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Determinants of the long-run growth rate in the South-Asian countries

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  • Rao, B. Bhaskara
  • Cooray, Arusha

Abstract

This study uses the extreme bounds analysis of Leamer (1983) to identify some robust determinants of the long-run growth rate in seven South-Asian countries. The relationships between the two are estimated using panel data. We also consider some methodological issues concerning the specification. It is argued that the frequently used specification of the growth equation by the cross-country studies is inappropriate for estimating the long-run or steady state growth effects of variables such as the investment ratio. We use an alternative specification. Since the steady state growth rate in theoretical growth models depends on total factor productivity (TFP), we estimate the long-run growth effects of variables by analysing the determinants of TFP. This approach is suggested by a few influential economists and has been used by Senhadji (2000).

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26493.

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Date of creation: Nov 2010
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Handle: RePEc:pra:mprapa:26493

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Keywords: South-Asian countries; Extreme bounds analysis; Long-run growth rate; Total factor productivity.;

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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Rao, B. Bhaskara & Tamazian, Artur & Singh, Rup & Vadlamannati, Krishna Chaitanya, 2008. "Financial developments and the rate of growth of output: An alternative approach," MPRA Paper 8605, University Library of Munich, Germany.
  3. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  4. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  5. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  6. B. Bhaskara Rao & Gazi Hassan, 2011. "Determinants of the long-run growth rate of Bangladesh," Applied Economics Letters, Taylor & Francis Journals, vol. 18(7), pages 655-658.
  7. Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677 Elsevier.
  8. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
  9. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-13, June.
  10. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank.
  11. Mark Rogers, 2003. "A Survey of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 79(244), pages 112-135, 03.
  12. Rao, B. Bhaskara, 2008. "Estimates of the Steady State Growth Rates for Selected Asian Countries with an Extended Solow Model," MPRA Paper 9724, University Library of Munich, Germany, revised 01 Jul 2008.
  13. Swamy, P A V B & Arora, S S, 1972. "The Exact Finite Sample Properties of the Estimators of Coefficients in the Error Components Regression Models," Econometrica, Econometric Society, vol. 40(2), pages 261-75, March.
  14. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  15. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  16. Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, vol. 38(3-4), pages 964-973, April.
  17. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, vol. 73(1), pages 31-43, March.
  18. Greiner, Alfred & Semmler, Willi, 2002. "Externalities of investment, education and economic growth," Economic Modelling, Elsevier, vol. 19(5), pages 709-724, November.
  19. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  20. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
  21. Abdelhak Senhadji, 2000. "Sources of Economic Growth: An Extensive Growth Accounting Exercise," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 6.
  22. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
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