An Exploratory Analysis of Related Macroeconomic Indicators as Determinants to Economic Growth

Sean Paul A De Castro ,Genesis P De Jesus ,Nicasio Angelo J Agustin

doi:10.32996/jefas.2022.4.1.21

Sean Paul A De Castro , Genesis P De Jesus + Show 1 more

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https://doi.org/10.32996/jefas.2022.4.1.21

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Abstract

The relative movement of certain individual economic indicators to the movement of per capita income is a well-researched field. In addition to that space, this study aimed at regressing economic development in terms of per capita incomes to selected miscellaneous indicators. This by itself may not be a new approach to understanding the interrelationships that exist between other relevant economic parameters, but localized and exploratory research in this regard does prove to have some key insights regarding the interactions of economic indicators in the Philippines. Using the Classical Linear Regression Model (CLRM), The results show that increases in Net Domestic Credit, Foreign Direct Investment, and Ratio of Female to Male Labor Participation Rate increased per capita income significantly, while increases in Real Interest Rate and Carbon Dioxide Emissions decreased per capita income significantly. This meant that increasing credit and investment and incorporating more women into the labor force is a significant impetus for growth and development, while environmental degradation and the high cost of borrowing harms it.

Highlights

Striking a balance between limited resources and unlimited wants is the central problem of Economics
Using the Classical Linear Regression Model (CLRM), The results show that increases in Net Domestic Credit, Foreign Direct Investment, and Ratio of Female to Male Labor Participation Rate increased per capita income significantly, while increases in Real Interest Rate and Carbon Dioxide Emissions decreased per capita income significantly
4.1.2 Coefficient Determination the researchers answer the following question, as shown on the Statement of the Problem section of this paper: by how much does Gross Domestic Product (GDP) per capita in the Philippines increase or decrease with a corresponding increase or decrease in the regressors, ceteris paribus: As shown in Figure 4, The R-squared coefficient of the model indicates that the variability in Net Domestic Credit, Real Interest Rate, Merchandise trade, Carbon Dioxide Emissions, Foreign Direct Investment, Ratio of Female to Male LFPR, and the Unemployment rate can explain 99.4% of the variability of the dependent variable, GDP per capita in the Philippines

Summary

Introduction

Striking a balance between limited resources and unlimited wants is the central problem of Economics. For contemporary economic policy, collective prosperity and growth for tens to thousands of millions of people year-on-year against political, social, and economic turmoil remains the principal endeavour for policymakers and stakeholders. This is not to say that the central problems of Economics and Economic Policy are different, but rather that the endeavour of the latter is the fundamental application of the former. Individual and specific indicators are devised to help track, analyze and predict these changes, but no singular model besides the National Income Account model, otherwise known as GDP, has been developed to encompass all of these factors yet.

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