Is Fixed Investment the Key to Economic Growth?
AbstractThis paper examines shares of fixed capital formation in GOP and rates of economic growth for more than 100 countries over successive 5-year periods between 1965 and 1985 to determine the direction of causality between them. Simple regressions and multiple regressions including several standard determinants of growth, as well as a simple causality test, provide more evidence that increases in growth precede rises in rates of capital formation than that increases in capital formation precede increases in growth. High rates of fixed capital formation accompany rapid growth in per capita income, but we find no evidence that fixed investment is the only or main source of ignition for economic growth.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4436.
Date of creation: Jul 1996
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Other versions of this item:
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
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