Studies on Factors Affecting Economic Growth

A special issue of Economies (ISSN 2227-7099). This special issue belongs to the section "Economic Development".

Deadline for manuscript submissions: 30 June 2025 | Viewed by 25206

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Guest Editor
Faculty of Economics, Constantin Brancusi University of Targu Jiu, Targu Jiu, Romania
Interests: economic growth; fiscal policy; business environment; marking; circular economy
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Special Issue Information

Dear Colleagues,

Economic growth is a permanent concern when considering the context of the objectives necessary to ensure a society’s sustainable and progressive development. This can be influenced by a number of factors, including investment in infrastructure and human capital, technological innovation, fiscal and monetary policy, political and institutional stability, the level of globalisation and trade, income distribution, population health, education levels, fluctuations in basic product prices, geopolitical tensions, and more. Moreover, these influences may vary depending on the economic, cultural, and political context of each country. Research in this area, therefore, contributes to understanding the complexity of the economic growth process and to formulating effective policies to promote prosperity and sustainable development. By analysing and understanding these factors, correlations and underlying causes of economic growth can be identified, and governments and economic stakeholders can implement effective policies and strategies to stimulate economic growth and promote general welfare. Given this background, this Special Issue will focus on research concerning the key factors that can enhance or, conversely, hinder economic growth, with new insights and innovative solutions in the context of present-day economic challenges. Research papers are also encouraged to investigate the impact of new digital technologies on economic growth; examine the relationship between economic growth and social issues such as health, education, social inclusion, or income distribution; develop sustainable models of economic growth; analyse the impact of geopolitical and climate change on economic growth; identify adaptation and resilience strategies; and analyse the asymmetric and non-linear effects of economic factors in depth. Additionally, other subjects related to the general scope of this Special Issue are welcome.

Prof. Dr. Gabriela Dobrota
Guest Editor

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Keywords

  • economic growth
  • GDP
  • investments
  • macroeconomic policy
  • econometric models
  • sustainable development
  • business environment

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Published Papers (14 papers)

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Research

21 pages, 320 KiB  
Article
The Asymmetric Relationship Between Tourism and Economic Growth: A Panel Quantile ARDL Analysis
by Huthaifa Alqaralleh, Ahmad Alsarayreh and Ahmad Alsaraireh
Economies 2025, 13(4), 97; https://doi.org/10.3390/economies13040097 - 1 Apr 2025
Viewed by 484
Abstract
This study analyses the intricate connection between tourism and economic growth, emphasising significant gaps in existing literature. The study utilises a comprehensive framework encompassing tourism-led economic growth (TLEG) and economy-driven tourism growth (EDTG), highlighting the bidirectional dynamics at play. This study utilises a [...] Read more.
This study analyses the intricate connection between tourism and economic growth, emphasising significant gaps in existing literature. The study utilises a comprehensive framework encompassing tourism-led economic growth (TLEG) and economy-driven tourism growth (EDTG), highlighting the bidirectional dynamics at play. This study utilises a panel quantile ARDL regression model to analyse regional disparities and varying levels of economic and tourism development. Results demonstrate that European nations with robust tourism sectors exhibit more significant recoveries, whereas Asia–Pacific countries face heightened pressure to leverage tourism for economic stabilisation. This study demonstrates the heightened sensitivity of GDP to tourism in economic downturns, emphasising the sector’s critical role in sustaining growth during difficult periods. Long-term implications favour a strategic focus on structural factors over cyclical ones, promoting innovation, infrastructure development, and investment in human capital. This study recommends economic policies that utilise tourism’s strengths, enhance resilience, and promote diversification to achieve sustainable prosperity during economic challenges. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
23 pages, 293 KiB  
Article
Helpless Rich Data: The Effect of Financial Openness with Dimensionality Reduction
by H. E. Cha, Doo Kyun Wang and Sherryl Berg-Ridenour
Economies 2025, 13(3), 62; https://doi.org/10.3390/economies13030062 - 24 Feb 2025
Viewed by 657
Abstract
The literature on financial openness is rich, yet the selection of a suitable financial index remains a challenge. In this paper, Principal Component Analysis (PCA) and Factor Analysis (FA) are utilized to reduce the dimensionality of five publicly available financial openness indices. The [...] Read more.
The literature on financial openness is rich, yet the selection of a suitable financial index remains a challenge. In this paper, Principal Component Analysis (PCA) and Factor Analysis (FA) are utilized to reduce the dimensionality of five publicly available financial openness indices. The results of the estimation are unexpected: PCA suggests a negative impact of financial openness on economic growth, while FA yields inconsistent results. Importantly, the negative impact of the institutional component on economic growth is statistically significant. These findings highlight the urgent need for proper institutional readiness to fully realize the benefits of financial openness. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
25 pages, 378 KiB  
Article
Public Expenditure and Economic Growth: Further Evidence for the European Union
by Simón Sosvilla-Rivero, María del Carmen Ramos-Herrera and Juan J. Rubio-Guerrero
Economies 2025, 13(3), 60; https://doi.org/10.3390/economies13030060 - 21 Feb 2025
Viewed by 1567
Abstract
This paper empirically investigates the short- and long-term impact of public expenditure on economic growth. We use annual data from 28 European Union (EU) countries for the 1995–2022 period and estimate a growth model augmented for public expenditure employing the Autoregressive Distributed Lag [...] Read more.
This paper empirically investigates the short- and long-term impact of public expenditure on economic growth. We use annual data from 28 European Union (EU) countries for the 1995–2022 period and estimate a growth model augmented for public expenditure employing the Autoregressive Distributed Lag (ARDL) panel data approach. Our results support the view that different categories of public expenditures have dissimilar long- and short-term effects on the economic performance of EU countries. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
18 pages, 622 KiB  
Article
The Effect of Financial Market Capitalisation on Economic Growth and Unemployment in South Africa
by Wandile Allan Ngcobo, Sheunesu Zhou and Strinivasan S. Pillay
Economies 2025, 13(3), 57; https://doi.org/10.3390/economies13030057 - 20 Feb 2025
Cited by 1 | Viewed by 827
Abstract
The dynamic impact of financial market capitalisation on South Africa’s unemployment and economic growth is empirically explored in this study using the finance-augmented Solow model framework. South Africa’s high rate of structural unemployment and its robust financial market, which is at the same [...] Read more.
The dynamic impact of financial market capitalisation on South Africa’s unemployment and economic growth is empirically explored in this study using the finance-augmented Solow model framework. South Africa’s high rate of structural unemployment and its robust financial market, which is at the same standard as those in countries with advanced economies, served as the driving force for the study. Evidence for the dynamic link is presented by a time series analysis that employed the VECM model. South Africa continues to face persistent macroeconomic issues, including stagnant economic growth, declining investment, and rising unemployment. Market capitalisation, net acquisition of financial assets, and foreign direct investment all have a favourable and substantial effect on economic growth. According to VECM estimation results, unemployment has a detrimental effect on economic growth. Also, market capitalisation has significant positive effects on economic growth. Unemployment and economic growth are inversely related, thus unemployment has an adverse effect on economic growth. According to the findings, financial markets have distinct effects on economic growth because of their various functions within the economy. It was also shown that foreign direct investment has a crucial role in increasing economic growth. This implies the important role that the financial market and systems have in South Africa’s economic growth. The article advises authorities to keep enacting measures to boost capital market growth to increase employment, while also making sure that other structural issues affecting the labour market are effectively addressed to stimulate job creation. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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26 pages, 3269 KiB  
Article
Growth and Inequality Linkages of the Mexican States in the New Century: A Panel Data Approach with Spatially Lagged Variables
by Andrés Artal-Tur, Maria Isabel Osorio-Caballero and Roy Nuñez
Economies 2025, 13(2), 54; https://doi.org/10.3390/economies13020054 - 18 Feb 2025
Viewed by 831
Abstract
The direction of the relationship between economic growth and income (social) inequality remains an open area of research, with theoretical models suggesting the possibility of positive or negative covariations. This study contributes to the debate by examining the case of Mexico, a country [...] Read more.
The direction of the relationship between economic growth and income (social) inequality remains an open area of research, with theoretical models suggesting the possibility of positive or negative covariations. This study contributes to the debate by examining the case of Mexico, a country characterized by significant income disparities. Our analysis introduces several innovations. First, we adopt a regional approach with data at the level of states, which provides a more suitable framework for comparison in regard to cross-country studies. Second, we employ three distinct measures of income inequality—the Palma ratio (P90/40), the P90/50 ratio, and the Gini index—offering a more comprehensive perspective in terms of income distribution deciles. Additionally, we incorporate a panel data approach that accounts for spatial neighborhood effects in inequality influencing growth. Our findings reveal a strong significant positive covariation between inequality and growth: periods of rising inequality coincide with accelerated economic growth, whereas periods of declining inequality align with growth slowdowns. Interestingly, the model is able to capture both positive and negative covariations for groups of states along the period of analysis, 2005–2019, highlighting the importance of considering regional heterogeneity when running national-level investigations. The effects of spatial inequality clusters on growth seem to be important too, affecting both northern and southern states. These results suggest that Mexico’s growth model appears structurally unequal, which can help to explain the persistent inequality situation shown by the country in the last decades. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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18 pages, 307 KiB  
Article
Examining Impact of Inflation and Inflation Volatility on Economic Growth: Evidence from European Union Economies
by Anastasios Pappas and Nikolaos Boukas
Economies 2025, 13(2), 31; https://doi.org/10.3390/economies13020031 - 29 Jan 2025
Cited by 1 | Viewed by 2561
Abstract
Examining the economies of the European Union from 2000 to 2023, we have found no strong evidence that the inflation rate has a negative impact on economic growth. In contrast, in line with conventional economic theory, higher interest rates are associated with lower [...] Read more.
Examining the economies of the European Union from 2000 to 2023, we have found no strong evidence that the inflation rate has a negative impact on economic growth. In contrast, in line with conventional economic theory, higher interest rates are associated with lower economic growth. The results remain consistent even after controlling for various control variables, non-linearities and endogeneity issues. These findings suggest that an aggressive tightening of monetary policy in the euro area, aimed at rapidly bringing inflation under control, could actually be detrimental to economic growth. Since the negative effects of monetary tightening on growth are clear, while the benefits of rapidly reducing inflation on economic growth are ambiguous, the European Central Bank must be cautious about both the intensity and the duration of monetary tightening. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
47 pages, 25995 KiB  
Article
Exploring the Tourism and Economic Growth Relationship in Vietnam: A Cointegration Analysis with Model-Specific Structural Breaks
by Ronald Ravinesh Kumar, Peter Josef Stauvermann and Lien Thi Mai Dau
Economies 2025, 13(2), 29; https://doi.org/10.3390/economies13020029 - 27 Jan 2025
Viewed by 1794
Abstract
In this study, we present a comprehensive analysis to examine the resilience of tourism in Vietnam since the Doi Moi period. Using an augmented Solow framework, data from 1986 to 2020, and the ARDL approach, we estimate the long-run and short-run effects, whilst [...] Read more.
In this study, we present a comprehensive analysis to examine the resilience of tourism in Vietnam since the Doi Moi period. Using an augmented Solow framework, data from 1986 to 2020, and the ARDL approach, we estimate the long-run and short-run effects, whilst accounting for model-specific structural breaks. To provide stronger validation and robustness of the results, we estimate eight models under four cases. We start with the base model, which includes tourism and capital (in per worker terms), and then augment it with factors that are carefully identified from the literature. The additional factors include urbanisation, financial development, trade openness, foreign direct investment (FDI), information and communication technology (ICT), and natural resources. We find that capital accumulation and tourism (in per worker terms) remain positive drivers of growth in all the estimations. Results from alternative models also highlight the pro-growth effects of urbanisation, financial development, and trade openness. A positive association between carbon emissions and economic growth is also noted, indicating the existing production–consumption setup, the pace of environmental harvesting, and the weak decoupling effects that could lead to negative externality in the long run. Factors like technology, natural resource rents, and FDI show negative effects on growth as well. Moreover, by examining the causality dynamics, the study further contributes to broader policy discussion. Hence, policies targeted to promote the growth process, and the advancement of the economy, should continue supporting capital accumulation, tourism development, urbanisation, financial development, and international trade. However, future economic policies should cautiously address emissions, natural resource use, and re-evaluate the gains from foreign direct investment (FDI) to ensure growth remains sustainable. With tourism and capital accumulation at the core of this study, the findings of this study are intended to generate deeper policy discussions on resource allocations and the need to harness and/or rely on contemporary sources of growth to promote the sustainable development of Vietnam. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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17 pages, 1332 KiB  
Article
The Efficacy of Monetary and Fiscal Policies on Economic Growth: Evidence from Thailand
by Pathairat Pastpipatkul and Htwe Ko
Economies 2025, 13(1), 19; https://doi.org/10.3390/economies13010019 - 15 Jan 2025
Viewed by 1669
Abstract
This study empirically explores the dynamic effect of MP and FP on the economic growth of Thailand from Q1:2003 to Q2:2024. In this study, data analysis was conducted using an advanced sequence of the econometric modeling approach to guarantee that the estimated results [...] Read more.
This study empirically explores the dynamic effect of MP and FP on the economic growth of Thailand from Q1:2003 to Q2:2024. In this study, data analysis was conducted using an advanced sequence of the econometric modeling approach to guarantee that the estimated results were more consistent and reliable. First, we used Bayesian additive regression trees (BART) and Bayesian variable selection (BASAD) methods to determine macro factors with the highest probabilities influencing growth, in addition to monetary and fiscal policy tools during the studied periods. Second, we used the time-varying coefficients seemingly unrelated equation (TVSURE) model to examine the economic impact of MP and FP. Last, we also employed the Markov switching regression (MSR) model not only to support the findings from the TVSURE model but also to propose policy recommendations based on regime durations and transitions tempted by MP and FP. The main results from both TVSURE and MSR reveal the following: (1) MP is more consistent with expected growth outcomes while FP is stronger when localized, (2) MP is more effective in sustaining long periods of high growth, (3) FP is significantly stronger in recovering from recessions, and (4) the coordination of MP and FP has a similar performance to MP alone but with shorter transition periods. This study makes an empirical contribution to the ongoing debate on the effectiveness of MP and FP in boosting growth and aiding in the recovery from recessions in the case of Thailand. In addition, this study not only acknowledged certain limitations but also recommended policies to sustain the Thai economy. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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21 pages, 759 KiB  
Article
Derivative Markets and Economic Growth: A South African Perspective
by Matthew Stevens and Cobus Vermeulen
Economies 2024, 12(11), 312; https://doi.org/10.3390/economies12110312 - 17 Nov 2024
Viewed by 1093
Abstract
It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and [...] Read more.
It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and economic growth, however, substantially less research has been done on the relationship between derivatives and growth, especially in the emerging-market context. Derivatives can be viewed as a specific category of financial innovation, which may advance economic growth through its specialised functions of risk management and price discovery. This paper contributes to bridging this gap in the literature by exploring the impact of exchange-traded futures derivatives on South African economic growth, output, and economic growth volatility. It employs ARDL bounds tests, Granger causality tests and GARCH volatility modeling to analyse the effects of exchange-traded futures derivatives on various measures of South African economic activity. The main result is that exchange-traded futures derivatives contribute positively to South African economic growth and economic activity. This may suggest that opportunities might exist in other emerging economies, with financial structures comparable to that of South Africa, to encourage the development of organised and well-regulated derivatives markets to unlock economic growth in these economies. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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23 pages, 1075 KiB  
Article
Does Institutional Quality Enhance the Effect of Health Outcomes on Economic Growth? Insights from Sub-Saharan African Countries
by Hafte Gebreselassie Gebrihet, Yibrah Hagos Gebresilassie and Gabriel Temesgen Woldu
Economies 2024, 12(11), 308; https://doi.org/10.3390/economies12110308 - 14 Nov 2024
Viewed by 1749
Abstract
Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research [...] Read more.
Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research on the interplay between InQ, health, and ECG in Sub-Saharan African (SSA) countries is particularly limited. This study aims to address this gap by evaluating how health impacts ECG, with an emphasis on the mediating role of InQ in the health–growth nexus in SSA. This study examines these interplays across 35 SSA countries from 2012 to 2022. The life expectancy at birth (LEX) and real gross domestic product per capita (GDP) are used as proxies for health outcomes and ECG, respectively. The system generalised method of moments estimator is employed to analyse data. Results show that the LEX has a strong positive effect on economic growth in SSA countries. Furthermore, the InQ indicators (such as control of corruption, government effectiveness, rule of law and political stability, and absence of violence) are positively correlated with ECG. When the LEX interacts with InQ indicators, InQ is identified as a key channel through which LEX influences ECG. The findings confirm that InQ plays a crucial role in the health–growth nexus, with the positive impact of LEX on ECG being more pronounced in countries with higher levels of InQ, while the effect is weaker in countries with lower levels of InQ. The findings of this study have crucial policy implications, highlighting the intricate link among institutional quality, health outcomes, and economic growth. This study’s findings provide essential insights for policymakers to design focused strategies that improve InQ and health outcomes to achieve sustained ECG in SSA. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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18 pages, 326 KiB  
Article
The Effect of Education on Economic Growth in Sub-Saharan African Countries: Do Institutions Matter?
by Mohammed N. Abu Alfoul, Ayman Hassan Bazhair, Ibrahim N. Khatatbeh, Adam G. Arian and Mahmoud N. Abu Al-Foul
Economies 2024, 12(11), 300; https://doi.org/10.3390/economies12110300 - 4 Nov 2024
Cited by 3 | Viewed by 3339
Abstract
This paper investigates the moderating role of institutional quality on the relationship between education and economic growth in Sub-Saharan Africa (SSA). The study applies the panel ARDL model to data from 18 SSA countries spanning 2000–2020 for its main analysis, along with a [...] Read more.
This paper investigates the moderating role of institutional quality on the relationship between education and economic growth in Sub-Saharan Africa (SSA). The study applies the panel ARDL model to data from 18 SSA countries spanning 2000–2020 for its main analysis, along with a battery of diagnostics test to ensure the robustness of the results. The results reveal that the long-term effect of education on economic growth is statistically insignificant, attributing this finding to high rates of education exclusion and low-quality education. Remarkably, the research emphasizes the moderating role of institutional quality, showing the positive effects of education on economic growth when countries demonstrate robust corruption control and political stability. The study contributes to the existing literature by highlighting specific institutional factors influencing the effectiveness of education in driving economic growth, emphasizing the need for a strong institutional framework alongside educational efforts for sustainable development. The findings highlight that robust institutions form a crucial infrastructure that enhances the effectiveness of education in driving productivity and fostering economic growth. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
25 pages, 2939 KiB  
Article
A Tale of Two Economies: Diachronic Comparative Analysis of Diverging Paths of Growth and Inequality in the United States and the United Kingdom
by Panagiotis Karountzos, Nikolaos T. Giannakopoulos, Damianos P. Sakas and Stavros P. Migkos
Economies 2024, 12(10), 274; https://doi.org/10.3390/economies12100274 - 8 Oct 2024
Cited by 1 | Viewed by 1890
Abstract
This study investigates the correlation between the Gini index and gross domestic product (GDP) in two of the world’s largest capitalist economies: the United States and the United Kingdom. Utilizing econometric methods, including stationarity tests and linear regression, this research work aims to [...] Read more.
This study investigates the correlation between the Gini index and gross domestic product (GDP) in two of the world’s largest capitalist economies: the United States and the United Kingdom. Utilizing econometric methods, including stationarity tests and linear regression, this research work aims to elucidate the relationship between economic inequality and economic growth. The results for the United States reveal a significant positive correlation between GDP and the Gini index, suggesting that economic growth is associated with rising income inequality. In contrast, the United Kingdom shows a much weaker relationship, indicating that other factors, such as redistributive policies and social welfare programs, may mitigate the impact of economic growth on income inequality. These findings highlight the importance of national policies and institutional frameworks in shaping economic outcomes and can be used in policy making. This study contributes to the existing literature by providing a comparative analysis of the correlation between GDP and the Gini index in two major capitalist economies, offering fresh empirical insights. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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22 pages, 939 KiB  
Article
Effects of Corruption and Informality on Economic Growth through Productivity
by Pedro Bermúdez, Luis Verástegui, José Luis Nolazco and Dante A. Urbina
Economies 2024, 12(10), 268; https://doi.org/10.3390/economies12100268 - 2 Oct 2024
Viewed by 3267
Abstract
Corruption and informality are issues which have attracted a great amount of empirical research, since they are variables that can affect economic development in various and complex ways, with direct and indirect effects on economic growth. In this context, the objective of this [...] Read more.
Corruption and informality are issues which have attracted a great amount of empirical research, since they are variables that can affect economic development in various and complex ways, with direct and indirect effects on economic growth. In this context, the objective of this investigation is to assess the impacts of corruption and informality on economic growth and productivity in countries from Latin America and the OECD (Organisation for Economic Co-operation and Development). To achieve this, a 3SLS-GMM estimation is proposed to manage the endogeneity of the variables in the system of equations. Subsequently, a simulation analysis is conducted to quantify the impacts of increases in corruption and informality on growth and productivity, as well as the influence of human capital in counteracting these impacts. The main findings of the research are as follows: (i) corruption decreases economic growth and productivity in both groups of countries; (ii) informality negatively affects economic growth and productivity; (iii) increases in corruption and informality reduce economic growth and productivity; and (iv) human capital has a positive impact on economic growth and reduces the negative impacts of corruption and informality. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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33 pages, 7471 KiB  
Article
Public R&D and Growth: A dynamic Panel Vector-Error-Correction Model Analysis for 14 OECD Countries
by Thomas H. W. Ziesemer
Economies 2024, 12(8), 216; https://doi.org/10.3390/economies12080216 - 22 Aug 2024
Viewed by 1819
Abstract
This paper addresses the controversial issue of the direct and indirect effects of public R&D on growth. We look at six variables of R&D-driven growth jointly for 14 OECD countries using methods of dynamic systems for panel data analysis: GDP, technical change, domestic [...] Read more.
This paper addresses the controversial issue of the direct and indirect effects of public R&D on growth. We look at six variables of R&D-driven growth jointly for 14 OECD countries using methods of dynamic systems for panel data analysis: GDP, technical change, domestic and foreign businesses and public R&D. Cointegration tests suggest four long-run relations for the six variables. We estimate these relations using group mean versions of fully modified and dynamic OLS. Domestic public R&D has positive long-run regression coefficients for direct effects on productivity and indirect ones via private R&D. Here, we build a panel vector-error-correction model with these long-term relations. Shocks to domestic public R&D enhance domestic private R&D, technical change and the GDP. Permanent changes in foreign public and private R&D have positive growth effects, which are transitional for foreign public R&D. Full article
(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)
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