How Do Economic Freedom and Investment Affect Economic Growth?

Kimlong Chheng ()

Macroeconomics from University Library of Munich, Germany

Abstract: This paper studies whether and how capital investment and economic freedom jointly endogenize economic growth. The results produced by White’s heteroscedasticity-consistent matrix tests on a panel data of 50 countries over 1981-2000 support the crucial role of both domestic and foreign capital investment and economic freedom for rapid growth. Countries that improve economic freedom and that bolster capital investment tend to experience faster growth. The domestic investment rate _the breakdown of public and private investment_ and foreign direct investment are positively associated with economic growth, while the initial real per capita GDP is negatively correlated with subsequent growth rate.

Keywords: Economic freedom; investment; growth (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 10 pages
Date: 2005-09-13
New Economics Papers: this item is included in nep-mac
Note: Type of Document - pdf; pages: 10
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0509021

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