Average Economic Growth Research Articles

ANALISIS PENGARUH UTANG DOMESTIK DAN UTANG LUAR NEGERI TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA PADA TAHUN 2014 - 2023

During the period of 2014-2023, Indonesia government set a target for average economic growth of 5.2% for 2014-2020 and 6% for 2020-2025. In order to achieve that, the fiscal policy adopted by the government is by utilizing debt. Based on Keynesian view, the government can incur debt to finance government budget deficits and stimulate economic growth. This research employs the ordinary least squares (OLS) method because it seeks to analyze the relationship between the variables of quarterly increase of GDP, quarterly increase of domestic debt growth, and quarterly foreign debt. Based on the estimation results of the model conducted in the research, the result show that the variables of quarterly domestic debt growth and quarterly foreign debt growth can only explain a 14.49% increase in quarterly GDP value. Simultaneously, domestic debt and foreign debt do not affect economic growth. Partially, an increase per quarter in domestic debt has a significant negative effect on the increase in quarterly GDP value, while an increase per quarter in foreign debt has a positive but not significant effect on the increase of quarterly GDP value.

Analysis of the Impact of Monetary Policy Instruments on Economic Growth in Indonesia by 2013 to 2023

Based on quarterly data by 2001Q1 to 2017Q2, this research and study covers theoretical debates and empirical studies on the factors that affect economic stability and their effect on the financial sector's performance. This study applies the Ordinary Least Square (O.L.S.) method to the Cointegration and Engle Granger-Error Correction Model (E.C.M.) methods. E.C.M. is done to assess the long-term validity and balance of the research model and foresee potential flaws and discrepancies among the theoretical and statistical models. Even while the M2 variable has no discernible effect on G.D.P. during the observation period, the research findings demonstrate that, over the long run, there is a balance among changes in G.D.P. and monetary variables, such as interest rates, Inflation, M2, and the rupiah value. On the other hand, the E.C.T. variable has a significant short-term effect on fluctuations in G.D.P. Interest rates, Inflation, M2, and exchange rates had no discernible effect on G.D.P. throughout this time. Thus, changes in monetary variables, particularly interest rates, Inflation, and M2, tend to effect G.D.P. The average quarterly financial deepening in Indonesia for the observation period was 3.80 per cent, according to the outcomes of the financial performance study. Furthermore, M2 growth during the same period was 3.03 per cent, compared to Indonesia's average quarterly economic growth of 1.36 per cent.

DEVELOPMENT SCENARIO SELECTION AND ORIENTATION PROPOSAL FOR KEY ECONOMIC SECTORS SUPPORTING THE STRATEGIC ENVIRONMENTAL ASSESSMENT OF DIEN BIEN PROVINCIAL PLANNING (2021-2030) WITH A VISION TO 2050

The Strategic Environmental Assessment (SEA) for the "Dien Bien Provincial Planning for the 2021-2030 period, with a vision to 2050" is conducted on the basis of Viet Nam's legislative framework, national and regional planning, as well as the economic development orientation of Dien Bien province. In this article, potentially environmentally impacting content of the planning will be discussed, in which, development scenarios will be proposed and feasible scenario for the development of Dien Bien Province, the development targets, and orientations of important economic sectors will be selected. Three growth scenarios have been proposed for Dien Bien Province: the baseline scenario, the high growth scenario, and the breakthrough scenario. The most feasible one is the high growth scenario. In this scenario, the main specific targets by 2030 are: The average economic growth rate in the 2021-2030 period is 10.51%/year, in which the agriculture, forestry and fishery sector and the industry - construction sector will grow at the rate of 6.54% and 18.64%/year, respectively, in which the figure for the industry sector is 17.30%/year and that of the service sector is 7.15%/year. Regarding the economic structure by 2030, the agriculture, forestry and fishery sector will account for 12.0%; the industry - construction sector will account for 44.3% (in which the share of the industry sector is 15.4%) and the figure for the service sector is 39.6% of the province’s Gross National Produc (GRDP). The research oriented the development of a number of important sectors such as: industry, construction, tourism, trade and services, and agriculture, forestry and fishery. Selecting feasible development scenarios with specific targets will contribute significantly to proposing development orientations for sectors having great impacts on the environment to support the SEA of Dien Bien Provincial Planning for the 2021-2030 period, with a vision to 2050.

Applicability of Financial Inclusion Theories and Rural Development Theories in the Implementation of the Parish Development Model (PDM) in Uganda

This article provides guidance on how to implement the Parish Development Model, which was launched in February 2022 as the government's multi-sectorial strategy to achieve socioeconomic transformation by converting 39% of Ugandan households from the subsistence economy to the money economy. Uganda, often known as the Pearl of Africa, has seen national development plans incorporate Vision 2040 goals, and it is now undertaking its third National Development Plan. To complete the 2040 vision cycle, three further identical projects must be done. President Yoweri Kaguta Museveni highlighted Financial Inclusion as one of the 17 implementation strategies, since Uganda's monetary poverty rate (the proportion of the population earning less than US$1.04 per day) has increased over the preceding nine years, from 19.7% in 2012/13 to 21.4% in 2016/17. Despite an average annual economic growth rate of 4.7%, the number of underprivileged individuals rose to 8.7 million in 2019/20 from 6.6 million in 2012/13. As a consequence, the Parish Development Model was implemented in rural regions to eliminate poverty. Financial inclusion and rural development principles can help to assist this economic growth plan. As a result, this study investigates how these principles have acted as guides for effective parish development model implementation, as well as recommendations to ensure that they are consistent with rural people's long-term aspirations. Keywords: Financial inclusion and Rural Development theories, Parish Development Model

Institutional Failures in Decentralization: Insight from Batam, Indonesia

Batam’s development began in 1970 by the Batam Authority (now called BP Batam) and was projected as an industrial area. At that time, Batam was transformed into a city with growth above the average national economic growth. Yet, the contrasting situation occurred after the implementation of regional autonomy in Batam. The presence of the Batam City Government as an executor of regional autonomy has a very strong legal and political position. Therefore, this paper focuses on institutional failures which have implications for the decline of the economy during the decentralized era. The methodology used in this research is descriptive exploratory, which extracts information from primary and secondary data. Primary data was obtained using surveys and interviews with expert informants. The data was analyzed using the Delphi method and Analytical Hierarchy Process (AHP). The results of the study showed that the problem was institutional dualism between the Batam City Government and BP Batam, which had implications for legal uncertainty. The Delphi method resulted in recommendations for the Free Trade Zone (FTZ), Special Economic Zones (SEZ), and the implementation of special autonomy in Batam. Meanwhile, the Analytical Hierarchy Process (AHP) method resulted in a finding that special autonomy was the best policy choice. The concept of asymmetric decentralization based on economics is a possible model of special autonomy. However, in its implementation, further stages are needed to prepare a special law regarding the substance of specialization given to Batam.

Analysis of Factors Influencing Poverty in Sungai Penuh City

Factors affecting poverty in Sungai Full City. The problem of poverty is one of the policy targets for the development of Jambi Province, one of which is in Sungai Full City so that the income gap becomes smaller. Poverty is a problem in multidimensional development because to overcome poverty, the problems faced are endless. This study aims to determine the development of poverty, population, economic growth, human development index, unemployment rate, income inequality in Sungai Full City and to determine and analyze the influence of population variables, economic growth, human development index, poverty in Sungai Penuh City. The year of analysis is 2008 to 2022. The analysis methods used are quantitative descriptive analysis, multiple linear regression analysis. The results showed that developments in the period 2008 – 2022 consisting of the average poverty rate increased by 3.28 percent, the average population increased by 1.55 percent, average economic growth increased by 5.72 percent, the average human development index increased by 0.75 percent, average income inequality increased by 0.35 percent, and the average unemployment rate increased by 7.03 percent. The population has a positive and significant effect on poverty in Sungai Penuh City, and the human development index has a negative and significant effect on poverty in Sungai Penuh City. Meanwhile, economic growth, income inequality and unemployment have a positive and insignificant effect on poverty in Sungai Full City.

Prospek Industri Asuransi di Indonesia

Theoretically, the relationship between insurance and economic growth can be a causal relationship, economic growth supports insurance growth or insurance growth supports economic growth. The aim of this research is to look at the prospects for insurance growth which are linked to macroeconomic indicators, such as: growth in the number of insurance companies, investment funds, gross premium receipts, economic growth and gross domestic product.The research method used is descriptive analysis which discusses insurance growth over the 10 (ten) years from 2013 to 2022. The research results show that, this can be seen from the average growth over the 10 (ten) years from 2013 to 2022, including; insurance company growth was 0.83%, investment fund growth was 11.48%, gross premium receipts growth was 12.80%, and average economic growth in Indonesia was 4.87% and gross domestic product growth was 8.41%.

Socio-Economic Development of Tibet in the 10th Five-Year Plan (2001–2005). Part 8

Fourth session of the 9th NPC, held in Beijing from March 5 to 15, 2001, approved the draft of the 10th five-year plan (2001–2005). The plan provided for an annual increase in China's GDP by 7 %. At the same time, the volume of the economy over five years was to increase by 40 % and amount to ¥ 12.5 trillion in 2005. Plan targets were largely met and exceeded. The average annual economic growth rate was 9.5 %, significantly higher than the world average (3.8 %). The volume of GDP in 2005 amounted to ¥ 18.2 billion.The standard of living in Tibet in the years under review was about two times lower than the Chinese average. Therefore, the region was provided with advanced growth rates of 12 % per year. The main event of the five-year plan in Tibet was the construction of the Qinghai-Tibet railway.

Developing Human Capability to Believe in Bhutan

The Kingdom of Bhutan is an exemplar of ongoing sustainable transformation. From realising over 20% growth in literacy rates in the last 15 years to sustaining an average economic growth of 7.5% per year since 1980 to becoming the world’s first carbon-negative country with forests covering over 70% of the land, Bhutan quietly continues to lead the way with unique foresight and resilience. This tradition of leadership continued in 2020 when His Majesty, the Fifth King of Bhutan’s urgently called upon Bhutanese civil servants to ‘prepare for the future’ as a ‘self-reliant’ nation. In response, the Royal Civil Service Commission of Bhutan launched a development accelerator called the ‘Nurturing Leadership Program’ which leveraged community-based participatory research methodologies to launch 125 innovation projects and build leadership capacity among over 625 civil servants. In total, 98.6% of more than 3,000 stakeholders surveyed at the end of the program agreed that project efforts positively impacted target outcomes, demonstrating that Bhutan can continue its unique role as a human capability incubator by transforming talent, organisation, leadership and HR into a shared and sustained brand of believe.

Determinants of the Inflation Rate: Evidence from Panel Data

Abstract This study analyzes the relationship between macroeconomic factors that affect the inflation rate. Through our research, we will analyze the impact of money supply growth, economic growth, import level and export level on the inflation rate for 40 countries that we have taken. There are: 6 Latin American countries, 2 Western Balkan countries, 19 Europe countries, 10 countries of Asia, 2 countries of Africa and Australia, within 8 years, namely from 2012 to 2023. The data for the execution of the work were obtained from the World Bank as a credible institution for the publication of statistics and Trading Economics, Another important institution in terms of statistics where 320 observations which are included in the analysis, so the data of this study are second- hand data. Since we have a group of study countries, then the data type of the study is Panel. The econometric model that we used for analysis is the model with the method of small squares. The findings of this paper show that countries that increase the money supply will also face an increase in the inflation rate, so the impact of the money supply on the inflation rate is positive. In the research countries, the results show us that we have a very small difference in the average import and export, which results in a very small average economic growth.

The Effect of Infrastructure on Economic Growth in Regencies and Cities in Special Region of Yogyakarta Province

This study employed panel data regression to estimate the variables. The estimation revealed three results. First, the average economic growth in the Special Region of Yogyakarta Province in 2009-2019 is 5.30 percent. Second, most public schools are in Gunungkidul Regency, and the least number of private schools are in Yogyakarta City. Then, the highest numbers of public hospitals are in Sleman Regency, and the least is in Gunungkidul Regency. The highest numbers of public health centers are in Gunungkidul Regency, and the least is in Yogyakarta City. Third, the partial test results revealed that three independent variables have a significant effect on the dependent variable. The number of public schools has a negatively significant effect on economic growth. The number of private schools has a negatively significant effect on economic growth.

The Causality Relationship Between Growth and Inequality: Java and Sumatera Studies

This research article has the theme of the causal relationship between growth and inequality with the object of research being the provinces on the island of Java and Sumatra island. The purpose of this study is to identify and analyze conditions of inequality in income distribution and economic growth and to analyze whether there is a causal relationship between inequality income with economic growth in provinces on the island of Java and provinces on the island of Sumatra during the 2015-2020 period. The research method used is quantitative descriptive using the Granger causality test analysis tool. Based on the research results, the condition of economic growth in each province on Sumatra Island fluctuated, with the highest average economic growth in South Sumatra Province and the lowest in Riau Province. Inequality in the distribution of provincial income on the island of Sumatra fluctuates, the highest average income distribution inequality is in the provinces of South Sumatra and Bengkulu, and the lowest is in the province of the Bangka Belitung Islands. Meanwhile in Java, economic growth also fluctuated. The highest average economic growth was in DI Yogyakarta Province, and the lowest was in Central Java Province. Inequality in the distribution of provincial income in Java Island fluctuates, with the highest inequality in Yogyakarta province and the lowest in Central Java province. In addition, the results of the Granger causality test show that there is no one-way or two-way causality relationship between economic growth and income inequality on the islands of Sumatra and Java.

Economic Growth, Inflation, and Monetary Policy in Pakistan: Preliminary Empirical Estimates

The recent increase in financial market volatility and the increased surge within developing world to become part of the global market have posed several challenges for policy-makers in the emerging markets to decide on a policy regime— monetary or exchange rate—that suits their needs and could also provide stability to the financial system. In view of the macroeconomic characteristics of these emerging economies, the choice of an appropriate policy becomes important to achieve certain targets such as sizeable domestic and foreign investment, reduced reliance on external borrowings, fiscal discipline, etc. These would require both price and exchange rate stability and country’s ability to deal with external shocks to maintain and achieve sustainable economic growth. Pakistan is no different and until recently had a history of macroeconomic imbalances with extremely high foreign (as well as domestic) debt, high budget and current account deficits, extremely low international reserves, high inflation, high nominal interest rates and low economic growth. The average economic growth over 40 years is around 4 percent. The main focus of any policy has been to achieve a sustainable growth pattern. However, due to a number of macroeconomic imbalances such as high budget deficits, extremely high indebtedness, low savings and investment rates, lack of fiscal discipline, undeveloped financial markets, unstable exchange rates along with high population growth and huge defence expenditure made this task almost impossible. Some of these macroeconomic imbalances contributed to episodes of high inflation and unemployment that the country experienced during most of the period since independence.

The relationship between city size, decentralisation and economic growth

PurposeThis article examines the links between average city size, fiscal decentralisation, and national economic growth in 33 Organisation for Economic Co-operation and Development (OECD) countries.Design/methodology/approachThe data in this paper comprise an unbalanced panel dataset which contains economic growth indicators, average city size, fiscal decentralisation indicators and control variables in 33 OECD member countries from 1975 to 2015 in five-year intervals. Fixed-effects (FE) estimators are used for the analysis.FindingsThis research finds i) countries with larger weighted average city sizes have higher economic growth, ii) countries with greater fiscal decentralisation have higher economic growth, but iii) countries with larger weighted average city sizes with greater decentralisation have lower rates of economic growth.Originality/valueThe research highlights the importance of agglomerations and decentralised governance and management for economic growth. While the findings are consistent with previous evidence that larger city sizes and fiscal decentralisation are separately associated with higher rates of economic growth, the authors find countries which have larger cities and greater fiscal decentralisation experience lower rates of economic growth highlighting a need for caution on decentralisation agendas in such cases. The implications of this suggest policymakers should proceed with caution on decentralisation agendas in countries with large cities.

The drivers of energy efficiency improvement among nine selected West African countries: A two-stage DEA methodology

There has been a general outcry globally to ensure sustainable environmental practices by minimizing CO2 while increasing economic growth. In general, most African countries have had the lowest energy efficiency levels over the past decades. This is because of higher inefficiency due to mismatches between efficiency inputs and outputs. Previous studies have only focused on measuring the energy efficiency of African countries without determining the drivers of such efficiency. Hence, the current study adopted the two-stage Data Envelopment Analysis (DEA) methodology to measure energy efficiency among nine selected West African states and their influencing factors. The focus of the first-stage DEA was to measure the energy efficiency among the nine selected countries using the Dynamic Slack Based Measure (SBM) DEA model with and without the inclusion of CO2 emissions and the Malmquist Productivity Index (MPI) to estimate the technology efficiency improvement. Panel data from 2007 to 2020 was used for the study. The study found that energy efficiency without the inclusion of CO2 emissions in West Africa has improved during the period ranging from 2007 to 2020. Of the nine countries involved in the study, four of them, including Ghana, Nigeria, Côte d'Ivoire and Senegal, had an efficiency level above 100% with an average economic growth of 6% during the sampled period of the study. The efficiency level increased with an 6% increase in economic growth and a reduction in CO2 emissions. The Tobit regression model was adopted in stage two to analyze the factors that may affect energy efficiency in West Africa. The study results revealed a significant and positive association between population and energy efficiency in West Africa. At the same time, gross national income and urbanization negatively influence West Africa's energy efficiency. The findings were in line with the results from the fixed effect estimates. The study concludes that despite the improvement in energy efficiency in West Africa, there is a need to further boost their efficiency by reducing carbon dioxide emissions and other harmful pollutants. According to the study, West African leaders should adapt global benchmarks of sustainable environmental practices for sustainable energy implementation for the sustainable energy sector.

Financial well-being of territorial communities and the economic growth of the regions of Ukraine: assessment and modeling of interrelation

Purpose. The purpose of the article to assess and model the interrelation between the financial well-being of territorial communities (TCs) and regional economic growth in Ukraine under conditions of uncertainty.
 Methodology / approach. The empirics of assessment and modeling of a causal relationship between the financial well-being of TCs and economic growth of regions is based on: the construction of time series for empirical parameters of territorial communities’ financial well-being (substantiation of structural elements of financial well-being, TCs clusterization by the criteria of profitability, and calculation of integral coefficients); multidimensional estimation of regional economic growth (multiplicative approach, principal component analysis); detection of impact (“pressure” force) of TCs’ financial well-being on the paces of regional economic growth (index and regression methods). 
 Results. Based on the results of the integral assessment with preliminary clusterization of TCs by their revenues, the article reveals that in 2020, the weighted average level of TCs’ financial well-being in Ukrainian regions was the highest in Zakarpattia (0.592), Kherson (0.534), Zaporizhzhia (0.513), and Chernivtsi (0.512) oblasts, while the lowest – in Ivano-Frankivsk (0.281) oblast. In 2010–2020, Ivano-Frankivsk (0.48 %), Poltava (0.06 %), Rivne (0.16 %), Ternopil (0.25 %), Khmelnytskyi (0.35 %), and Chernihiv (0.54 %) oblasts demonstrated higher annual average economic growth paces, while Dnipropetrovsk (-0.86 %) and Kherson (-0.94 %) oblasts – negative ones. 
 Originality / scientific novelty. The article enhances the methodological approach to the complementary assessment of TCs’ financial well-being and regional economic growth, which has contributed to modeling the ability of territories’ economies to increase investment-economic capacity and the causal relationship between economic growth determinants and the financial capacity of territorial communities in regions. 
 Practical value / implications. The article offers and substantiates the action-oriented approach to the assessment of regional economic development. Its implementation contributes to making the spatial breakdown of the system’s economic condition and building the architectonics of economic progress determinants to determine the “divergence areas” of regional development.

Financial well-being of territorial communities and the economic growth of the regions of Ukraine: assessment and modeling of interrelation

Purpose. The purpose of the article to assess and model the interrelation between the financial well-being of territorial communities (TCs) and regional economic growth in Ukraine under conditions of uncertainty.
 Methodology / approach. The empirics of assessment and modeling of a causal relationship between the financial well-being of TCs and economic growth of regions is based on: the construction of time series for empirical parameters of territorial communities’ financial well-being (substantiation of structural elements of financial well-being, TCs clusterization by the criteria of profitability, and calculation of integral coefficients); multidimensional estimation of regional economic growth (multiplicative approach, principal component analysis); detection of impact (“pressure” force) of TCs’ financial well-being on the paces of regional economic growth (index and regression methods). 
 Results. Based on the results of the integral assessment with preliminary clusterization of TCs by their revenues, the article reveals that in 2020, the weighted average level of TCs’ financial well-being in Ukrainian regions was the highest in Zakarpattia (0.592), Kherson (0.534), Zaporizhzhia (0.513), and Chernivtsi (0.512) oblasts, while the lowest – in Ivano-Frankivsk (0.281) oblast. In 2010–2020, Ivano-Frankivsk (0.48 %), Poltava (0.06 %), Rivne (0.16 %), Ternopil (0.25 %), Khmelnytskyi (0.35 %), and Chernihiv (0.54 %) oblasts demonstrated higher annual average economic growth paces, while Dnipropetrovsk (-0.86 %) and Kherson (-0.94 %) oblasts – negative ones. 
 Originality / scientific novelty. The article enhances the methodological approach to the complementary assessment of TCs’ financial well-being and regional economic growth, which has contributed to modeling the ability of territories’ economies to increase investment-economic capacity and the causal relationship between economic growth determinants and the financial capacity of territorial communities in regions. 
 Practical value / implications. The article offers and substantiates the action-oriented approach to the assessment of regional economic development. Its implementation contributes to making the spatial breakdown of the system’s economic condition and building the architectonics of economic progress determinants to determine the “divergence areas” of regional development.

Indebtedness and the pace of catching up in the CEE countries

The paper verifies the existence of the relationship between the economic growth – i.e., the main determinant of the catching up process – and the level of government, household and external debt (foreign liabilities). The comparative analysis of the correlation for CEE11 countries and EU14 countries confirms that the level of indebtedness is a strong determinant of economic growth, and thus of the catching up process. The authors confirmed the "unfair" relationship that high debts more severely constrain development in less credible developing countries, and that tolerance for public debt in developing countries has decreased in recent years. The results also show that in developing CEE countries – unlike in the case of developed countries – higher levels of foreign liabilities and their stronger growth turn out to be a hindrance to economic growth. Finally, it should be emphasized that the fact that the stronger increase in household liabilities was accompanied by higher average economic growth in the CEE countries in the analyzed period (as opposed to EU14 countries) should be treated as an important warning. Probably the relatively high (although noticeably lower than in the EU14 countries) and/or growing household debt in the CEE countries will also at some point begin to slow down their economic growth and the pace of the catching up process.

Trajectories for South African employment after COVID-19

The COVID-19 health response shut down the South African economy for a period, and then continued to constrain face-to-face services such as tourism, hospitality and personal services. These industries create the majority of jobs in all middle- and high-income economies. The COVID-19 interventions further aggravated pre-existing and rising unemployment and poverty levels. By 2021, only 42% of the working-age population in South Africa was employed, as compared to the National Development Plan’s target of 60% by 2030. South Africa has had high unemployment since at least 1978, with an historical policy path that appears to direct the economy towards slow growth and low employment. This article outlines the results of employment scenarios modelling: the purpose is to envisage the future of employment in South Africa in the context of the COVID-19 pandemic, with a view to 2050. Two ‘plausible’ scenarios are modelled. The upper and lower trajectories are aligned to historical growth paths between 1970 and 2019, with three decades experiencing an average 1.5% GDP growth and two decades an average 3.6% growth. An average economic growth rate rising from 2% to 3.5% between 2022 to 2050 would result in the achievement of the National Development Plan’s employment targets. The modelling also shows what the employment trajectory might have been in the absence of the COVID pandemic. Significance: This article evaluates the potential pathway for South African employment after COVID-19. After a rapid and significant fall caused by policies to manage COVID-19, employment might only recover to peak 2018 levels by 2024–2026. The COVID-19 pandemic may have long-term implications for employment. In the absence of the pandemic, there could have been between 500 000 and 1.6 million more people working by 2050.

Management of Competitiveness in the EU Member States: The Main Strengths and Weaknesses

The paper's main objective is to investigate the differences in competitiveness among the EU member states. Each nation's competitiveness is determined by its government's management capabilities on the national, regional and local levels and thus poses substantial implications to economic growth. For this purpose, hierarchical clustering as the primary method of investigation was selected. The data mining process was based on extracting GCI score data about individual member states. Based on the GCI score evaluation, the cluster analysis showed two groups of EU member states, according to the 'traditional' division of old member states (OMS) and new member states (NMS). Results showed a statistically significant gap in GCI scores between the OMS and NMS. Furthermore, the within-class variability in the OMS cluster appears to be higher than in the NMS cluster, which underlines growing disparities among old member states. Most significant differences among both groups prevail in the field of institutions, ICT adoption, business dynamism and innovation. Finally, the link between achieved GCI score and average economic growth has been investigated. Contrary to expectations, more developed member states (OMS) showed, on average, relatively lower economic growth rates over the investigated period than the less developed member states (NMS). The results showed a moderately negative link between the GCI score and economic growth, which suggests that a higher GCI score does not mean achieving higher economic growth, whereas member states with lower total GCI scores could outpace the higher ones in terms of economic growth. In many aspects, the EU still resembles two rails in Europe, and a significant gap between OMS and NMS prevails. Relatively higher economic growth of NMS might help reduce the gap over time. However, it may prove a short-sighted, and significant lags in many crucial factors will stiff the competitiveness in the long term.