Determinants of economic growth across Sweden : An analysis of exogenous and endogenous economic growth and convergence

• Main Author: Andersson, Guadalupe
• Format: Others
• Language: English
• Published: Örebro universitet, Handelshögskolan vid Örebro Universitet 2021
• Subjects: Economics; Nationalekonomi
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:oru:diva-89291

<p>The purpose of this study is to examine the exogenous and endogenous growth theories in order to determine the factors that generate economic growth across the Swedish national areas during2000-2016. This analysis is made through the estimation of the Solow model, the augmented Solow model and the Romer model using the econometric methods fixed effects and random effects. Moreover, a convergence analysis across these Swedish regions is presented in this research, which is carried out using a random effects model. The results indicate that investment explains 94 percent of the variation in regional income per capita when random effects and regional time trends are taken into account. This finding suggests that investment is the determinant of economic growth in the short run, which is consistent with the predictions of the Solow model and the exogenous growth theory. Furthermore, the estimation of the Romer model yields misleading results, which are not consistent with the predictions of the endogenous growth theory. Nevertheless, the fact that the available dataset to study the Romer model is limited due to the difficulty of finding Swedish R&amp;D data and the assumption that R&amp;D is undertaken in the main offices of the firms typically situated in Stockholm, while the R&amp;Dspillovers are used in production facilities in other regions of Sweden may be responsible for obtaining such inaccurate results. Additionally, the study of convergence reports that there is conditional convergence across the Swedish national areas during 2000-2016. This indicates that the differences in income per capita across these regions have decreased during the analysed period. </p>