Estimation of the Steady State Growth Rates for Selected OPEC Countries with an Extended Solow Model (1973-2007)

Document Type : Research article

Authors

Ahmad reza jalali naini

Nasrin kazemzadeh

https://doi.org/10.22067/erd.v20i6.43088

Abstract

Abstract
Access to the high and stable economic growth rate is one of the important issues in each country. Because of close relationship between welfare of societies and economic growth, most of the economists are attempting to recognize the sources of economic growth. According to existing theories; one of the important sources of economic growth is technology development or total factor productivity. To achieve sustained and sustainable economic growth requires high growth rate technology or TFP.
In this research, an extended version of the Solow (1956) growth model have been developed to estimate steady state growth rates of selected OPEC countries in which total factor productivity is assumed a function of two important externalities viz, learning by doing and openness to trade. In order to estimate production function we used general to specific modeling.
Results have shown that the highest steady state growth rate belongs respectively to Indonesia, Saudi Arabia, Iran and Algeria. But the growth rate of Nigeria and Venezuela have not been accountable clearly. According to these results, openness to trade has played an important role in improving the long run growth rate in Saudi Arabia, Algeria and Iran, but a negative effect on the growth rate of Venezuela, yet learning by doing has had no effect on the growth rate of any country.

Keywords: steady state growth rate, trade openness, learning by doing, selected OPEC countries, general- to- specific modeling

Keywords

steady state growth rate

trade openness

learning by doing

selected OPEC countries

general- to- specific modeling

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