How Do Economic Freedom and Investment Affect Economic Growth?
AbstractThis 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.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0509021.
Length: 10 pages
Date of creation: 13 Sep 2005
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Economic freedom; investment; growth;
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- E - Macroeconomics and Monetary Economics
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