Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach


Malcolm D. Knight ; Delano Villanueva ; Norman Loayza

Publication Date:

December 1, 1992

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate


Several recent empirical studies have examined determinants of economic growth using country average (cross-section) data. In contrast, this paper employs a technique for using a panel of both cross-section and time-series data for 98 industrial and developing countries over 1960-85 to determine the quantitative importance for economic growth of both country-specific and time-varying factors such as human capital, public investment, and outward-oriented trade policies. The empirical results provide support for the view that these factors exert a positive and significant influence on economic growth. They also provide estimates of the speed at which the gap in real per capita income between rich and poor countries is likely to be reduced over the longer term.


Working Paper No. 1992/106



Also published in Staff Papers, Vol. 40, No. 3, September 1993.


Publication Date:

December 1, 1992



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