AI Summary & Key Takeaways
AI InsightFuture research may explore sectoral heterogeneity and climate interactions via dynamic models, such as GMM, to refine policy insights.
📌 3 Key Takeaways
Abstract
Purpose- This study empirically investigates the impacts of structural factors including the rule of law, social capital, unemployment, and population growth rate on sustainable economic growth, utilizing a balanced panel dataset encompassing 34 developing and middle-income countries over the 2002–2022 period. By integrating institutional, social, and demographic dimensions, the research aims to elucidate how these elements shape long-term growth trajectories in heterogeneous emerging economies, addressing gaps in the literature on their interactive effects. Methodology- Economic growth is proxied by the per capita gross domestic product (GDP) growth rate. Independent variables include the rule of law index, Women, Business and the Law Index score (as a measure of social capital), unemployment rate, and population growth rate. To address panel data challenges such as cross-sectional dependence, heteroskedasticity, and autocorrelation, the analysis employs a robust panel least squares method with panel-corrected standard errors (PCSE) under fixed effects specifications. Preliminary tests, including Pesaran's CIPS unit root and cross-sectional dependence tests, ensure model validity. Findings- The results reveal that improvements in the rule of law and social capital indicators exert positive and statistically significant effects on growth, while unemployment and population growth exhibit negative influences. Specifically, a one-unit enhancement in the rule of law index boosts growth by 0.14%, and a similar rise in the social capital score contributes 0.13%. In contrast, a 1% increase in unemployment reduces growth by 13.7%, and population growth by 0.9%. The model's explanatory power (R² = 0.478) and absence of autocorrelation (Durbin-Watson = 2.066) affirm estimation reliability, with the Hausman test endorsing the fixed effects approach. Conclusion- The findings underscore the imperative for institutional reforms and gender equality policies, alongside labor market interventions and demographic management, to foster sustainable growth. Prioritizing active employment programs, education investments, and controlled migration strategies can promote inclusive development. Future research may explore sectoral heterogeneity and climate interactions via dynamic models, such as GMM, to refine policy insights.