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How Do Economic Freedom and Investment Affect Economic Growth?

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  • KIMLONG CHHENG

    (Kobe University, Graduate School of International Cooperation Studies)

Abstract

This paper studies whether and how capital investment and economic freedom jointly endogenize economic growth. The results produced by White’s heteroscedasticity-consistent matrix tests on a panel data of 50 countries over 1981-2000 support the crucial role of both domestic and foreign capital investment and economic freedom for rapid growth. Countries that improve economic freedom and that bolster capital investment tend to experience faster growth. The domestic investment rate _the breakdown of public and private investment_ and foreign direct investment are positively associated with economic growth, while the initial real per capita GDP is negatively correlated with subsequent growth rate.

Suggested Citation

  • Kimlong Chheng, 2005. "How Do Economic Freedom and Investment Affect Economic Growth?," Macroeconomics 0509021, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0509021
    Note: Type of Document - pdf; pages: 10
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    Cited by:

    1. Jan Hanousek & Evžen Kočenda, 2011. "Public Investment and Fiscal Performance in the New EU Member States," Fiscal Studies, Institute for Fiscal Studies, vol. 32(1), pages 43-71, March.
    2. Vatcharin Sirimaneetham, 2006. "What drives liberal policies in developing countries?," Bristol Economics Discussion Papers 06/587, School of Economics, University of Bristol, UK.
    3. Olena SOKOLOVSKA, 2016. "Trade freedom and revenue from trade taxes: a cross-country analysis," Vestnik of the St. Petersburg University. Series 5. Economics Вестник Санкт-Петербургского университета. Серия 5. Экономика, CyberLeninka;Федеральное государственное бюджетное образовательное учреждение высшего образования «Санкт-Петербургский государственный университет», issue 2, pages 52-67.
    4. Hatice KÜÇÜKKAYA, 2017. "EUREFE’17 International Conference," Turkish Economic Review, KSP Journals, vol. 4(3), pages 343-344, September.
    5. Aslý YENÝPAZARLI, 2017. "Economic freedom and effects on economic growth: A time series analysis for Turkey," Turkish Economic Review, KSP Journals, vol. 4(3), pages 345-351, September.

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    More about this item

    Keywords

    Economic freedom; investment; growth;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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