Do Macro-Economic Factors Influence Financial Management Decision Making? The Israeli Economy in Perspective
Journal of Financial Management and Analysis, Vol. 28(2), 2015
Posted: 26 Apr 2016
Date Written: 2015
Abstract
The aim of this paper is to analyze financial and economic factors affecting economic growth and testing consistency of explanatory factors. Understanding these factors will assist decision makers in encouraging economic growth by government and financial institutions. We identified several quantitative factors which are associated with the long-term economic growth (as reflected by measures of standard of living) of various countries. Gross National Product (GDP) or Gross National Income (GNI) expresses standard of living as found in our long-term global data, where another measure is Gross National Happiness (GNH). These factors include: export per capita-being a proxy for the degree of international competitiveness; Secondary and tertiary education-being proxies to investment in human capital as well as the degree of social progress; High technology-representing knowledge and international competitiveness; and, Natural population growth-representing the degree of social progress.We confirmed these factors as being important in terms of their significance and duration based on cross-national data – beginning in 1960 and continuing for the years 1965, 1970, 1978, 1985, 1992, 2000, and 2007 (before global financial crisis). This study covers economic performance of countries for 47 years, and the consistency of the results over such a long time span, strongly supports the validity of factors identified and studied in this paper.
Keywords: Economic Growth; International Competitiveness; Estimation; Export; Education; High-tech; Population Growth; Israel
JEL Classification: C12; C31; C81; E20; N15; O11
Suggested Citation: Suggested Citation