Drivers of Growth: Empirical Analysis of Ten Largest Economies

Abstract

This study investigates the constellation of macroeconomic forces that drive economic growth by focusing on the world’s 10 largest economies (in terms of GDP). It uses cross-country data from 1990 to 2019 (30 years). The macroeconomic forces considered for the study are macroeconomic stability (represented by inflation), infrastructure (represented by mobile cellular subscription per hundred people), foreign trade (represented by exports and imports) and foreign direct investment (FDI) inflow. Real GDP is used as a measure of economic growth. The empirical findings suggested that macroeconomic instability is detrimental to economic growth. Infrastructure improvements and FDI inflows can boost growth of the selected nations. However, trade has an insignificant impact on economic growth. JEL Codes: O47, F21