Macroeconomic Determinants of Economic Growth: A Review of International Literature

Abstract

The paper conducts a qualitative narrative appraisal of the existing empirical literature on the key macroeconomic determinants of economic growth in developing and developed countries. Much as other empirical studies have investigated the determinants of economic growth using various econometric methods, the majority of these studies have not distinguished what drives or hinders economic growth in developing or developed countries. The study finds that the determinants of economic growth are different when this distinction is used. It reveals that in developing countries the key macroeconomic determinants of economic growth include foreign aid, foreign direct investment, fiscal policy, investment, trade, human capital development, demographics, monetary policy, natural resources, reforms and geographic, regional, political and financial factors. In developed countries, the study reveals that the key macroeconomic determinants that are associated with economic growth include physical capital, fiscal policy, human capital, trade, demographics, monetary policy and financial and technological factors.

Multilateral Trade Liberalization and Economic Growth

“…In particular, we consider a model that includes control variables affecting 7 There is a voluminous literature that has explored various microeconomic and macroeconomic factors that could affect countries' economic growth or per capita income. A survey of this literature could be found in a survey on this literature is provided by Chirwa and Odhiambo (2016).…”

The effect of globalisation for economic growth of developing countries

“…In general, it is expected that institutions, if work properly, can increase effectiveness of human and physical capital use. This, in turn, would foster economic growth (Silve & Plekhanov, 2018;Chirwa & Odhiambo, 2016). Therefore, in this paper four institutional determinants are included: 1) government effectiveness;…”

An Extended GRA Method Integrated with Fuzzy AHP to Construct a Multidimensional Index for Ranking Overall Energy Sustainability Performances

“…Macroeconomic stability plays an important role in economic growth, as instability creates uncertainty about future values of economic variables. Since economic development enables the provision of better energy services, macroeconomic conditions of an economy have an effect on the economic dimension [43].…”