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An Empirical Analysis Of The Determinants Of Economic Growth In The Western Balkans

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  • Besnik Taip FETAI
  • Besime Fekri MUSTAFI
  • Ariana Besnik FETAI

Abstract

The objective of this paper is to assess the main determinants that affect economic growth, and also the policies that may affect it, in the Western Balkan over the period 1994 to 2015. For this purpose we employ different techniques: OLS with robust error, fixed and random effects model, and Hausman-Taylor model with instrumental variables (IV). The study shows the evidence of conditional convergence, indicating to the need for an upward move in the steady state level of the Western Balkan region. The results show that foreign direct investments, gross savings and domestic credit to private sector have a positive effect on per capita growth. On the other hand, initial level of per capita growth, corruption, unemployment, and general government final consumption, have a negative relationships with per capita growth. Moreover, the paper shows puzzling results of the schooling which is not significant factor for growth in the Western Balkans. The study also highlights the relevance of attracting more foreign direct investments and reduction in corruption. JEL Codes - E60; O11

Suggested Citation

  • Besnik Taip FETAI & Besime Fekri MUSTAFI & Ariana Besnik FETAI, 2017. "An Empirical Analysis Of The Determinants Of Economic Growth In The Western Balkans," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 64(2), pages 245-254, June.
    • Handle: RePEc:aic:saebjn:v:64:y:2017:i:2:p:245-254:n:70
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    References listed on IDEAS

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    4. Mr. David Moore & Mr. Athanasios Vamvakidis, 2007. "Economic Growth in Croatia: Potential and Constraints," IMF Working Papers 2007/198, International Monetary Fund.
    5. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    6. Hubert Gabrisch, 2015. "Financial Constraints on Growth: Comparing the Balkans to Other Transition Economies," Eastern European Economics, Taylor & Francis Journals, vol. 53(4), pages 309-327, July.
    7. Katerina Lyroudi & John Papanastasiou & Athanasios Vamvakidis, 2004. "Foreign Direct Investment And Economic Growth In Transition Economies," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 2(1), pages 97-110.
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    Cited by:

    1. Yashasvi PANDEY & C.R. BISHNOI, 2023. "Macroeconomic determinants of economic growth. An international perspective," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(636), A), pages 53-76, Autumn.

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    More about this item

    Keywords

    economic growth; binding constraints; Western Balkan; panel methods;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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