A Perspective on Frugality in Growing Economies: Triggering a Virtuous Cycle between Consumption Propensity and Growth

Published:

Authors

  • Kayano FukudaNational University of Singapore, Fellow, Center for Research and Development Strategy, Japan Science and Technology Agency, Engineering Drive, Singapore.
  • Chihiro WatanabeNational University of Singapore, Singapore.
Keywords
Frugality, Virtuous Cycle, Consumption Propensity, Growth

Abstract

The relationship between Growing economies have recovered from the global financial crisis faster than many developed economies and increased the consumption significantly over the past years. In light of the role of their consumption growth in global sustainability, this paper analyzes the decisive factors leading to a virtuous cycle between consumption propensity and investment in growing economies. An empirical analysis was conducted to identify the contributing factors to such a cycle in 40 countries. They could be divided into three economic groups by the marginal propensity to consume. The results suggest that growing economies suffer from an autarky cycle between consumption and GDP due to insufficient investment elasticity against consumption elasticity while advancing and advanced economies allow GDP growth to induce investment efficiently. A possible trigger for inducement of investment by growth in growing economies can be ‘frugality’.

References

Banerjee, A.V. and Duflo, E. (2008) ‘What is Middle Class about the Middle Classes around the World?’, Journal of Economic Perspectives, 22:2, pp. 3-28.
Bryon, E. (2010) ‘Gillette’s Latest Innovation in Razors: the 11-Cent Blade’, Wall Street Journal, 1 October, (online) (cited 27 May 2011). Available from <URL: http://online.wsj.com/article/SB10001424052748704789404575524273890970954.html>
Economist (2010) ‘First Break All the Rules’, Economist, 17 April, pp. 3-5.
Fukuda, K., Zhao, W. and Watanabe, C. (2011) ‘Dual Hybrid Management of Technology: Coevolution with Growing Economies’, Journal of Technology Management for Growing Economies, 2, 1 (in print).
Gupta, A.K., Sinha, R., Koradia, D., Patel, R., Parmar, M., Rohit, P., Patel, H., Patel, K., Chand, V.S., James, T.J., Chandan, A., Patel, M., Prakash, T.N. and Vivekanandan, P. (2003) ‘Mobilizing Grassroots’ Technological Innovations and Traditional Knowledge, Values and Institutions: Articulating Social and Ethical Capital’, Futures, 35:9, pp. 975-987.
Gupta, A.K. (2010a) ‘Empathetic Innovations: Connections Across Boundaries’, Indian Institute of Management Working Paper.
Gupta, A.K. (2010b) ‘Leveraging Innovations for Inclusive Governance’, Indian Institute of Management Working Paper.
International Monetary Fund (2010) Regional Economic Outlook: Asia and Pacific: Leading the Global Recovery: Rebalancing for the Medium Term, Washington, D.C., IMF.
Immelt, J.R., Govindarajan, V. and Trimble, C. (2009) ‘How GE Is Disrupting Itself’, Harvard Business Review, 87:12, pp. 50-59.
Jana, R. (2009) ‘Innovation Trickles in a New Direction’, Businessweek, 11 March, (Online) (cited 30 May 2011). Available from <URL: http://www.businessweek.com/magazine/content/09_12/b4124038287365.htm>
Jenkins, R. (2005) ‘Globalization, Corporate Social Responsibility and Poverty’, International Affairs, 81:3, pp. 525-540.
Jose, P.D. (2008) ‘Rethinking the BOP: New Models for the New Millennium’, IIMB Management Review, 20:2, pp. 198-202.
Karrnani, A. (2006) ‘The Mirage of Marketing to the Bottom of the Pyramid’, California Management Review, 49:4, pp. 90-111.
Karnani, A. (2007) ‘Doing Well by Doing Good – Case Study: “Fair & Lovely” Whitening Cream’, Strategic Management Journal, 28:13, pp. 1351-1357.
Kharas, H. (2010) ‘The Emerging Middle Class in Developing Countries’, OECD Development Centre Working Paper, 285.
Landrum, N.E. (2007) ‘Advancing the “Base of the Pyramid” Debate’, Strategic Management Review, 1:1, pp. 1-12.
National Innovation Council, India (2010) ‘Introduction’ (online) (cited 3 June 3 2011). Available from <URL: http://www.innovationcouncil.gov.in/aboutus/aboutnic.php>.
Prahalad, C.K. (2004) The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, New Jersey, Wharton School Publishing.
Raballion, M. (2010) ‘The Developing World’s Bulging (but Vulnerable) Middle Class’, World Development, 38:4, pp. 445-454.
Sheth, J. (2010) Innovate or Adapt? The Challenge of New Markets, Singapore, Singapore Economic Development Board.
Solow, R.M. (1957) ‘Technical Change and the Aggregate Production Function’, Review of Economics and Statistics, 39:3, 312-320.

How to Cite

Kayano Fukuda, Chihiro Watanabe. A Perspective on Frugality in Growing Economies: Triggering a Virtuous Cycle between Consumption Propensity and Growth. J.Technol. Manag. Grow. Econ.. 2023, 01, 79-98
A Perspective on Frugality in Growing Economies: Triggering a Virtuous Cycle between Consumption Propensity and Growth

Current Issue

PeriodicityBiannually
Issue-1May
Issue-2November
ISSN Print2321-2217
ISSN Online2321-2225
RNI No.CHAENG/2013/50088
OA Policy

Publisher's policy of the journal at Sherpa UK for the submitted, accepted, and published articles. Click OAPolicy

Plan-S Compliance

To check compliance, one has to use the Journal Check Tool (JCT). This tool provided by cOAlition S (European funders) for the researchers (fundee) to check the compliance with the journal.

Recommend journal to your library

You can recommend the journal being a researcher or faculty member to your library. We will post a copy of the Journal to your library on your behalf at free of cost.
Click here: Recommend Journal

Preprint Arxiv Submission

The authors are encouraged to submit the author’s copy (preprint) to appropriate preprint archives e.g. https://arxiv.org and/or on https://indiarxiv.org or institutional repositories (e.g., D Space) before paper acceptance by the editor of Journal. After publications of the paper author(s) should mention the citation information, title and abstract along with DOI number of the publication carefully on the required page of the depository(ies).

Contact: Phone: +91-172-2741000, +91-172-4691800

Email : editor.tmg@chitkara.edu.in;

Abstract and Indexing

Information

This work is licensed under a Creative Commons Attribution 4.0 International License.

Articles in Journal of Technology Management for Growing Economies(J.Technol. Manag. Grow. Econ.) by Chitkara University Publications are Open Access articles that are published with licensed under a Creative Commons Attribution- CC-BY 4.0 International License. Based on a work at https://tmg.chitkara.edu.in/. This license permits one to use, remix, tweak and reproduction in any medium, even commercially provided one give credit for the original creation.

View Legal Code of the above-mentioned license, https://creativecommons.org/licenses/by/4.0/legalcode

View Licence Deed here https://creativecommons.org/licenses/by/4.0/

Creative Commons License

Journal of Technology Management for Growing Economies by Chitkara University Publications is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://tmg.chitkara.edu.in/

Members