Competition and the growth of nations: International evidence from Bayesian model averaging

I apply Bayesian model averaging (BMA) and complementary approaches to international data for the time span 1988-2007 in order to find out whether competition in the economic and political arenas is a robust determinant of aggregate growth, and whether there exists jointness among competition variables versus other growth determinants. Several indicators of competition are used, and I control for a range of other factors potentially affecting growth. My results provide some support for the importance and positive impact on growth of financial market competition. No other competition area emerges as robust growth driver. The jointness analysis suggests a moderate degree of complementarity between financial market competition and important growth determinants, implying manageable policy complexity.