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

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.

Nexus between environmental, social and economic development in South Asia: evidence from econometric models

“…We used a better modelled technique of Panel data regression over cross-section and time-series data in handling all the evidence obtainable, which cannot be measured in pure cross-section and time-series ( Plumper et al., 2005 ). The balanced panel data of five countries covering 18 years includes 3 macroeconomic indicators- GDP, Trade Openness, Financial Development Index ( Rahman et al., 2019 ); 2 societal development indicators- HDI, GINI ( Kubiszewski et al., 2013 ) and 3 environmental development indicators- Ecological footprint, Bio-capacity, Energy use ( Wackernagel et al., 2019 ). The countries are selected from SAARC region, excluding– Afghanistan, Bhutan and Maldives – due to unobtainability of data for our chosen variables and time period.…”

“…Economic growth is considered to be a powerful tool to create employment, reduce poverty and improve the living standards ( Azam, 2019 ). Therefore, economic growth has been a major policy agenda of developing countries where the poverty level is high and widespread ( Rahman et al., 2019 ). South Asian region, in particular, is experienced with a high poverty level that varies among the counties.…”

“…The past empirical results revealed by the researchers are inconclusive, the reason being the studies have adopted ad-hoc approaches, used different country-specific characteristics or there exists omitted variable bias. Previous studies have not considered all the relevant variables for growth studies in South Asia (see Kashem and Rahman, 2019 ; Rahman et al., 2019 ; Rahman et al., 2020 ). Therefore, the present study aims to answer the research question i.e., what are the impacts of various economic, social and environmental indicators on economic growth in South Asian countries?…”

Nexus between energy consumption, information and communications technology, and economic growth: An enquiry into emerging Asian countries

“…Our empirical study shall be limited to cover only the effect of ICT on economic growth and energy consumption, but we shall state the literature on a broader perspective by analyzing the interrelationships of technology and economy; energy and economy and; energy–economy–technology nexus. Most of the literature investigates the relationship between technology and economy (Afroz, Muhibbullah, Morshed, Shadkam, & Bijari, 2020; Cortés & Navarro, 2011; Dedrick, Gurbaxani, & Kraemer, 2003; Edoun & Fotso, 2019; Farhadi et al, 2012) or the interdependence of energy and economy (Rahman, 2017; Rahman et al, 2019; Rahman & Kashem, 2017; Shahbaz, Van Hoang, Mahalik, & Roubaud, 2017; Sorrell, 2015; Streimikiene & Kasperowicz, 2016), or the linkage of energy–economy–technology (Ahmed & Azam, 2016; Betz, Betz, Kim, Monks, & Phillips, 2019; Mezghani & Haddad, 2017; Smulders & de Nooij, 2003; Weisser, 2004), producing varied results across nations under each of these hypotheses. All of these links are explained extensively later.…”

“…Second, the rationale behind choosing Asia is the high poverty rate in this region due to which rapid economic growth is a fundamental necessity (Rahman, Rana, & Barua, 2019). By 2030, Asia is expected to contribute approximately 60% of global growth in terms of GDP (Yendamuri & Ingilizian, 2019).…”