Economic Growth Model of Ecuador with Upper Middle Income to Explain and Predict Productivity during the Period 2000-2022

Abstract

Economic growth is one of the most widely used measures of a country's macroeconomic performance, although it is not without its critics. There are strong arguments that per capita gross domestic product growth can reflect an important part of the success or failure of policies implemented in an economy. The objective, to analyse Ecuador's economic growth model with high average income to explain and predict productivity over the period 2000-2022. The materials and methods, this line of research addresses a hypothetical-deductive and descriptive level of inquiry, by developing aspects from the global perspective concerning economic theory and implicit models of classical growth; such as the model that describes the Cobb-Douglas production function, to explain and predict the temporal behaviour of Ecuador's economic development. The above, in order to establish a correlational analysis of the contributions of the macroeconomic determinants of productivity. The response variable to be measured has been the gross domestic product per capita (GDPpc ) with respect to the independent variables: Domestic Savings (S), Gross Fixed Capital Formation (FBKF), Government Final Consumption Expenditure (G), Exports (E) and as a control variable represented by Labor Force (L). A systematic documentary search was carried out through databases: Scielo, Scopus, Google Scholar and Science Direct, to support the present research with contributions with articles of temporal relevance within the last 5 years. In addition, it was based on annual secondary data extractions from official sources such as the Central Bank of Ecuador (BCE) and the World Bank (WB), according to the temporal coverage from 2000 to 2022. Results, 23 temporal observations were analysed to build an econometric model under the adaptation of a Cobb Douglas production function to explain and predict the behavior of elasticity in Ecuador's economic growth, which establishes that 99.81% of the total variability present in the data is explained by the model that includes variations in savings, gross fixed capital formation, labour force, government final consumption expenditure and exports in the analysed period. Conclusions, the imports variable is eliminated as it is not statistically significant, the resulting model complies with the basic assumptions and the corresponding economic validation in terms of the signs of the estimates for the determinants of economic growth in Ecuador.