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

PurposeThe 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/approachPanel corrected standard error (static estimation) approach and one-step system generalised method of moments (dynamic estimation) approach are used.FindingsBoth 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/valueThe 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.
- University of Southern Queensland Australia
- University of Southern Queensland Australia
- Federation University Australia
- Federation University Australia
- University of Dhaka Bangladesh
GMM approach, gross capital formation, FDI, South Asia, economic growth, panel data, remittance inflow, 339, energy consumption, inflation, government expenditure
GMM approach, gross capital formation, FDI, South Asia, economic growth, panel data, remittance inflow, 339, energy consumption, inflation, government expenditure
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).45 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Top 10% impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Top 10%
