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Structural Differences in Economic Growth

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Author Info

  • Nalan Basturk

    ()
    (Erasmus University Rotterdam)

  • Richard Paap

    ()
    (Erasmus University Rotterdam)

  • Dick van Dijk

    ()
    (Erasmus University Rotterdam)

Abstract

This paper addresses heterogeneity in determinants of economic growth in a data-driven way. Instead of defining groups of countries with different growth characteristics a priori, based on, for example, geographical location, we use a finite mixture panel model and endogenous clustering to examine cross-country differences and similarities in the effects of growth determinants. Applying this approach to an annual unbalanced panel of 59 countries in Asia, Latin and Middle America and Africa for the period 1971-2000, we can identify two groups of countries in terms of distinct growth structures. The structural differences between the country groups mainly stem from different effects of investment, openness measures and government share in the economy. Furthermore, the detected segmentation of countries does not match with conventional classifications in the literature.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-085/4.

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Date of creation: 12 Sep 2008
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Handle: RePEc:dgr:uvatin:20080085

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Related research

Keywords: Economic growth; parameter heterogeneities; latent class models; panel time series;

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References

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  1. Hamparsum Bozdogan, 1987. "Model selection and Akaike's Information Criterion (AIC): The general theory and its analytical extensions," Psychometrika, Springer, vol. 52(3), pages 345-370, September.
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  3. Bruce E. Hansen, 1996. "Sample Splitting and Threshold Estimation," Boston College Working Papers in Economics 319., Boston College Department of Economics, revised 12 May 1998.
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  5. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
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  7. Jesus Crespo Cuaresma & Gernot Doppelhofer, 2006. "Nonlinearities in Cross-Country Growth Regressions: A Bayesian Averaging of Thresholds (BAT) Approach," Vienna Economics Papers 0608, University of Vienna, Department of Economics.
  8. Sachs, J-D & Warner, A-M, 1996. "Sources of Slow Growth in African Economies," Papers 545, Harvard - Institute for International Development.
  9. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  10. Bart Hobijn & Philip Hans Franses, 2000. "Asymptotically perfect and relative convergence of productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 59-81.
  11. Paap, Richard & Franses, Philip Hans & van Dijk, Dick, 2005. "Does Africa grow slower than Asia, Latin America and the Middle East? Evidence from a new data-based classification method," Journal of Development Economics, Elsevier, vol. 77(2), pages 553-570, August.
  12. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
  13. Kamel Jedidi & Harsharanjeet S. Jagpal & Wayne S. DeSarbo, 1997. "Finite-Mixture Structural Equation Models for Response-Based Segmentation and Unobserved Heterogeneity," Marketing Science, INFORMS, vol. 16(1), pages 39-59.
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Cited by:
  1. Morier, Bruno & Teles, Vladimir Kuhl, 2011. "A time-varying markov-switching model for economic growth," Textos para discussão 305, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  2. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, 02.
  3. Dimitris Korobilis & Michelle Gilmartin, 2011. "On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK," Working Paper Series 13_11, The Rimini Centre for Economic Analysis.
  4. Sylvia Frühwirth-Schnatter, 2011. "Panel data analysis: a survey on model-based clustering of time series," Advances in Data Analysis and Classification, Springer, vol. 5(4), pages 251-280, December.

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