Causal Relationship among Various Development Indices: A Panel Study

Published On: 2021-09-16 11:22:57

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Author: Sayel Basel , R. Prabhakara Rao and K.U. Gopakumar

Author Address: Department of Economics, Christ University, Bengaluru-560029 (Karnataka), Department of Economics, Sri Sathya Sai Institute of Higher Learning, Prasanthi Nilayam-515134 (Andhra Pradesh)

Keywords: Development indices, panel ARDL, panel data, panel short-run causality test

JEL Codes: C23, I30, O10, O57.


The concept of development has been regarded as a broader phenomenon encompassing various interrelated factors leading to improvement in the overall human wellbeing. So, it is important to understand the interlinkages between various dimensions of development. The present study was an attempt to analyze the causal relationship between the four aspects of development measured by the indices, namely the Economic Development Index (EDI), Social Development Index (SDI), Environment Development Index (ENDI), and Institutional Development Index (IDI) for a panel of 102 counties from 1996 to 2015. The long?run relationship between these indices through the panel ARDL model were also examined. The results indicated that there existed a bidirectional causal relationship between EDI and SDI, IDI and SDI, ENDI and SDI, and between IDI and ENDI. The one-way causality runs from IDI to EDI and ENDI to EDI. Further, given the nature of the variables considered here, panel autoregressive distributed lag models were used to examine the long?run relationship between the indices of development. The results showed that the impact of development indices with one another was statistically significant in the long run.


Indian Journal of Economics and Development
Volume 17 No. 3, 2021, 624-631

Indexed in Clarivate Analytics (ESCI) of WoS
Scopus: Title Accepted
NAAS Score: 5.15