Factors that Influence Economic Growth: Empirical Evidence from Albania

Abstract

This study aimed to analyze the impact of the demographic factors and economic factors on GDP per capita in Albania from the period 1990-2020. The variables taken into consideration were life expectancy growth rate, fertility growth rate, labor force growth rate, unemployment rate, population growth rate, trade balance to GDP, and real interest rate. This study used Ordinary Least Squares (OLS) regressions to identify factors that influence GDP per capita. Before conducting the OLS regression is tested for normality, multicollinearity, heteroscedasticity, and also if the model is correctly specified. The results of the model suggest that there is a positive significant relationship between fertility growth rate and real interest rate and GDP per capita, and a negative significant relationship between population growth rate and the GDP per capita. There is not a consensus on the main factors that impact the economic growth of a country and the main difficulties consist of a lack of empirical research on Albanian data. The life expectancy growth rate, labor force growth rate, unemployment rate and trade balance to GDP taken into consideration have no significant effect on the dependent variable.