Macroeconomic Determinants of Economic Growth in Lower Middle Income Countries

24 Pages Posted: 30 Jan 2018 Last revised: 31 Jan 2018

Date Written: September 17, 2017

Abstract

The main objective of the study is to critically examine the macroeconomic determinants of economic growth of World Bank newly categorized lower middle income countries. In specific, the study try to find out the relationship between the key macroeconomic indicators namely foreign direct investment, current account balance, exports of goods and services, imports of goods and services, government total investment, inflation, total population, unemployment rate, life expectancy at birth, total remittances received and economic growth among lower middle income countries. To achieve the objective, the study employed panel data approach and run multiple regression analysis. The study use different type of regression model to describe the relationship and deployed Hausman Specification Test and Breusch and Pagan Lagrangian multiplier test for random effects to find best model for estimation. After a rigorous analysis, the study select random effect model is the best model for our estimation. Empirical results show that current account balance, total investment, total population, life expectancy at birth and remittance received is proved to be significant in confidence level of five percent. It also deduced from study that export performance, import performance and inflation are found insignificant while FDI, interest rate and unemployment rate are found highly insignificant. Empirical results also suggest that export performance, total investment, inflation, total population, unemployment rate and remittance have positive coefficient on economic growth of lower middle income country.

Keywords: Economic growth, Lower middle income countries, Panel data, Multiple regression analysis, FDI, interest rate, Unemployment rate ,Current account balance, Total investment, Total population, Life expectancy at birth, Remittance received

Suggested Citation

Wadud, Md. Abdul, Macroeconomic Determinants of Economic Growth in Lower Middle Income Countries (September 17, 2017). Available at SSRN: https://ssrn.com/abstract=3106266 or http://dx.doi.org/10.2139/ssrn.3106266

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Bangladesh

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