Both Institutions and Policies Matter but Differently for Different Income Groups of Countries: Determinants of Long-Run Economic Growth Revisited

SummaryThis paper revisits the recent debate on the determinants of long-run economic growth with the simple idea that different factors matter at different country groups classified by income levels. This paper improves on the methodology by conducting not only cross-section estimations but also fixed-effects panel and system-GMM estimations. The results suggest that new policy variables such as technology and tertiary education, as well as institutions, matter as the determinants of long-run economic growth. In addition, this paper finds that while secondary education and institution turn out to be important for lower-income countries, an emphasis on technology and higher education appears to be effective in generating growth for the upper middle- and high-income countries but not for the lower middle and low-income countries.