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Explaining Knowledge-Based Economic Growth in the World Economy

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Innovation, Growth and Competitiveness

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

Abstract

Building upon authors’ previous work, the study develops econometric models in order to specify the determinants of knowledge-based economic growth at the international level. In doing so, it differs from other studies in the following ways: it makes use of a new composite indicator of growth which accounts for knowledge capacity, it runs WLS regressions, and it explores the existence of nonlinear relations between determinants and growth. The study confirms previous findings that variables such as investment and FDI are important determinants of growth but adds that geography, agglomerations and institutions play a vital role in economic performance. Furthermore, it indicates that the effect of initial economic conditions, size of government, openness to trade and institutions on growth is nonlinear: up to a critical level, these factors have a positive impact, whereas beyond that the effect diminishes and may become negative. These findings have important implications for both theory and policy.

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Notes

  1. 1.

    Openness is usually measured by the ratio of exports to GDP. However, other indicators have also been used. For example Sachs and Warner (1995) suggest one that takes into account the five following criteria: average quota and licensing coverage of imports are less than 40%, average tariff rates are below 40%, black market premium is less than 20%, no extreme controls are imposed on exports, and the country is not under a socialist regime.

  2. 2.

    According to North (1990) the term “institutions” refers to the formal rules, informal constraints and their enforcement characteristics that together shape human interaction.

  3. 3.

    This is necessary since the variables are measured in different units.

  4. 4.

    All explanatory variables are measured at the beginning of the time period examined (i.e. in 1990), whereas EDIs reflects knowledge-based dynamism in the last reporting period.

  5. 5.

    See Gwartney and Lawson (2005) for a detailed description of the variables availed by the Fraser Institute.

  6. 6.

    Relatively high values of the index indicate countries with a more central place, while relatively low values indicate countries with a peripheral place in the world economic space.

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Author information

Authors and Affiliations

  1. Department of Planning and Regional Development, University of Thessaly, Pedion Areos, Volos, 38334, Greece

    Panagiotis Artelaris & George Petrakos

  2. Department of Economics, University of Thessaly, 43 Korai Street, Volos, 38333, Greece

    Paschalis A. Arvanitidis

Authors
  1. Panagiotis Artelaris
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  2. Paschalis A. Arvanitidis
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  3. George Petrakos
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Corresponding author

Correspondence to Paschalis A. Arvanitidis .

Editor information

Editors and Affiliations

  1. VU University Amsterdam, De Boelelaan 1105, Amsterdam, 1081 HV, Netherlands

    Peter Nijkamp

  2. (ESRI), Economic and Social Research Institute, Whitaker Square, Sir John Rogerson's Quay, Dublin, 2, Ireland

    Iulia Siedschlag

Appendix

Appendix

Table3.4Descriptive statistics of Model 1 variables

Model 1 variables

Mean

Standard deviation

Min

Max

EDI-A3

0.1196

0.0365

0.0581

0.2806

Gross capital formation (% of GDP)

23.0929

5.2893

14.1589

37.0337

FDI, net inflows (% of GDP)

1.4945

1.7535

0

9.7185

Population gravity

96.5207

255.1096

0.3096

1,349.0301

Life expectancy at birth (years)

71.1499

5.4085

55.2285

79.0963

Personal computers (per 1000 people)

57.2112

66.9146

0.5365

253.2829

Impartial courts

6.2653

1.8336

2.9000

9.3500

GDP per capita (PPP, constant international $)

10,172.5584

9,838.6190

675.1660

32,317.8790

Population density (people per sq km)

208.4966

690.9285

2.2618

4,749.9998

Regulation

5.0776

1.2243

2.4732

6.8320

Table3.5Descriptive statistics of Model 2 variables

Model 2 variables

Mean

Standard deviation

Min

Max

EDI-A6

0.1379

0.0445

0.0526

0.2806

Gross capital formation (% of GDP)

23.2014

6.1595

13.5973

41.0422

FDI, net inflows (% of GDP)

1.3159

1.4237

−1.1545

7.4199

Population gravity

83.4087

219.0235

1.1012

1,349.0301

Urbanization (urban to total population)

65.4094

18.1342

15.0000

97.2000

Personal computers (per 1000 people)

43.8290

60.2611

0.3818

253.2829

Life expectancy at birth (years)

69.6842

6.7992

46.2916

79.0963

Age dependency ratio (% of working-age population)

0.6541

0.1720

0.4365

0.9997

Total trade (% of GDP)

61.2317

30.9513

14.9909

154.6453

Size of government

4.9778

1.5897

1.2374

8.3158

Legal system and property rights

6.4171

1.7765

2.8484

9.2783

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Artelaris, P., Arvanitidis, P.A., Petrakos, G. (2011). Explaining Knowledge-Based Economic Growth in the World Economy. In: Nijkamp, P., Siedschlag, I. (eds) Innovation, Growth and Competitiveness. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-14965-8_3

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