Empirical Studies on the Drivers of Economic Growth and Development


Student thesis: Doctoral Thesis

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Award date15 May 2019


This thesis provides empirical evidence for three essays which largely encapsulate empirical analyses of drivers of economic growth and development.

The first essay investigates the effect of competition in both domestic and foreign markets on firm productivity and export decisions using firm level data from 139 countries. Using the Sample Selection Endogenous Treatment (SSET) Poisson model that tackles both the issue of endogenous sample selection and endogenous treatment at the same time, the essay documents evidence that strong competition in the domestic market propels firms to be more productive, and decreasing domestic competition increases firms’ propensity to export. However, firms’ export intensity, i.e. how much they export, is not directly influenced by competition in the domestic market. Moreover, lower competition in the foreign market increases the propensity of domestic firms to export, enlarging the set of exporting firms to include firms with relatively smaller export amounts.

The second essay looks at industrialization as a driver of sustainable economic growth in Africa. Whilst the last couple of decades have witnessed an unprecedented growth expedition in Africa, an important question is how to make the growth sustainable. A remarkable distinction between the growth experience in the Asian economies and the African economies is that Africa has more or less skipped the industrial stage which many developed countries observed. Given the major contribution of industrialization to growth, this paper examines the impact of industrialization on economic growth in Africa. The examination of industrialization has become more imperative following recent commitments of African governments and the African Development Bank to it, and also it being a part of the Sustainable Development Goals. Employing data for the period 1980-2014 from 37 African countries and the generalized method of moments method, we show two main interesting results despite the fact that industrialization is very much on the low in the region. First, our results affirm the hypothesis that industrialization is an important booster of economic growth. Second, trade openness further augments the effect of industrialization on economic growth. We also employ alternative measure of industrialization and perform sub-regional/sampling analyses. The results are shown to be robust across.

The third essay performs a cross-country analysis on entry into entrepreneurship using European household data. Over the past twenty years, the number of international migrants across the globe has increased at a rapid rate. This has awakened concern for migrants, particularly their integration and socio-economic wellbeing since they face many challenges in their host countries. One of the most effective ways to support migrants is through entrepreneurship. The European Union (EU) in its Entrepreneurship 2020 Action Plan also seeks to support migrants by promoting their entrepreneurial potentials and abilities. Europe is currently experiencing the highest levels of migration across the globe. In this study we have used household level data (Household Finance and Consumption Survey) from 17 EU countries to examine the dynamics of entrepreneurship. Particularly, we have analysed through binary models the tendency for migrants to enter entrepreneurship. The analyses indicate that migrants are less likely to be entrepreneurs relative to non-migrants. The results also show that migrants with citizenship of their host country are less likely to endeavour entrepreneurship relative to those who are not citizens. Further results show that wealth is a very important factor in predicting the propensity for a household to enter entrepreneurship. This outcome is consistent with the full sample, and also restriction of the sample to migrants.