An Empirical Revaluation On Global Economic Growth Factors And Convergence

In recent years,the global economy has witnessed rapid development.Per capita GDP has been growing rapidly;science and technology have been continuously improved;and multinational corporations have become the main body of economic globalization.With the increasing liquidity of capital globally,the global background of economic growth has undergone tremendous changes in the fields of economic globalization,regional economic integration and direct foreign investment development.In the context of such significant changes in the world economy,can global economic growth still be explained by the Solow model?Does the convergence of economic growth predicted by the Solow model still exist and how does the convergence rate change?These questions are still to be further verified in the field of economic growth.In this paper,using the panel data of world macro-economic growth indicators from 2000 to 2015,we use human capital augmented Solow Model of Mankiw et al.(1992)to have an empirical study on the current economic growth.The structure of this paper is as follows:Firstly,we summarize the development of the Solow Model at home and abroad.The literature review in this paper includes two parts:the contribution of capital and labor factors to economic growth and convergence;secondly,the current situation of global economic growth is studied,reporting the current situation and trend of world economic growth;thirdly,introducing the theoretical model of this paper briefly;fourth,using panel data of economic growth indicators from 2000 to 2015 to verify the model empirically and comparing the results with those of Mankiw et al.(1992);Fifth,the main conclusions of this paper are given.Learning from previous researches,this paper mainly uses three methods:the literature research methods,comparative research methods and empirical research methods.First of all,the paper reviews the domestic and foreign researches on the existing theory of economic growth in the field of economic growth in time sequence,and provides the ideas and methods for the research of this paper.Secondly,we use panel data of global macro-economic growth indicators from 2000 to 2015 to validate the Solow growth theory from empirical perspectives.Statistical software Stata and fixed effect model are used for regression analysis and the regression results are reported.Finally,the results of this paper are compared with those of Mankiw et al.(1992),considering the current global economic development.We draw three conclusions from this research.First,initial health endowments play an important role in economic growth.The higher the infant mortality rate in a country,the lower the GDP per capita.The measurement of human capital is mainly divided into two major parts-education and health.In reality,the lower the mortality rate in a country,the faster the economic growth.Take China as an example.Since the reform and opening up,the level of medical care in China has continued to increase and the economy has also enjoyed sustained high growth.This proves that health has very important significance for economic growth.In general,health affects economic growth by affecting people's behaviors such as childbirth,savings,investment,and education,which also explains the correlation between infant mortality and education in this article.Thereforea higher level of health has an important role in promoting economic growth.Lowering the mortality rate,raising the level of education,and increasing investment in human capital are all effective ways for a country to improve economic development.Second,Compared to 1960-1985,the share of physical capital in national income gradually decreased from 2000 to 2015,and the share of human capital in national income gradually increased.Technological progress and economic globalization have made investors pay more attention to the effective use of physical capital rather than the stock of physical capital.Therefore,the role of physical capital in economic growth has been gradually diluted,and the rate of return on physical capital has decreased.The effect of human capital represented by education and health on the actual output per capita is mainly achieved through the labor force with a high level of human capital.Human capital mainly affects economic growth indirectly by affecting technological progress.There are two ways to influence technological progress-technological imitation and technological innovation.Therefore,in the long run,technical imitation is not sustainable,and it should pay more attention to independent research and development,and enhance the ability of domestic independent innovation so as to effectively promote economic growth.Compared with 1960-1985,the share of physical capital and human capital in national income both show a declining trend from 1990 to 2015,and the latter fell by a greater margin than the former.The reduction of the share of physical capital and human capital is mainly caused by two reasons:the progress of technology and the development of economic globalization.Technological progress and economic globalization make the role of capital and labor on economic growth gradually diluted,so that the returns on physical capital and human capital are gradually decreasing.In addition,globalization can effectively increase the liquidity of capital in the world and make the bargaining power of capital become stronger than that of labor.This is another reason why the labor return rate is lower than the return on capital.Third,economic growth shows a more significant convergence and the convergence slows down.Since 1990,the standardization of systems and policies among all countries in the world,the liberalization of trade,the growth of outward investment and the externality of knowledge all have led to a remarkable convergence of economic growth among countries.In the current economic development,international technology diffusion and regional technology diffusion coexist.Although the international technology diffusion still prevails,the regional economy has also made great development in recent years.The diffusion of regional technology in the entire technology diffusion can not be underestimated.Therefore,the reverse effect of international technological diffusion and regional technological diffusion on economic growth makes the world economic growth still show significant convergence,but the convergence rate is gradually slowing down.The innovation of this paper is as follows:First,the time period studied in this paper is the world macroeconomic growth in the recent 16 years.Compared with Mankiw et al.(1992),the present study can better reflect the current characteristics of economic growth.Secondly,In this paper,panel data and fixed effect model are used instead of the cross-section data and mean value algorithm of Mankiw et al.(1992),which greatly expanded the sample size.Last,this paper compares the empirical results obtained with the empirical results of Mankiw et al.(1992)to find out the differences between the current global economic growth and the past,so this paper has great practical significance.