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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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Web page: http://www.tinbergen.nl

Related research

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

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References

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  1. 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, vol. 49(3), pages 371-384.
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  3. Paul Collier & Jan Willem Gunning, 1997. "Explaining African economic performance," CSAE Working Paper Series 1997-02.2, Centre for the Study of African Economies, University of Oxford.
  4. 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.
  5. Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
  6. Sachs, J-D & Warner, A-M, 1996. "Sources of Slow Growth in African Economies," Papers 545, Harvard - Institute for International Development.
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  8. Doppelhofer, G. & Cuaresma, J.C., 2007. "Nonlinearities in Cross-Country Growth Regressions: A Bayesian Averaging of Thresholds (BAT) Approach," Cambridge Working Papers in Economics 0706, Faculty of Economics, University of Cambridge.
  9. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
  10. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  11. 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.
  12. 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.
  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. 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.
  2. Michelle Gilmartin & Dimitris Korobilis, 2012. "On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 179-195, 05.
  3. 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).
  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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