Table 4: Pearson correlations (a)10Table 5: Pearson correlations (b)122.5 Regression12Table 6: Model Summaryb13Table 7: Coefficientsa133.0 Limitations144.0 Conclusion and recommendations14References16Appendices17Research Data from www. tradingeconomics. com 201517Analysis of economic indicators for 20 countries during the period of year 20151.0 IntroductionEconomic growth in developed and developing countries has been a subject of debate over the last decade. With increasing levels of technology, ease of access to credit and improvement in capital inflows, most countries are experiencing positive economic growth. However, recessions and stagnation in employment opportunities have witnessed negative economic growth even in developed countries. Chand (2014) argues that for a country to develop economically, determinants such as foreign trade, capital formation, and natural resources, human resources and corruption must be taken into consideration.
Naker (2013) agrees that high economic growth rates, especially in the 1980s, were driven by rising house prices and wages, low real interest rates and rise in consumer confidence. Although some countries have plenty of natural resources, they lack capabilities and human capital to transform them into the growth path. In these countries, unemployment remains high and so is the lending rates that are suppose to trigger investments and consumer spending.
While unemployment rate may signal saturation of the job market with respect to skills and creative abilities, lack of disposable income among the youth adversely affects consumer spending (Bonilla, 2008). In reality, surplus labor has little significance on the growth of the economy meaning that human resources have to be adequate in terms of abilities and skills to achieve economic growth (Boyes & Melvin, 2015). Gross Domestic Product (GDP) growth rate is driven by personal consumption, business investment, exports and imports, and also government spending.
However, a country experiencing low GDP growth rate is likely to halt hiring of new employees and investment in new purchases (Dwivedi, 2010). As a result, there will be rise in unemployment rate and difficulty to secure credit for investment opportunities. This study aims to discuss the relationship between the various economic indicators that affect economic growth of a country. For example, it would be interesting to find out how bank lending rates affect home ownership while remittances, unemployment rate and capital flow influence real GDP output of a country.
The significance of this analysis is to help identify an economic path, especially for developing countries, if they are to undertake economic planning or follow a capitalist path of development. In the latter case, the state may assume the rational interventionist role in an efficient market system. As unemployment rate rises, people become a burden to the economy as manpower management remain defective (Mankiw, 2014). However, increased capital flows in the form of remittances and Foreign Direct Investments (FDIs) are likely to spark economic growth. In conclusion, economic growth of a country is determined by a number of factors which have been identified below.
While bank lending rate, GDP growth rate, capital inflows and remittances affect the economy directly, government spending and unemployment rate are also non-economic indicators that influence economic growth. It would be of great interest to establish the relationship between bank lending rate, unemployment rate and government spending.