The capitalism (C),
democracy (D) and rule of law (R)—CDR global invariant hypothesis was
previously demonstrated for year 2014 cross country per capita real gross
domestic product adjusted for purchasing power parity (G). Consistent with the
principle of parsimony, the CDR index
explained G with only these three variables. This paper re-estimates the model
for the last 22 years of available data. The result is model parameters that
are a set of global time invariant constants. These constants constitute the
global time invariant CDR index
defined by the vector inner (dot) product of the global constants and country C, D, R and C·D·R. This establishes the CDR global time invariant hypothesis. Exogenous and endogenous components of
capital are decoupled to calculate and explain the values and roles of new
ideas versus old capital stock. Based on the unitary entrepreneurship
elasticity of G, the theoretical optimal reinvestment in capital stock is
validated by empirical gross fixed capital formation. Together, these place
economic growth on a scientific basis. Because of the absence of explicit
definitions in the extant literature for concepts such as capitalist,
capitalism, entrepreneurship and other consequential terminologies, they are
clarified in concise nomenclature.
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