DETERMINANTS OF A COUNTRY’S GNP TO GDP POSITION: A REVISIT

Abstract

The aim of this paper is to identify the factors that could contribute to an increase in a country’s GNP relative to its GDP. This represents a sequel to [Tan, EC, CF Tang and RD Palaniandi (2019). What could cause a country’s GNP to be greater than its GDP? Singapore Economic Review, https://doi.org/10.1142/S0217590819500073 .] on what could cause a country’s GNP to exceed its GDP. Annual data of a panel of 52 countries from 1992 through 2016 are mobilized for the purpose, with the sample period split into five-year average intervals. The possible determinants of the relative position include the savings-investment gap, international reserves, state of technology, demography, unemployment, export-orientation, income inequality, size of the primary commodities sector, financial repression, tax incidence and the ease of doing business. Based upon the application of the system GMM technique to winsorized data and filtered data from Cook’s Distance Outlier Test, the savings-investment gap could enhance the GNP–GDP percentage of a country. The percentage could be lowered by export orientation, uneven income distribution and the size of the working age population.