Fconomlc Growth TbdolEd

6.2.3 Aggregatlon Methodolo$f
6.2,t.1 nomdl2o on ke4l@
Be@e oldir@ BasrinB s.ts uel in difi€Enl vorbks io imlu& rh'D in ndds
noNali4don lreornql h 6€n $eFby ssling each vqriable in tems of do io onc *heE
fiighs vdF &noL stogd in$itudN In dilinE th€ foltosinS fornuh is uscd for
aansfom.tio if rhe hishd v!lo4 or dE origintl vtriable indi@lc wmk inslilltio6 (U*c
.mtry tui!) (Vs.vry(va-Vm). Cdv.*|y' whd hiEh€r €16 iidiolc sbns
indnudoftt rh. fomuh (v.vo,rMv*' V.h) is uscd Hd€ v,-disind vrlues' v* =
Mdimum valw acin d by @ntt in Migiul indo! VE = Minidm valuc tlIlimd bv
counq in odeinal ind.x. simihr sn!&gy i! bcing emplord in crdrid o'tttious i'dicca
.o&bly Gw.rnEy ed t }s (2m3) Mil|{ od Holms (2009) md s.nsb tud Pons
(2003).
6.23.3 w.lgl,tht an l agqegptlot n th..lolow.
wcish6 fd $b indiEs &d vdabl* @ qlculll€d Ning PrinciFl @mpn€trlMlysis sine
tlis indqx dptures pqiods of 2002 to 2006, !o D*. itd.x @mp&ible &,s lime' lh.
'tslEs sill iiply sjnils wi8liing s.lEm. ffi Fio&
Wnn 3!m rci3hls fd.ll
y€lrn vfidlioG in counlrid vilucs oE brscd on ft€n rthiv. iNlilutional p€raommoq not
by cho8. in *ishis. Th.E 6 bc 6w dficM linds of *iBbdns th.rc t65.d @ th.
vNlDd or lhcir Espdtive y4. On€ po$ibilitt is io choose ! b4e yst and wiShl olheE
lee.linBly' Rdn r dfl .lbireily ch@in3 bN r!r, il is F.tcnbl. io .v.6e. $cit
p€iodic vrlG suh thot 4h contr' hls single vslG for ! vdftla W.ighls .c calcular€d