Macroeconomic Determinants of Economic Growth in Developing Countries: A Cross-Sectional Analysis

Abstract

The purpose of the present paper is to investigate the cross- sectional impacts of macroeconomic factors on economic growth and testing the hypothesis that inflation has negative effect on economic growth in 90 developing countries. In addition to the macroeconomic factors identified in the study, there are several other considerations that policymakers in developing countries should take into account when formulating economic policies. One crucial aspect is the role of institutional quality and governance in shaping economic outcomes. Strong institutions, including transparent and accountable governance structures, efficient legal systems, and effective regulatory frameworks, are essential for promoting investment, fostering business confidence, and ensuring macroeconomic stability. Furthermore, attention should be paid to the importance of sustainable development and environmental considerations in economic policymaking. As countries strive for economic growth, they must also prioritize environmental sustainability to mitigate the adverse impacts of unchecked development on natural resources, ecosystems, and public health. Incorporating principles of sustainable development into national development strategies can help ensure that economic growth is environmentally responsible and socially inclusive. Moreover, fostering innovation and technological advancement is critical for long-term economic growth and competitiveness. Investing in research and development, promoting entrepreneurship, and facilitating technology transfer can spur productivity gains, drive economic diversification, and enhance the overall competitiveness of developing economies in the global marketplace. Another area of focus is human capital development, including education and healthcare. Investing in education and healthcare infrastructure, improving access to quality education and healthcare services, and enhancing skills development are essential for building a skilled workforce, reducing poverty, and promoting social inclusion. A healthy and educated population is not only crucial for economic productivity but also contributes to overall societal well-being and resilience. Additionally, fostering inclusive growth and addressing income inequality are important policy objectives for promoting social cohesion and reducing poverty. Policies that promote equitable access to economic opportunities, address disparities in income and wealth distribution, and empower marginalized groups can help ensure that the benefits of economic growth are shared more equitably across society. The findings of the study provide valuable insights into the macroeconomic determinants of economic growth in developing countries, policymakers must consider a holistic approach to economic development that encompasses institutional reform, environmental sustainability, innovation, human capital development, and inclusive growth strategies. By addressing these multifaceted challenges, developing countries can unlock their full economic potential and achieve sustainable and inclusive development outcomes.