The drivers of economic growth in South Asia: evidence from a dynamic system GMM approach

Rahman, Mohammad Mafizur and Rana, Rezwanul Hasan and Barua, Suborna (2019) The drivers of economic growth in South Asia: evidence from a dynamic system GMM approach. Journal of Economic Studies, 46 (3). pp. 564-577. ISSN 0144-3585


Purpose – The purpose of this paper is to explore the drivers of economic growth in South Asia region for
the period of 1975–2016 using the World Bank data.

Design/methodology/approach – Panel corrected standard error (static estimation) approach and one-step
system generalised method of moments (dynamic estimation) approach are used.

Findings – Both the static and dynamic estimations indicate that energy use, gross capital formation and
remittances are the main drivers of economic growth in South Asian countries. The effects of all these variables
are positive and significant. The extent of the effect of energy use is much higher than that of other two
variables on the economic growth. A 1 per cent increase in the growth of energy consumption can expedite the
gross domestic product growth by approximately 3 per cent in South Asia. However, the key variables, such as
trade, government expenditure and foreign direct investment demonstrate no significant effect.

Originality/value – The current research is original in the sense that it investigated the issue with a new
data set using improved econometric techniques. Moreover, in South Asia as a whole, this kind of study is
totally absent, particularly with panel data of a large number of years. Furthermore, this study has taken
into account the problem of heterogeneity and the biases created by cross-section dependence, which were
mostly absent in previous studies. Therefore, the findings of this research are new contributions to the
existing literature.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to Published version, in accordance with the copyright policy of the publisher.
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 16 Aug 2019 00:17
Last Modified: 16 Aug 2019 00:17
Uncontrolled Keywords: economic growth, energy consumption, remittance inflow, gross capital formation, government expenditure, FDI, inflation, GMM approach, panel data, South Asia
Fields of Research : 14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1403 Econometrics > 140304 Panel Data Analysis
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910103 Economic Growth
Identification Number or DOI: 10.1108/JES-01-2018-0013

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