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Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania

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  • Ur Rehman, Ijaz
  • Shahbaz, Muhammad
  • Kyophilavong, Phouphet

Abstract

We study the relationship between financial development, technological development and economic growth in Romania. We construct aggregate indices of financial development and technological development using principal component analysis. The ARDL bounds testing approach shows the presence of cointegration between financial development, technological development and economic growth. Financial development and technological development contribute to economic growth. Moreover, financial development leads technological development which Granger causes economic growth. Our empirical evidence suggest that economic growth is driven by financial development via technological development and that, in Romania,a stable financial system and capital market can facilitate technological innovations.

Suggested Citation

  • Ur Rehman, Ijaz & Shahbaz, Muhammad & Kyophilavong, Phouphet, 2013. "Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania," MPRA Paper 51813, University Library of Munich, Germany, revised 29 Nov 2013.
  • Handle: RePEc:pra:mprapa:51813
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    Keywords

    Financial development; technological development; economic growth; Romania;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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