Determinants of long-term economic growth in OECD countries

Abstract

This thesis consists of three self-contained empirical papers, each of which tries to contribute to our understanding of the determinants of economic growth across countries. Over decades of research, economists have suggested various different theories for explaining the different growth enhancing factors. Two of these factors, infrastructure as a productive sector and genetic distance as a channel of knowledge spillover, have been tested empirically in the first two chapters of this thesis. The results show that both public infrastructure and genetic proximity, individually, are consistently highly significant determinants of productivity growth in OECD countries over the period 1870–2009. However, the last chapter shows that, when it comes to including all potential growth regressors which have been introduced in the literature so far, public infrastructure becomes insignificant and genetic distance loses its consistent position as a highly statistically significant determinant of growth. These conflicting results demonstrate that neither infrastructure investment nor genetic distance is very robust to the inclusion of various potential regressors, when the uncertainty problem associated with empirical growth models is taken into account, therefore, the last chapter uses the Bayesian model averaging method and shows that innovations, international technology diffusion, fixed capital and human capital investment have been important contributors to productivity growth in the OECD countries over the 141-year period (1870-2010) that the last chapter of this study has considered.