Luận văn thạc sĩ UEH determinants of economic growth in a panel of asean and developing countries

UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIET NAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

VIET NAM –THE NETHERLANDS PROGRAMME

FOR MASTER OF DEVELOPMENT ECONOMICS

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DETERMINANTS OF ECONOMIC

GROWTH IN A PANEL OF ASIA PACIFIC

COUNTRIES

FINAL THESIS

Supervisor: Nguyen Hoang Bao

Student: Tran Luu Quoc Vuong

Class: MDE-16

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HO CHI MINH CITY, DECEMBER 2013

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APPENDICES

A: List of chosen countries and territories in Asia Pacific Region 51

B: Scatterplot matrix of variables 52

C: Tests 53

LIST OF FIGURES

Figure 3.1. Conceptual framework of the study 14

Figure 4.1. Growth rate versus Level of Per capita GDP (simple relation) 27

LIST OF TABLES

Table 3.1 Summary of variables 20

Table 4.1. Summary Statistic on the sample observations 29

Table 4.2. Correlation on the sample observations 30

Table 4.3. Basic Cross-Country Growth Regression 31

Table 4.4. Heteroskedasticity – White test 32

Table 4.5. Basic Cross-Country Growth Regression (robust) 33

Table 4.6. Multicollinearity testing 34

Table 4.7. Restricted Model (1) 35

Table 4.8. Restricted Model (2) 36

Table 4.9. Model Comparison 37

Table 4.10. Extended models 43

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ABBREVIATIONS

IMF : International Monetary Fund

WB : World Bank

UN : United Nations

GDP : Gross Domestic Products

GNP : Gross National Products

R&D : Research and Development

OECD : The Organization for Economic Co-operation and Development

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Table of Contents

1. CHAPTER 1: INTRODUCTION ..........................................................................2

1.1. Problem statement ......................................................................................................... 2

1.2. Objectives of study ........................................................................................................ 3

1.3. Research questions ........................................................................................................ 4

1.4. Scope of the research .................................................................................................... 4

1.5. Structure of the thesis .................................................................................................... 4

2. CHAPTER 2: THEORETICAL AND EMPIRICAL BACKGROUND ..................6

2.1. Theoretical background:................................................................................................ 6

2.2. Empirical review ........................................................................................................... 9

2.3. Summary ..................................................................................................................... 12

3. CHAPTER 3: RESEARCH METHODOLOGY .................................................. 13

3.1. Conceptual framework ................................................................................................ 13

3.2. Variables ..................................................................................................................... 14

3.2.1 Dependent variables ............................................................................................ 14

3.2.2 Explanatory variables .......................................................................................... 15

3.3. Data ............................................................................................................................. 22

3.4. Econometric model ..................................................................................................... 22

3.5. Summary ..................................................................................................................... 24

4. CHAPTER 4: DATA ANALYSIS ....................................................................... 26

4.1. Growth rate and convergence ...................................................................................... 26

4.2. Descriptive analysis .................................................................................................... 27

4.3. Regression Results for Growth rates ........................................................................... 30

4.3.1 Basic Regression ................................................................................................. 30

4.3.2 Hypothesis tests ................................................................................................... 32

4.3.3 The Determinants of Growth rate........................................................................ 39

4.3.4 The extended models ........................................................................................... 42

4.4. Summary ..................................................................................................................... 44

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Determinants of economic growth in a panel of Asia Pacific countries Thesis Proposal

Tran Luu Quoc Vuong – MDEk16 1

5. CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS ........................ 45

5.1. Main findings and policy implications ........................................................................ 45

5.2. Limitation of the research and Recommendation for further studies .......................... 45

6. REFERENCES..................................................................................................... 48

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Determinants of economic growth in a panel of Asia Pacific countries Thesis Proposal

Tran Luu Quoc Vuong – MDEk16 2

1. CHAPTER 1: INTRODUCTION

1.1.Problem statement

Nowadays, there are over 200 countries on over the world with different

institutions, with different growth rates. These growth rates vary hugely across

countries and between developing countries to developed countries. According to

recent surveys of many international organizations (IMF, WB, UN and so on), de￾veloping countries and economies in transition continue to register much stronger

growth than developed economies.

After the end of the World War II, the world started to recover economic

and the growth became an important part of economic science. Economists have

tried to apply other theories with a lot of empirical model to understand the process

of economic growth and explain enormous differences in economic performance

across countries. In the early, economists used Keynesian theories to discuss about

the stability of the growth path. Next, they focused on steady state growth rates

exogenously determined by technological progress. After that, Solow (1956) and

Swan (1956) became the pioneers who enriched neoclassical economic growth

model, and followed by a lot of others. From 1980s, economists developed growth

theory, which use endogenous economic growth model to evaluate the roles of

knowledge, innovation and human capital.

Improvements of economic theories and hundreds of researches have pro￾vided acceptable explanation for a particular phenomenon of recent decades: the

great divergence in economic performance. But, indeed, the income of underde￾veloped economies, as a whole, are failing to catch up the income of the developed

countries. Realizing this inadequacy, economic growth studies have shifted their

focus to find out the reason of this problems.

There were a lot of researches discuss about this problem, such as: Solow

(2000), Aghion and Howitt (1998), Kenny and Williams (2001), Temple (1999),

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