Publication Details

Harvie, C. & Valadkhani, A. (2010). Cross country co-movements of GDP growth rates: are they systematic?. Australian Conference of Economists (pp. 1-32). Sydney: Economic Society of Australia.


Using factor analysis this paper examines discernable patterns of real GDP growth comovementsacross 97 countries, using consistent time series data for the period 1961-2008.Of these countries only 21 are found to form three statistically significant groupings, wheremembership count exceeds more than two. Ten major OECD European countries plus Japanand Hong Kong form the first well-defined common bloc of countries (G12). The second bloc,consisting of six major Asian countries (G6), have GDP growth rates that exhibit a very highdegree of correlation, based on their robust factor loadings. The last group of countiescollectively witnessed a very substantial degree of cross-country growth co-movementsconstituted four (G4) Anglo-Saxon countries. We conclude that, inter alia, geographicalproximity, cultural ties and the level of socio-economic and financial ties among countriesdetermine the global systematic co-movements of growth rates. This paper also identifies theextent to which the GDP growth rates in the remaining 76 countries are intertwined with thatof the above three groups of countries. We conclude that the recent US recession is expectedto initially engulf other Anglo-Saxon countries as well as G12 and G6 countries, beforeexerting its adverse knock-on effects to the rest of the world.

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Economic Society of Australia