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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. Kamel Jedidi & Harsharanjeet S. Jagpal & Wayne S. DeSarbo, 1997. "Finite-Mixture Structural Equation Models for Response-Based Segmentation and Unobserved Heterogeneity," Marketing Science, INFORMS, INFORMS, vol. 16(1), pages 39-59.
  2. Barro, Robert J., 1999. "Determinants of Democracy," Scholarly Articles 3451297, Harvard University Department of Economics.
  3. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 6(3), pages 335-76, October.
  4. T. Rolf Turner, 2000. "Estimating the propagation rate of a viral infection of potato plants via mixtures of regressions," Journal of the Royal Statistical Society Series C, Royal Statistical Society, Royal Statistical Society, vol. 49(3), pages 371-384.
  5. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, Econometric Society, vol. 68(3), pages 575-604, May.
  6. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262522543, December.
  7. Crespo Cuaresma, Jesus & Doppelhofer, Gernot, 2007. "Nonlinearities in cross-country growth regressions: A Bayesian Averaging of Thresholds (BAT) approach," Journal of Macroeconomics, Elsevier, Elsevier, vol. 29(3), pages 541-554, September.
  8. Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  9. Paul Collier & Jan Willem Gunning, 1998. "Explaining African economic performance," Economics Series Working Papers, University of Oxford, Department of Economics WPS/1997-02.2, University of Oxford, Department of Economics.
  10. 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, Elsevier, vol. 77(2), pages 553-570, August.
  11. Hamparsum Bozdogan, 1987. "Model selection and Akaike's Information Criterion (AIC): The general theory and its analytical extensions," Psychometrika, Springer, Springer, vol. 52(3), pages 345-370, September.
  12. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, Springer, vol. 8(4), pages 355-78, December.
  13. Bart Hobijn & Philip Hans Franses, 2000. "Asymptotically perfect and relative convergence of productivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(1), pages 59-81.
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Cited by:
  1. Markus Eberhardt & Francis Teal, 2009. "Econometrics for Grumblers: A New Look at the Literature on Cross-Country Growth Empirics," CSAE Working Paper Series 2009-07, Centre for the Study of African Economies, University of Oxford.
  2. Sylvia Frühwirth-Schnatter, 2011. "Panel data analysis: a survey on model-based clustering of time series," Advances in Data Analysis and Classification, Springer, Springer, vol. 5(4), pages 251-280, December.
  3. Korobilis, Dimitris & Gilmartin, Michelle, 2010. "On regional unemployment: an empirical examination of the determinants of geographical differentials in the UK," MPRA Paper 28542, University Library of Munich, Germany.
  4. 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).

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