All Title Author
Keywords Abstract


General Theory of Economics: CDR Supply Side Scientific Growth Law Unveiled

DOI: 10.4236/tel.2018.815223, PP. 3637-3663

Keywords: CDRIndex, GDP, Capitalism, Democracy, Rule of Law, Entrepreneurship

Full-Text   Cite this paper   Add to My Lib

Abstract:

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.

References

[1]  North, D.C. (1991) Institutions. Journal of Economic Perspectives, 5, 97-112.
https://doi.org/10.1257/jep.5.1.97
[2]  Knack, S. and Keefer, P. (1995) Institutions and Economic Performance: Cross Country Tests Using Alternative Institutional Measures. Economic & Politics, 7, 207-227.
https://doi.org/10.1111/j.1468-0343.1995.tb00111.x
[3]  Glaeser, E. L., La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. (2004) Do Institutions Cause Growth. Journal of Economic Growth, 9, 271-303.
https://doi.org/10.1023/B:JOEG.0000038933.16398.ed
[4]  Acemoglu, D., Johnson, S., and Robinson, J.A. (2005) Institutions as a Fundamental Cause of Long-Run Growth. Handbook of Economic Growth, 1, 385-472.
https://doi.org/10.1016/S1574-0684(05)01006-3
[5]  Acemoglu, D., Naidu, S., Restrepo, P. and Robinson, J.A. (2014) Democracy Does Cause Growth (No. w20004). National Bureau of Economic Research.
https://doi.org/10.3386/w20004
[6]  Schumpeter, J.A. (1911) Theory of Economic Development. Harvard University Press, Cambridge.
[7]  Schumpeter, J.A. (1928) The Entrepreneur. In: Becker, M., Knudsen, T. and Swedberg, R., Eds., 2011. The Entrepreneur: Classic Texts by J. Schumpeter, Stanford University Press, Stanford, CA, 227-260.
[8]  Schumpeter, J.A. (1954) A History of Economic Analysis. Allen & Unwin, London.
[9]  Malthus, T.R. (1798, 1970) An Essay on the Principle of Population. Pelican Books, London.
[10]  Simon, J. (1981) The Ultimate Resource. Princeton University Press, Princeton.
[11]  Ridley, A.D. (2017) Wealth Is All in the Mind. International Journal of Social Science & Economic Research, 2, 3369-3379.
http://ijsser.org/uploads/ijsser_02__208.pdf
[12]  Ridley, A.D. (2017) Division of Human Capital Creates Surplus Wealth. Bulletin of Political Economy, 11, 1-20.
http://www.serialsjournals.com/serialjournalmanager/pdf/1520053852.pdf
[13]  Ridley, A.D. (2017) Micro Intrapreneurship. International Journal of Social Science & Economic Research, 2, 4729-4743.
http://ijsser.org/uploads/ijsser_02__299.pdf
[14]  Ridley, A.D. (2016) The Entrepreneurial Community. Journal of Management and Engineering Integration, 9, 41-51.
[15]  Ridley, A.D., Davis, B. and Korovyakovskaya, I. (2017) Entrepreneurial Mindset and the University Curriculum. Journal of Higher Education Theory and Practice, 17, 79-100.
[16]  Korovyakovskaya, I. and Ridley, A.D. (2017) An Entrepreneurship Strategy for a Russian Curriculum. Journal of Economy and Entrepreneurship, 11, 438-443.
[17]  Smith, A. (1759, 2006) The Theory of Moral Sentiments. Dover Publications, New York.
[18]  Smith, A. (1776, 2000) An Inquiry into the Nature and Causes of the Wealth of Nations. Tantor.
[19]  Micklethwait, J. and Wooldridge, A. (2003) The Company. Random House, New York.
[20]  Keefer, P. and Knack, S. (1997) Why Don’t Poor Countries Catch Up? A Cross-National Test of an Institutional Explanation. Economic Inquiry, 35, 590-602.
https://doi.org/10.1111/j.1465-7295.1997.tb02035.x
[21]  de Soto, H. (2000) The Mystery of Capital. Basic Books, New York.
[22]  Acemoglu, D. and Robinson, J.A. (2013) Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Broadway Business.
[23]  Garten, J. (2016) From Silk to Silicon: The Story of Globalization through Ten Extraordinary Lives. Harper Collins, New York.
[24]  Gordon, R.J. (2016) The Rise and Fall of America Growth. Princeton University Press, Princeton, NJ.
https://doi.org/10.1515/9781400873302
[25]  Ricardo, D. (1817) On the Principles of Political Economy and Taxation. J. M. Dent & Sons, 1911, Dover, 2004.
[26]  Cohen, A.J. and Harcourt, G.C. (2003) Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies? Journal of Economic Perspectives, 17, 199-214.
https://doi.org/10.1257/089533003321165010
[27]  Ridley, A.D. and Ngnepieba, P. (2018) Conservation of Capital: Homeomorphic Mapping from Intangible Aggregate Macro-Economic CDR Space into Tangible Micro-Economic Production Spaces. Theoretical Economics Letters, 8, 2103-2115.
https://doi.org/10.4236/tel.2018.811138
[28]  Day, C. (2016) Non-Scale Endogenous Growth with R&D and Human Capital. Scottish Journal of Political Economy, 63, 443-467.
https://doi.org/10.1111/sjpe.12115
[29]  Surowiecki, J. (2005) The Wisdom of Crowds. Random House, New York.
[30]  Gwartney, J., Holcombe, R. and Lawson, R. (2004) Economic Freedom, Institutional Quality, and Cross-Country Differences in Income and Growth. Cato Journal, 24, 205-233.
[31]  Gwartney, J., Holcombe, R. and Lawson, R. (2006) Institutions and the Impact of Investments and Growth. Kyklos, 59, 255-273.
https://doi.org/10.1111/j.1467-6435.2006.00327.x
[32]  Granger, C.W.J. (1969) Investigating Causal Relations by Econometric Models and Cross-Spectral Methods. Econometrica, 37, 424-438.
https://doi.org/10.2307/1912791
[33]  Goel, R.K., Mazhar, U. and Nelson, M.A. (2016) Corruption across Government Occupations: Cross-National Survey Evidence. Journal of International Development, 28, 1220-1234.
https://doi.org/10.1002/jid.3040
[34]  Czap, H.J. and Nur-tegin, K.D. (2012) Government Positions for Sale—A Model of Grand Corruption. Business and Politics, 14, 1-25.
https://doi.org/10.1515/1469-3569.1414
[35]  McCloud, N. and Kumbhakar, S.C. (2012) Institutions, Foreign Direct Investment and Growth: A Hierarchical Bayesian Approach. Journal of the Royal Statistical Society (A), 175, 83-105.
https://doi.org/10.1111/j.1467-985X.2011.00710.x
[36]  (1779-1848) Jons Jacob Berzelius.
https://en.wikipedia.org/wiki/J%C3%B6ns_Jacob_Berzelius
[37]  Auty, R. (1993) Sustaining Development in Mineral Economies: The Resource Curse Thesis. Routledge, London.
[38]  Frankel, J.A. (2012) The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions. HKS Faculty Research Working Paper Series RWP12-014, John F. Kennedy School of Government, Harvard University.
[39]  Humphreys, M. (2005) Natural Resources, Conflict and Conflict Resolution. Journal of Conflict Resolution, 49, 508-537.
https://doi.org/10.1177/0022002705277545
[40]  Norman, C. (2009) Rule of Law and the Resource Curse: Abundance versus Intensity. Environmental Resource Economics, 43, 183-207.
https://doi.org/10.1007/s10640-008-9231-y
[41]  Peach, J. and Starbuck, C.M. (2011) Oil and Gas Production and Economic Growth in New Mexico. Journal of Economic Issues, 45, 511-526.
https://doi.org/10.2753/JEI0021-3624450228
[42]  Sachs, J. and Warner, A.M. (2001) Natural Resources and Economic Development: The Curse of Natural Resources. European Economic Review, 45, 827-838.
https://doi.org/10.1016/S0014-2921(01)00125-8
[43]  Sala-i-Martin, X. and Subramanian, A. (2003) Addressing the Natural Resource Curse: An Illustration from Nigeria. NBER Working Paper No. 9804, National Bureau of Economic Research, Cambridge, MA.
https://doi.org/10.3386/w9804
[44]  van der Ploeg, F. (2011) Natural Resources: Curse or Blessing? Journal of Economic Literature, 49, 366-420.
https://www.aeaweb.org/articles?id=10.1257/jel.49.2.366
https://doi.org/10.1257/jel.49.2.366
[45]  Wadho, W.A. (2014) Education, Rent Seeking and the Curse of Natural Resources. Economics & Politics, 26, 128-156.
https://doi.org/10.1111/ecpo.12029
[46]  Murphy, K.M., Shleifer, A. and Vishny, R.W. (1991) The Allocation of Talent: Implication for Growth. The Quarterly Journal of Economics, 106, 503-530.
https://doi.org/10.2307/2937945
[47]  Murphy, K.M., Shleifer, A. and Vishny, R.W. (1993) Why Is Rent-Seeking So Costly to Growth? The American Economic Review, 83, 409-414.
[48]  Solow, R.M. (1956) A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70, 65-94.
https://doi.org/10.2307/1884513
[49]  Adelman, I. and Morris, C. (1967) Society, Politics and Economic Development. Johns Hopkins University Press, Baltimore.
[50]  Barro, R.J. (1996) Democracy and Growth. Journal of Economic Growth, 1, 1-27.
https://doi.org/10.1007/BF00163340
[51]  Dick, W.G. (1974) Authoritarian versus Nonauthoritarian Approaches to Economic Development. Journal of Political Economy, 82, 817-827.
https://doi.org/10.1086/260236
[52]  Grier, K.B. and Tullock, G. (1989) An Empirical Analysis of Cross-National Economic Growth, 1951-1980. Journal of Monetary Economics, 24, 259-276.
https://doi.org/10.1016/0304-3932(89)90006-8
[53]  Helliwell, J.F. (1992) Empirical Linkages between Democracy and Economic Growth. NBER Working Paper #4066, National Bureau of Economic Research, Cambridge.
[54]  Huntington, S.P. and Dominguez, J.I. (1975) Political Development. In: Greenstein, F.I. and Polsby, N.W., Eds., Handbook of Political Science, Addison-Wesley, Reading, 1-114.
[55]  Kohli, A. (1986) Democracy and Development. In: Lewis, J.P. and Kallab, V., Eds., Development Strategies Reconsidered, Transaction Books, New Brunwick, 153-182.
[56]  Kormendi, R.C. and Meguire, P.G. (1985) Macroeconomic Determinants of Growth: Cross-Country Evidence. Journal of Monetary Economics, 162, 141-163.
https://doi.org/10.1016/0304-3932(85)90027-3
[57]  Landau, D. (1986) Government and Economic Growth in the Less Developed Countries: An Empirical Study for 1960-1980. Economic Development and Cultural Change, 35, 35-75.
https://doi.org/10.1086/451572
[58]  Marsh, R.M. (1988) Sociological Explanations of Economic Growth. Studies in Comparative International Development, 23, 41-76.
https://doi.org/10.1007/BF02686984
[59]  Pourgerami, A. (1988) The Political Economy of Development: A Cross-National Causality Test of Development-Democracy-Growth Hypothesis. Public Choice, 58, 123-141.
https://doi.org/10.1007/BF00125718
[60]  Pourgerami, A. (1991) The Political Economy of Development. An Empirical Investigation of the Wealth Theory of Democracy. Journal of Theoretical Politics, 3, 189-211.
https://doi.org/10.1177/0951692891003002005
[61]  Przeworski, A. and Limongi, F. (1993) Political Regimes and Economic Growth. Journal of Economic Perspectives, 7, 51-69.
https://doi.org/10.1257/jep.7.3.51
[62]  Przeworski, A. and Limongi, F. (1997) Modernization Theories and Facts. World Politics, 49, 155-183.
https://doi.org/10.1353/wp.1997.0004
[63]  Remmer, K. (1990) Democracy and Economic Crisis: The Latin American Experience. World Politics, 42, 315-335.
https://doi.org/10.2307/2010414
[64]  Scully, G.W. (1988) The Institutional Framework and Economic Development. Journal of Political Economy, 96, 652-662.
https://doi.org/10.1086/261555
[65]  Scully, G.W. (1992) Constitutional Environments and Economic Growth. Princeton University Press, Princeton.
https://doi.org/10.1515/9781400862832
[66]  Sloan, J. and Tedin, K.L. (1987) The Consequences of Regimes Type for Public-Policy Outputs. Comparative Political Studies, 20, 98-124.
https://doi.org/10.1177/0010414087020001005
[67]  Weede, E. (1983) The Impact of Democracy on Economic Growth: Some Evidence from Cross-National Analysis. Kyklos, 36, 21-39.
https://doi.org/10.1111/j.1467-6435.1983.tb02659.x
[68]  Friedman, M. and Friedman, R. (1980) Free to Choose. Houghton, Mifflin, Harcourt Publishing Company, Inc., New York.
[69]  Friedman, M. (2002) Capitalism and Freedom. University of Chicago Press, Chicago.
[70]  Gwartney, J., Holcombe, R. and Lawson, R. (1999) Economic Freedom and the Environment for Economic Growth. Journal of Institutional and Theoretical Economics, 155, 643-663.
[71]  Gwartney, J. and Lawson, R. (2003) The Concept and Measurement of Economic Freedom. European Journal of Political Economy, 19, 405-430.
https://doi.org/10.1016/S0176-2680(03)00007-7
[72]  Heritage Foundation (1995-2016).
http://www.heritage.org/index/about
[73]  Sowell, T. (2015) Wealth, Poverty and Politics. Blackstone Audio, Inc., Ashland.
[74]  Rand, A. (1961) The Virtue of Selfishness. New American Library, Penguin Group, New York.
https://www.youtube.com/watch?v=3u8Jjth81_Q
https://www.youtube.com/watch?v=rydsea_Y8xI
[75]  Gwartney, J., Lawson, R. and Hall, J. (2015) Economic Freedom of the World Annual Report. Fraser Institute, Vancouver.
[76]  Hall, J.C. and Lawson, R.A. (2014) Economic Freedom of The World: An Accounting of the Literature. Contemporary Economic Policy, 32, 207-227.
https://doi.org/10.1111/coep.12010
[77]  Ridley, A.D. (2018) GDP Forecasting by CDR Composition. International Journal of Economics, Business and Management Research, 2, 103-109.
http://ijebmr.com/uploads2018/IJEBMR_02_274.pdf
[78]  La Porta, R., Lopez-de-Silanes, F., Shleifer, A. and Vishny, R. (1999) The Quality of Government. Journal of Law, Economics and Organization, 15, 222-279.
https://doi.org/10.1093/jleo/15.1.222
[79]  Landes, D. (1998) The Wealth and Poverty of Nations. W. W. Norton, New York.
[80]  Hausman, J.A. (1978) Specification Tests in Econometrics. Econometrica, 46, 1251-1271.
https://doi.org/10.2307/1913827
[81]  Hausman, J. (1983) Chap. 7. Specification and Estimation of Simultaneous Equations Models. In: Grilliches, Z. and Intrillagator, M.D., Eds., Handbook of Econometrics, Vol. 1, North Holland, Amsterdam, 391-448.
[82]  Taylor, C. (2018) 70% of Rich Families Lose Their Wealth by the Second Generation.
http://time.com/money/3925308/rich-families-lose-wealth/
[83]  Lotto, B. (2017) Deviate: The Science of Seeing Differently. Orion Publishing Group, London.
[84]  Moore, G. (2014) Screen Play: The Imitation Game. The Weinstein Company, New York.
[85]  Ridley, A.D. (2018) Entrepreneurial Economics: Revising the Econ 101 Course. International Journal of Economics, Business and Management Research, 2, 183-207.
http://ijebmr.com/uploads2018/IJEBMR_02_280.pdf
[86]  Llaugel, F. and Ridley, A.D. (2018) Entrepreneurial Engineering: Revising the Engineering 101 Course. International Journal of Economics, Business and Management Research, 2, 258-271.
[87]  Ngnepieba, P., Ridley, A.D., Stephens, D., Johnson, L. and Edington, M. (2018) Entrepreneurial Mathematics: Revising the Math101 Course. International Journal of Economics, Business and Management Research, 2, 272-285.
http://ijebmr.com/uploads2018/IJEBMR_02_287.pdf
[88]  Ball, P. (2012) Curiosity: How Science Became Interested in Everything. University of Chicago Press, Chicago.

Full-Text

comments powered by Disqus

Contact Us

service@oalib.com

QQ:3279437679

微信:OALib Journal