ECONOMIC GROWTH IN G-7 COUNTRIES: AN EMPIRICAL ANALYSIS OF ITS DETERMINANTS

Abstract

This study is an exploration of the key factors of economic growth among G-7 economies, including Canada, France, Germany, Italy, Japan, United Kingdom and United States, between the years 2000 and 2023. As economic giants of the world, a study on the sources of growth in these countries provides a good knowledge on the enhancement of long-term growth and development policies. The study identifies and estimates the role of investment, balance of trade, the participation of labor force, human capital index as a proxy of health and education and high-technology exports through dynamic panel-data estimation technique by means of the Generalized Method of Moments (GMM). The methodology takes into consideration country-heterogeneity as well as time dynamics in order to provide a sound and reliable outcome. The results affirm that investment and human capital are invariably robust factors in driving GDP growth with balance of trade being positively supportive as well. Also, the labor force participation and high-technology exports, which are statistically less significant in this model but show positive upward trends, have a potential in the future with the help of adaptive and innovation-friendly policies. Comprehensively, the findings point to the long-term viability of investment, education, and technology development on promoting inclusive, resilient, and sustainable growth in advanced economies.