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Economic growth and manufacturing: An analysis using Panel VAR and intersectoral linkages

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  • Gabriel, Luciano Ferreira
  • de Santana Ribeiro, Luiz Carlos

Abstract

This paper aims to investigate how manufacturing affects economic growth over time, especially in developing countries. We apply Panel Vector Autoregression (PVAR) for fixed effects approach, and then we estimate impulse-response functions (IRF) and forecast-error variance decomposition (FEVD) for a sample of 115 countries from 1990 to 2011. Furthermore, we apply Hirschman-Rasmussen (HR)’s Index for 29 countries for 1995, 2000, 2005 and 2010 as well as Field of Influence for this group of countries for 1995 and 2010. The main results indicate that manufacturing industry can work as “engine of growth” in developing countries. Moreover, manufacturing is the only strategic key sector in terms of driving economic growth for most developing countries in all the period analyzed. However, manufacturing has lost its relative importance in developed and developing countries in terms of linkages.

Suggested Citation

  • Gabriel, Luciano Ferreira & de Santana Ribeiro, Luiz Carlos, 2019. "Economic growth and manufacturing: An analysis using Panel VAR and intersectoral linkages," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 43-61.
    • Handle: RePEc:eee:streco:v:49:y:2019:i:c:p:43-61
    DOI: 10.1016/j.strueco.2019.03.008
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    7. Mercer-Blackman, Valerie & Mariasingham, Joseph & Garay, Krizia, 2018. "Using Input-output Links to Measure the Potential for Service-Led Development in Formerly Transition Economies," Conference papers 332983, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    More about this item

    Keywords

    Manufacturing; Linkages; Economic growth; Panel VAR;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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