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Living Standard and Economic Growth: A Fresh Look at the Relationship Through The Nonparametric Approach

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  • Indrani Chakraborty
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    Abstract

    The relative role of economic growth vis-a-vis public action in raising living standards in developing countries has been a point of contention for quite some time now. The arguments on both sides are usually based on some estimated relationship between indicators of living standard and other variables. A critical review of the existing studies throws up some methodological issues among which misspecification of the model is most crucial. An alternative approach, viz. the nonparametric regression method, has been shown to be superior in taking care of this problem. Analysing the data for 88 developing countries we note that per capita income has positive significant effect on the life-expectancy at birth. However, we have not observed any relationship between the improvement in life-expectancy and change in income as well as the level of income, unlike some earlier studies. This study has the implication that well-targeted public policies may be successful in improving the standard of living in poor economies in the short-term. But for sustainability in the long-term, growth-based strategies are necessary. [Working Paper No. 283]

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:3161.

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    Date of creation: Nov 2010
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    Handle: RePEc:ess:wpaper:id:3161

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    Keywords: standard of living; model specification; nonparametric regression; public action vs. public expenditure;

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    1. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
    2. Kakwani, N., 1993. "Performance in living standards : An international comparison," Journal of Development Economics, Elsevier, vol. 41(2), pages 307-336, August.
    3. Bhalla, Surjit S & Glewwe, Paul, 1986. "Growth and Equity in Developing Countries: A Reinterpretation of the Sri Lankan Experience," World Bank Economic Review, World Bank Group, vol. 1(1), pages 35-63, September.
    4. Hardle, W., 1992. "Applied Nonparametric Methods," Discussion Paper 1992-6, Tilburg University, Center for Economic Research.
    5. Lant Pritchett & Lawrence H. Summers, 1996. "Wealthier is Healthier," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 841-868.
    6. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 133-150, Winter.
    7. Isenman, Paul, 1980. "Basic needs: The case of Sri Lanka," World Development, Elsevier, vol. 8(3), pages 237-258, March.
    8. Streeten, Paul & Burki, Shahid Javed, 1978. "Basic needs: Some issues," World Development, Elsevier, vol. 6(3), pages 411-421, March.
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