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

Author

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  • Mohammad Mafizur Rahman
  • Rezwanul Hasan Rana
  • Suborna Barua

Abstract

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.

Suggested Citation

  • Mohammad Mafizur Rahman & Rezwanul Hasan Rana & Suborna Barua, 2019. "The drivers of economic growth in South Asia: evidence from a dynamic system GMM approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(3), pages 564-577, August.
    • Handle: RePEc:eme:jespps:jes-01-2018-0013
    DOI: 10.1108/JES-01-2018-0013
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    Citations

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    Cited by:

    1. Byaro, Mwoya & Pelizzo, Riccardo & Kinyondo, Abel, 2023. "What are the Main Drivers Behind the Acceleration of Tanzania's Economic Growth Over the Past Three Decades?," African Journal of Economic Review, African Journal of Economic Review, vol. 11(4), June.
    2. Nitin Arora & Ishfaq Ali Ganaie, 2023. "How Much Technically Efficient Is The South Asian Region? An Intra-Regional Comparison Among Its Affiliates," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 24(1), pages 20-40, March.
    3. Qianqian Wu & Rong Wang, 2023. "Do Environmental Regulation and Foreign Direct Investment Drive Regional Air Pollution in China?," Sustainability, MDPI, vol. 15(2), pages 1-16, January.
    4. Avishek Khanal & Mohammad Mafizur Rahman & Rasheda Khanam & Eswaran Velayutham, 2021. "Are Tourism and Energy Consumption Linked? Evidence from Australia," Sustainability, MDPI, vol. 13(19), pages 1-20, September.
    5. Mohammad Mafizur Rahman & Xuan-Binh (Benjamin) Vu & Son Nghiem, 2022. "Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles?," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    6. Bakari, Sayef, 2024. "Assessing the Impact of Domestic Investments and CO2 Emissions on Economic Growth in Sub-Saharan Africa: A Comprehensive Study (1990-2022)," MPRA Paper 120370, University Library of Munich, Germany.
    7. Amin, Sakib & Jamasb, Tooraj & Nepal, Rabindra, 2021. "Regulatory reform and the relative efficacy of government versus private investment on energy consumption in South Asia," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 421-433.
    8. Muhammad Tariq Iqbal Khan & Sofia Anwar & Muhammad Rizwan Yaseen & Abdul Majeed Nadeem, 2022. "The Impact of Natural Disasters and Climate Change on Agriculture: An Empirical Analysis," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 28-38.
    9. Ahmed Abdullah Saad Al-Dhubaibi & Aarif Mohammad Khan & Hussein H. Sharaf-Addin & Mochammad Solichin, 2024. "Strategic Integration: Fostering Sustainability in Low-Income Country through Poverty Alleviation, Carbon Efficiency, Energy and Economic Resilience," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 524-532, May.
    10. Sisira R. N. Colombage & Suborna Barua & Madurika Nanayakkara & Udari N. Colombage, 2023. "COVID-19 Effects on Public Finance and SDG Priorities in Developing Countries: Comparative Evidence from Bangladesh and Sri Lanka," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(1), pages 85-111, February.
    11. Zanbaz Ahmed Khan & Biswajit Patra, 2024. "Intergenerational Mobility in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 25(1), pages 7-25, March.
    12. Rahman, Mohammad Mafizur & Sultana, Nahid, 2022. "Impacts of institutional quality, economic growth, and exports on renewable energy: Emerging countries perspective," Renewable Energy, Elsevier, vol. 189(C), pages 938-951.
    13. Xi Zhong & Liuyang Ren & Tiebo Song, 2022. "Beyond Market Strategies: How Multiple Decision-Maker Groups Jointly Influence Underperforming Firms’ Corporate Social (Ir)responsibility," Journal of Business Ethics, Springer, vol. 178(2), pages 481-499, June.
    14. Dan Gabriel Dumitrescu & Alexandra Horobe? & Cristiana Doina Tudor & Lucian Belascu, 2023. "Renewables and Decarbonisation: Implications for Energy Policy in the European Union," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 345-345, April.
    15. Rahman, Mohammad Mafizur, 2021. "The dynamic nexus of energy consumption, international trade and economic growth in BRICS and ASEAN countries: A panel causality test," Energy, Elsevier, vol. 229(C).
    16. Ali, Qamar & Yaseen, Muhammad Rizwan & Anwar, Sofia & Makhdum, Muhammad Sohail Amjad & Khan, Muhammad Tariq Iqbal, 2021. "The impact of tourism, renewable energy, and economic growth on ecological footprint and natural resources: A panel data analysis," Resources Policy, Elsevier, vol. 74(C).

    More about this item

    Keywords

    Economic growth; Energy consumption; Remittance inflow; Gross capital formation; Government expenditure; FDI; Inflation; GMM approach; Panel data; South Asia; O47; O53; C33;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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