Making Abundant Natural Resources Work for Developing Economies
Making Abundant Natural Resources Work for Developing Economies
Making Abundant Natural Resources Work for Developing Economies
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Financial development index : Following Ndikumana (2000) a composite index offinancial development is calculated <strong>for</strong> country i in year t as follows:FINDEXit1=mm∑j=1F j[100 * (F, itj)]Where: m (=3) is the number of financial indicators used in the computation of theindex. The index used here combines credit to the private sector, credit provided bybanks and money and quasi-money (%GDP) (or M2/GDP).F j , it a financial development indicator under considerationF j is the sample average of financial indicator jIndicator <strong>for</strong> growth (Y) and investment (I) : The study follows the convention inthe literature by using real per capita GDP as a proxy <strong>for</strong> economic growth (Y ).Investment share of real GDP per capita (Laspeyres). RGDPL is obtained bysumming investment, consumption, government and exports, and subtracting importsin any given year. The indicator is a fixed base index with 1996 as the reference year,hence the “L” <strong>for</strong> Laspeyres.