Empirical Analytics of SAARC vs ASEAN in Perspective of Economic Growth and Capital Accumulation

Abstract

It is an empirical exercise to build the connection between investment in human/ physical capital and economic growth. A panel data set is targeted by considering twelve selected SAARC and ASEAN economies for the period 2005-2019. To get the empirical findings a unit root analysis is made for data stationarity; the Fully Modified Ordinary Least Square (FMOLS) method is taken in practice to find the association of the investment in human/physical capital with economic growth. Moreover, the Pedroni test is used to examine cointegration among the regressors as well as explained variables. The research outcomes highlight that the investment in the human and physical capital formation through education/health expenditures and gross fixed capital formation plays a noteworthy part in economic growth in SAARC and ASEAN economies separately and overall. Moreover, the inflationary trends and the labor force participation rate have their significance for determining economic growth. The trade volume is a significant force for the economic growth until the export proportion will be greater than imports. In a policy outlook, there is a need to enhance the fiscal budget for the health and education sector that will ultimately enhance the economic growth of the concerned economies.