J. (2007). International trade and economic growth. New York: Routledge.Kedir, A. M., Williams, C., & Altinay, L. (2018). Services industries and the informal economy: an introduction. The Service Industries Journal, 38(11-12), 645-649. https://doi.org/10.1080/02642069.2018.1486959
Khayum, M. F. (1995). The impact of service sector growth on intersectoral linkages in the United States. The Service Industries Journal, 15(1), 35-49. https://doi.org/10.1080/02642069500000003
Kornai, J. (1992). The socialist system, the political economy of communism. New Jersey: Princeton University Press. https://doi.org/10.1093/0198287763.001.0001
Kotler, P., Keller, K. L., & Martinović, M. (2014). Upravljanje marketingom. Zagreb: Mate d.o.o. Levy, M., Weitz, B. A., & Grewal, D. (2014). Retailing management. New York: McGraw-Hill.
Ling, S. L. M. (2013). Increasing productivity of distributive trade through retail innovations: evidence from Malaysia. The International Review of Retail, Distribution and Consumer Research, 23(3), 324–352. https://doi.org/10.1080/09593969.2013.764338
Lovreta, S., Radunović, D., & Petković, G. (1998). Trgovina-Teorija i praksa [Distributive trade – Theory and practise]. Beograd: Savremena administracija.
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2008). Producer services: growth and roles in long-term economic development. The Service Industries Journal, 28(4), 463-477. https://doi.org/10.1080/02642060801917588
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2005). Renewal and obsolescence. An evolutionary perspective on industry growth and regional development in Sweden 1978–2002 (Rapporter och Notiser 166). Lund, Sweden: Lund University, Department of Social and Economic Geography.
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2006). Producer services. Boosters or followers? An evolutionary approach to producer services and technology shifts in time and space (Rapporter och Notiser 167). Lund, Sweden: Lund University, Department of Social and Economic Geography.
Moreno, J. D. J., & Carrasco, O. R. (2015). Evolution of efficiency and its determinants in the retail sector in Spain: new evidence. Journal of Business Economics and Management, 16(1), 244–260. https://doi.org/10.3846/16111699.2012.732958
Olsen, J., & Granzin, K. (1990). Economic development and Channel Structure-Multinational Study. Journal of Makromarketing, 1, 61-74. https://doi.org/10.1177/027614679001000205
Ozak, O. (2018). Distance to the pre-industrial technological frontier and economic development. Journal of Economic Growth, 23(2), 175-221. https://doi.org/10.1007/s10887-018-9154-6
Rocha, I. L. (2018). Manufacturing as driver of economic growth. PSL Quarterly Review, 71(285), 103-138. https://doi.org/10.2139/ssrn.3211881
Rodrik, D. (2007). One economics, many recipes: globalization, institutions, and economic growth. New Jersey: Princeton University Press.
Romer, P. (1989). Endogenous technological change (NBER Working Paper No. 3210).Romer, P. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71-102. https://doi.org/10.1086/261725
Ruhiiga, T.M. (2011). The wholesale-retail sector and changes in consumer market response in rural South Africa. Journal of Social Sciences, 29(1), 91-99. https://doi.org/10.1080/09718923.2011.11892959
Samuelson, P., & Nordhaus, W. (2008). Ekonomija [Economy]. Beograd: Mate.
Schmidheiny, K. (2015). Short guides to microeconometrics, panel data: Fixed and random effects. Basel: Unversität Basel.
Schneider, P. H. (2005). International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries. Journal of Development Economics, 78(2), 529-547. https://doi.org/10.1016/j.jdeveco.2004.09.001
Scully, G. (1988). The institutional framework and economic development. Journal of Political Economy, 96(3), 652-662. https://doi.org/10.1086/261555
Warland, M., & Mayer, H. (2017). Peculiarities of public sector clients in service innovations. The Service Industries Journal, 37(2), 105-124. https://doi.org/10.1080/02642069.2017.1297427
Williams, C. C., & Horodnic, I. A. (2018). Extent and distribution of unregistered employment in the service industries in Europe. The Service Industries Journal, 38(11-12), 856-874. https://doi.org/10.1080/02642069.2018.1481209
Williams, C. C. (1997). Rethinking the role of the retail sector in economic development. The Service Industries Journal, 17(2), 205-220. https://doi.org/10.1080/02642069700000011
Aldashev, G., & Zanarone, G. (2017). Endogenous enforcement institutions. Journal of Development Economics, 128, 49-64. https://doi.org/10.1016/j.jdeveco.2017.05.002
Balios, D., Eriotis, N., Fragoudaki, A., & Giokas, D. (2015). Economic efficiency of Greek retail SMEs in a period of high fluctuations in economic activity: a DEA approach. Applied Economics, 47(33), 3577-3593. https://doi.org/10.1080/00036846.2015.1019033
Battisti, M., Del Gatto, M., & Parmeter, C. F. (2018). Labor productivity growth: disentangling technology and capital accumulation. Journal of Economic Growth, 23(1), 111-143. https://doi.org/10.1007/s10887-017-9143-1
Benazić, M. (2014). Determinants of retail trade in Croatia. Economic Research, 27(1), 607-628. https://doi.org/10.1080/1331677X.2014.967538
Berman, B. (2006). Marketing channels. New York: John Wiley & Sons.
Beyers, W. B. (2005). Services and the changing economic base of regions in the United States. Service Industries Journal, 25(4), 461-476. https://doi.org/10.1080/02642060500092113
Blackaby, F. (1978). Deindustrialisation. London: Heinemann.
Borcan, O., Olsson, O., & Putterman, L. (2018). State history and economic development: evidence from six millennia. Journal of Economic Growth, 23(1), 1-40. https://doi.org/10.1007/s10887-017-9152-0
Bryson, J. R., Daniels, P. W., & Warf, B. (2004). Service worlds-People, organizations, technologies. London: Routledge.
Capello, R., & Fratesi, U. (2013). The service sector in the new globalization phase: Evidence from European regions. In J. R. Cuadrado-Roura (Ed.), Service industries and regions: Growth, location and regional effects (pp. 43-64). Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-35801-2_3
Cinnirella, F., & Streb, J. (2017). The role of human capital and innovation in economic development:evidence from post-Malthusian Prussia. Journal of Economic Growth, 22(2), 193-227. https://doi.org/10.1007/s10887-017-9141-3
Clemes, M. D., Hu, B., & Li, X. (2016). Services and economic growth in China: an empirical analysis.Journal of the Asia Pacific Economy, 21(4), 612-627. https://doi.org/10.1080/13547860.2016.1190492
Cuadrado-Roura, J. R. (2013). The location of service industries. In J. R. Cuadrado-Roura (Ed.), Service industries and regions: Growth, location and regional effects (pp. 253-284). Berlin: Springer BerlinHeidelberg. https://doi.org/10.1007/978-3-642-35801-2
Cvetanović, S., & Despotović, D. (2014). Znanje kao komponenta ljudskogkapitala u modelima ekonomskog rasta. Škola biznisa, 1, 1-17 (in Serbian).
Cvetanović, S., & Mladenović, I. (2015). Ekonomija kapitala i finansiranje razvoja [Economy of capital and financing of development]. Niš: autorovo izdanje.
Cvetanović, S., Filipović, M., & Dragutinović, D. (2015). Teorija privrednog rasta i razvoja [Theory of economic growth and development]. Beograd: Ekonomski fakultet Univerziteta u Beogradu.
Daniels, P. W., & Bryson, J. R. (2005). Sustaining business and professional services in a second city region. The Service Industries Journal, 25(4), 505-524. https://doi.org/10.1080/02642060500092220
Delogu, M., Docquier, F., & Machado, J. J. (2018). Globalizing labor and the world economy: the role of human capital. Journal of Economic Growth, 23(2), 223-258. https://doi.org/10.1007/s10887-017-9153-z
Di Berardino, C., D’Ingiullo, C., & Sarra, A. (2017). Distributive trade and regional productivity growth. The Service Industries Journal, 37(13-14), 833-857. https://doi.org/10.1080/02642069.2017.1359261
Dibb, S., Simkin, L., Pride, W. M., & Ferrell, O. C. (1991). Marketing. Zagreb: Mate d.o.o.
European Commision. (2013). Implementation of the EuropeanRetail Action Plan. Retrieved from https:// http://europa.eu/rapid/press-release_IP-13-78_en.htm
European Commision. (2018). A European retail sector fit for the 21st century. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Retrieved from https://ec.europa.eu/growth/con-tent/european-retail-sector-fit-21st-century_en
Eurostat. (2008). Statistical classification of economic activites in the European Community. Retrieved from http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF
Eurostat. (2018). Retail trade volume index overview. Retrieved from http://ec.europa.eu/eurostat/statistics-explained/index.php/Retail_trade_volume_index_overview#Retail_trade_developments
Garcilazo, E., Mouradian, F., & Oliveira-Martins, J. (2013). Patterns and trends in services related activities in OECD regions. In J. R. Cuadrado-Roura (Ed.), Service industries and regions: Growth, location and regional effects (pp. 65-108). Heidelberg: Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-35801-2_4
Ghavidel, S., & Sheshkalany, A. N. (2017). Cost disease in service sector. The Service Industries Journal. 37(3-4), 206-228. https://doi.org/10.1080/02642069.2017.1306056
Grossman, G., & Helpman, E. (1994). Endogenous Innovation in the Theory of Growth. Journal of Economic Perspectives, 8(1), 23- 44. https://doi.org/10.1257/jep.8.1.23
Hendrik, V. B., & Lewer, J. J. (2007). International trade and economic growth. New York: Routledge.Kedir, A. M., Williams, C., & Altinay, L. (2018). Services industries and the informal economy: an introduction. The Service Industries Journal, 38(11-12), 645-649. https://doi.org/10.1080/02642069.2018.1486959
Khayum, M. F. (1995). The impact of service sector growth on intersectoral linkages in the United States. The Service Industries Journal, 15(1), 35-49. https://doi.org/10.1080/02642069500000003
Kornai, J. (1992). The socialist system, the political economy of communism. New Jersey: Princeton University Press. https://doi.org/10.1093/0198287763.001.0001
Kotler, P., Keller, K. L., & Martinović, M. (2014). Upravljanje marketingom. Zagreb: Mate d.o.o. Levy, M., Weitz, B. A., & Grewal, D. (2014). Retailing management. New York: McGraw-Hill.
Ling, S. L. M. (2013). Increasing productivity of distributive trade through retail innovations: evidence from Malaysia. The International Review of Retail, Distribution and Consumer Research, 23(3), 324–352. https://doi.org/10.1080/09593969.2013.764338
Lovreta, S., Radunović, D., & Petković, G. (1998). Trgovina-Teorija i praksa [Distributive trade – Theory and practise]. Beograd: Savremena administracija.
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2008). Producer services: growth and roles in long-term economic development. The Service Industries Journal, 28(4), 463-477. https://doi.org/10.1080/02642060801917588
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2005). Renewal and obsolescence. An evolutionary perspective on industry growth and regional development in Sweden 1978–2002 (Rapporter och Notiser 166). Lund, Sweden: Lund University, Department of Social and Economic Geography.
Lundquist, K.-J., Olander, L.-O., & Henning, M. S. (2006). Producer services. Boosters or followers? An evolutionary approach to producer services and technology shifts in time and space (Rapporter och Notiser 167). Lund, Sweden: Lund University, Department of Social and Economic Geography.
Moreno, J. D. J., & Carrasco, O. R. (2015). Evolution of efficiency and its determinants in the retail sector in Spain: new evidence. Journal of Business Economics and Management, 16(1), 244–260. https://doi.org/10.3846/16111699.2012.732958
Olsen, J., & Granzin, K. (1990). Economic development and Channel Structure-Multinational Study. Journal of Makromarketing, 1, 61-74. https://doi.org/10.1177/027614679001000205
Ozak, O. (2018). Distance to the pre-industrial technological frontier and economic development. Journal of Economic Growth, 23(2), 175-221. https://doi.org/10.1007/s10887-018-9154-6
Rocha, I. L. (2018). Manufacturing as driver of economic growth. PSL Quarterly Review, 71(285), 103-138. https://doi.org/10.2139/ssrn.3211881
Rodrik, D. (2007). One economics, many recipes: globalization, institutions, and economic growth. New Jersey: Princeton University Press.
Romer, P. (1989). Endogenous technological change (NBER Working Paper No. 3210).Romer, P. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71-102. https://doi.org/10.1086/261725
Ruhiiga, T.M. (2011). The wholesale-retail sector and changes in consumer market response in rural South Africa. Journal of Social Sciences, 29(1), 91-99. https://doi.org/10.1080/09718923.2011.11892959
Samuelson, P., & Nordhaus, W. (2008). Ekonomija [Economy]. Beograd: Mate.
Schmidheiny, K. (2015). Short guides to microeconometrics, panel data: Fixed and random effects. Basel: Unversität Basel.
Schneider, P. H. (2005). International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries. Journal of Development Economics, 78(2), 529-547. https://doi.org/10.1016/j.jdeveco.2004.09.001
Scully, G. (1988). The institutional framework and economic development. Journal of Political Economy, 96(3), 652-662. https://doi.org/10.1086/261555
Warland, M., & Mayer, H. (2017). Peculiarities of public sector clients in service innovations. The Service Industries Journal, 37(2), 105-124. https://doi.org/10.1080/02642069.2017.1297427
Williams, C. C., & Horodnic, I. A. (2018). Extent and distribution of unregistered employment in the service industries in Europe. The Service Industries Journal, 38(11-12), 856-874. https://doi.org/10.1080/02642069.2018.1481209
Williams, C. C. (1997). Rethinking the role of the retail sector in economic development. The Service Industries Journal, 17(2), 205-220. https://doi.org/10.1080/02642069700000011