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Determinants of economic growth: A varying-coefficient path identification approach

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  • He, Qiuqin
  • Xu, Bing

Abstract

Identifying the determinants of economic growth is an important issue for policy-decision making. However, the disparities in the conclusions of cross-country growth empirics confuse policymakers. This paper focuses on the divergence of determinants of cross-country growth in Varian (2014) and provides an alternative explanation for the divergence by proposing a novel varying coefficient path identification approach with non-parametric techniques. With this approach, we verify the importance of four variables—Initial Income, Life expectancy, Fraction of Confucian, and Equipment Investment, which is consistent with Varian (2014). Meanwhile, we interpret that the divergence of determinants mentioned in Varian (2014) is mainly due to the neglect of the potential non-linearities and cross-country heterogeneity in the growth process. Finally, new features of growth during 1960–2016 are investigated, and the determinants, apart from Initial Income, remain fairly consistent with those during 1960–1992. These conclusions are further confirmed by the convergence test and robustness test.

Suggested Citation

  • He, Qiuqin & Xu, Bing, 2019. "Determinants of economic growth: A varying-coefficient path identification approach," Journal of Business Research, Elsevier, vol. 101(C), pages 811-818.
    • Handle: RePEc:eee:jbrese:v:101:y:2019:i:c:p:811-818
    DOI: 10.1016/j.jbusres.2018.12.013
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    Cited by:

    1. Piotr Wójcik & Bartłomiej Wieczorek, 2020. "We have just explained real convergence factors using machine learning," Working Papers 2020-38, Faculty of Economic Sciences, University of Warsaw.
    2. Tânia Pinto & Aurora Teixeira, 2023. "Does scientific research output matter for Portugal’s economic growth?," GEE Papers 0174, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2023.

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