Open AccessThe macroeconomic determinants of cross-country efficiency in wealth maximization
Author(s) -
Harun Or Rosid,
Zhao Xuefeng,
Sujan Chandra Paul,
Reza Sultanuzzaman
Publication year - 2020
Publication title -
international journal of research in business and social science
Language(s) - English
Resource type - Journals
ISSN - 2147-4478
DOI - 10.20525/ijrbs.v9i6.894
Subject(s) - economics , maximization , national wealth , china , pace , frontier , capital (architecture) , stochastic frontier analysis , efficient frontier , macroeconomics , microeconomics , financial economics , production (economics) , finance , geography , portfolio , archaeology , geodesy
In the arena of economic analysis, the wealth of a nation is getting more and more attention to be a better indicator to evaluate the status of an economy. This paper had studied the aggregate household wealth of different nations of the world, 106 countries, for the year 2009-2018. During these years, only two countries of the world, China and the USA have managed to increase their wealth tremendously over the last decade while others experienced a slow pace in the growth of wealth. To satisfy the query of how efficient these countries were in maximizing their wealth, a stochastic frontier approach (SFA) has been used to predict the technical efficiency dependent variable and then generalized methods of moments (GMM) and other models have been used to find out the determinants of this efficiency. The study had come up with the result that land, labor, and capital mainly contributed to the output of wealth maximization while past year level of efficiency, export, and import played the main roles in determining the wealth maximizing efficiency status of a nation. It is found that there is a negative relationship between past-year efficiency with current years and the more a country imports, the less efficient the country is while the more it exports, the more efficient the country is in maximizing wealth.