External Financial Conditions And Slower Growth In Emerging Economies: 2013–2015

Abstract

Emerging economies have experienced a slower economic growth period in the aftermath of the global financial crisis. In this chapter we examine the important external and internal conditions that were effective in causing growth deterioration in emerging economies during the period 2013–2015. We utilize a pooled panel ordinary least squares (OLS) estimation using a sample containing 68 countries. Regarding the external conditions, emerging market economies experienced growth deceleration when (i) the current account deficit increased, (ii) trading partners’ import demand decreased, and (iii) the terms of trade deteriorated. Furthermore, we find that certain internal conditions, such as higher consumer prices, a more expansionary fiscal policy, more government borrowing, lower investment, and lower labor force participation, significantly contributed to the economic growth decline. © Springer International Publishing AG 2017.

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