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Journal of Global Economics

ISSN: 2375-4389

Open Access

An Analysis of Patterns of World Economy: Consumption and Economic Growth

Abstract

Hae S Kim

The purpose of this paper is to assess the effect of consumption (consumer spending) on economic growth based on 222 countries/territories in the world, while the effect of other variables that are also assumed to affect economic growth is statistically controlled. The four factors (patterns) of economic growth identified are as follows: Factor 1/consumption-driven economy; Factor 2/Savings-based; Factor 3/oil-resource based; Factor 4/government-spending. Empirical evidence shows the predominance of the consumption-driven economy in affecting economic growth across the world, developing, or developed. Eight variables were found significantly loaded in the pattern of the consumption- driven economy: (1) consumption (2) globalization (3) economic freedom (4) knowledge economy (5) global competitiveness (6) corruption, (7) foreign direct investment, and (8) economic growth. This means the consumption- driven economy is multidimensional in affecting economic growth.

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