A Cross-Country Causal Panorama of Human Development and Sustainability
29 Pages Posted: 16 Dec 2011
Date Written: November 18, 2011
A broad summary of the theoretical literature on economic growth shows this theory has transcended the neoclassical paradigm and that market rationality does not govern the human development process. Instead human development is the appropriate standard for rationality. Using Gidwitz et al’s (2010) 1970-2010 database of human development index (HDI) components for 135 countries, together with indicators of the demographic transition, urbanization, technological change, sustainability, and institutions, I construct a panel for the 1985-2010 quinquennia, and use as instruments the 1970-1980 data. I estimate a matrix of causal coefficients for 15 as a function of 19 development and sustainability indicators, using three types of instrumented regressions for each matrix entry: levels regressions; growth regressions; growth regressions also containing the contemporary growth of independent variables. I find that demographic transition and urbanization and technology, the main causes of divergence, are much less consistently and significantly causally linked than sustainability, human development, economic integration and democracy. This suggests technology transfer to the poor and poor regions as an effective tool for development. Sustainability on the one hand holds back and on the other is promoted by several aspects of development. It is shown that policies promoting green development can therefore generate dynamic efficiency.
Keywords: human development, economic growth, sustainability, causality, divergence
JEL Classification: F01, I00, O11, O40
Suggested Citation: Suggested Citation