Empirical Literature on Economic Growth, 1991–2020: Uncovering Extant Gaps and Avenues for Future Research

The factors required to achieve sustainable economic growth in a country are debated for decades, and empirical research in this regard continues to grow. Given the relevance of the topic and the absence of a comprehensive, systematic literature review, we used bibliometric techniques to examine and document several aspects in the empirical literature related to growth, from 1991 to 2020. Five main results are worth highlighting: (a) the share of empirical articles on economic growth show a clear upward trend; (b) among all the groups of countries considered, the emerging economies (EEs) have received the most scientific attention; (c) the economic growth processes of the Latin American and Caribbean EEs have observed negligible scientific attention; (d) the very long-run studies comprise a residual share among the empirical literature on growth; (e) the extant empirical studies on economic growth have addressed mainly the impact of “macroeconomic conditions.” Our findings suggest there is a need to redirect the empirical growth agenda, so as to encourage more scientific attention devoted to the analysis of key determinants of economic growth in the very long run. There should also be increased scrutiny of the processes of economic growth in Latin American and Caribbean EEs

Determinants of Economic Growth in the European Union Countries

This paper reassesses the long-debated relationship between the financial system development and economic growth. We use not only indicators for financial access, efficiency, stability and depth of the bank-oriented financial sector, but we also consider Eurozone membership, corruption perception and competitiveness of countries to examine the determinants of economic growth. We apply a panel data approach to 27 European countries over the 2004–2017 period. By splitting the time span, we examine whether the effect of financial system development, Eurozone membership, corruption perception and competitiveness on economic growth is affected by the occurrence of financial and debt crises. Our results indicate that loans to private sector do not always support economic growth. Our research also reveals that corruption perception has a negative impact on economic growth, and so does membership in Eurozone during a crisis.

Let it float: new empirical evidence on de facto exchange rate regimes and growth in Latin America

This paper reassesses the evidence presented in Levy-Yeyati and Sturzenegger (LYS) (2003) on the relation between exchange rate regimes and economic growth. We use their de facto classification as well as their database, in order to gain robustness and efficiency in the results. We run System GMM estimations. Additionally, we focus on Latin American countries for the period 1974-2004. Differently to LYS, our evidence indicates that exchange rate regimes are not significant to explain economic growth, both in a worldwide sample of countries and particularly in Latin America. However, in this region flexible regimes appear to have more advantages in terms of the role of the determinants of economic growth in relation to the other exchange regimes.

Banks and Economic Growth: A Basic Disequilibrium Model with Five Rationing Regimes

In this paper, an inductive research methodology and the principle of parsimony are applied to reconsider a central issue in economics and macro-finance, namely the determinants of economic growth and the role of the financial sector. A simple framework is derived, characterised by information imperfections and the absence of market clearing. The literature on rationing has identified the need to consider differing rationing regimes but has not included a banking sector. Such a set-up is presented in this paper, which identifies the link between credit and economic growth under differing rationing regimes, with varying consequences for inflation. The familiar case of money creation resulting in inflation features as a special case within the general framework. Others are the possibility of asset price bubbles and collapses, non-inflationary growth despite full employment, and instability in banking systems. The model is consistent with empirical evidence that has been difficult to reconcile with conventional equilibrium models. It is found that within this simple rationing framework, banks, left to their own devices, do not necessarily deliver stable, non-inflationary growth, and there is no reason to expect their behaviour to optimise social welfare. Some implications for research and policy are discussed.

Economic Performance in Post-Soviet and Post-Communist Countries – Evidence from Panel Data and Multivariate Statistical Analysis

The study examines the effect of sets of determinants of economic growth, which are widely emphasised in the literature, in a group of 27 selected post-Soviet, post-communist and transition countries from Central and Eastern Europe, the former Soviet Union, and Mongolia during 1997–2017. The set of baseline variables includes, among others, trade openness, investment rate, public consumption spending, and selected demographic factors. The methodology uses panel data and it is supported by multivariate statistical methods of grouping objects. The panel data provides results that are mainly consistent with the literature review. However, the effects of demographic factors are rather not significant, but the role of investment has been emphasised. In turn, the multivariate statistical approaches indicate the shifts in regional (dis)similarity between the analysed countries with respect to the performance of the selected variables over the last 20 years.

Determinants of Economic Growth: An Empirical Evaluation of the Ugandan Economy

This paper investigated the determinants of economic growth in Uganda for the period 1982–2015 using the autoregressive distributed lag (ARDL) mode. The paper was motivated by the impressive economic performance of Uganda since 1986 that made her graduate from a “failed state” to a “mature reformer” in a short time. The paper established that while the initial level of GDP growth, government consumption and investment positively affected Uganda’s economic growth in the short run, inflation, foreign aid and a policy dummy variable representing structural adjustment programmes negatively impacted GDP growth. The results revealed that in the long run, trade openness, population growth, government consumption and investment positively influenced GDP growth in Uganda. The results failed to show a significant relationship between trade openness, population growth and human capital accumulation and economic growth in the short run. The study also failed to show a significant relationship between inflation, human capital and foreign aid and economic growth in the long run. The paper recommends policies that enhances sound macroeconomic fundamentals such as price stability, investment promotion, trade openness, increased government consumption, increased population growth and effective foreign aid.

External Debts and Economic Growth when Debt Rating Matters

The paper investigates the dependence pattern of economic growth on external debt supply by accounting for the safety of debts, measured by the sovereign debt rating. The method of cross-section regression is based on a sample of 145 advanced and developing economies with averaged data over the 1990–2019 period. The pattern of economic growth follows a U-shaped curve, for which the growth rate is first decreasing and then increasing on the external debt supply. A possible explanation can rely on the sovereign debt rating. For low supply of external debts, more supply of debts reduces the debt rating, which, in turn, lowers the economic growth rate. But for high enough supply of debts, more debts raise their rating, improving the growth rate. These results are robust on controlling for various determinants of economic growth and on the fixed effect panel regression.

Does transportation infrastructure impact economic growth in India?

Purpose This paper aims to show a long run and causal association between economic growth and transport infrastructure. Design/methodology/approach In this study, the authors use ARDL models through the period 1990 – 2020 to investigate the relationship between transport infrastructure and economic growth in India. Findings The infrastructure has a positive impact on economic growth in India for the long run. Moreover, Granger causality test demonstrates a unidirectional relationship between transport infrastructure to economic development. Stimulatingly, the paper highlights the effect of air infrastructure statistically insignificant on economic growth in the long and short-run period. Originality/value The original outcome from the study delivers an inclusive depiction of determinants of economic growth from transport infrastructure in India, and these findings will help the policymakers to frame policies to improve the transport infrastructure. Hence, it is proposed that the government of Indian should focus more to upsurge the transport infrastructure for higher economic development.

Determinants of Economic Growth in Organization of Islamic Cooperation with Governance Index as a Moderating Variable

This study seeks to explore and investigate the influence of foreign direct investment, remittances, and trade openness on economic growth in the Organization of Islamic Cooperation with governance index as a moderating variable in 2005-2019. Moderated Regression Analysis analysis is used to analyze governance index variables. The use of Generalized Least Square and Generalized Method of Moments is used to determine which method is best. Sargant level of significance and value showed GMM more precisely in this study. The results of statistical testing show that all independent variables have a significant positive influence on economic growth except foreign direct investment which has a significant negative influence. This negative influence is due to the instability of investment flows. In addition, governance index can moderate foreign direct investment, remittances, and trade openness in its influence on economic growth.Thus, it can be concluded that to increase economic growth, the need for good governance index so that economic growth in the Organization of Islamic Cooperation is increasing.