Contribution of Advanced Technology and Foreign Capital to Growth of Different Stage of Development Countries

This study determines influence of advanced technology and foreign capital on economic growth apart from contribution of the other major domestic inputs. The countries were classified into four groups; i.e., lower and lower middle income countries, upper middle income countries, non-OECD high income countries, and OECD countries. Five major factors as sources of growth in this study are domestic factors; i.e., domestic capital, labour, and human capital and supporting factors; i.e., foreign capital, and advanced technology. The long run cointegrating relation of the five major factors and its output was estimated for each group of countries. By using panel dynamic production function, most factors in the model were found significantly determining growth in all income groups. Human resources, in form of labour and human capital, were the most contributors to growth. Although all factors were found significantly contributing to growth in the OECD, at least one of the factors has not played significant role in the other three lower stages of development countries. Noticeably, both advanced technology and foreign capital were found significantly contributing to growth in all countries except for the high income Non-OECD where the advanced technology being insignificant source of growth. All five engines of growth must be put attention to play role in development of economy so that the development can be sustainable such as found all being significant factors in the case of the OECD.