Determinants of Economic Growth in OIC Member Countries: A Panel Data Analysis in High and Low-Income Categories
Karunia Romadhani (a*)- Sri Herianingrum (b)

Karunia Romadhani*
Faculty of Economics and Business, University of Airlangga, Surabaya, Indonesia
karunia.romadhani.412460-2023[at]feb.unair.ac.id

Sri Herianingrum
Faculty of Economics and Business, University of Airlangga, Surabaya, Indonesia
sri.herianingrum[at]feb.unair.ac.id

Abstract

This research will examine the determinants of economic growth in the Organization of Islamic Cooperation member states during the period 2010-2021. The novelty of this research lies in the comparison of two types of countries based on per capita income, thus ensuring that the planned policies are appropriately targeted according to the current conditions of each country. The researchers in this study used the Fixed Effect Model to conduct panel regression analysis. The results show a negative influence between external debt and economic growth for both high and low-income countries. However, the inflation rate does not have a significant impact on either group of countries. Another endogenous variable, FDI, has a positive effect on the economic growth of high-income countries but a negative effect on the economic growth of low-income countries. On the other side, low-income nations boost their economies from trade openness, while high-income countries observe no change in their economic performance. Therefore, OIC countries^ policies should generally focus on reducing external debt, increasing exports and imports in low-income countries, and enhancing FDI in high-income countries in efforts to increase the GDP per capita of OIC member countries.

Keywords: External debt, Inflation Rate, FDI, Trade Openness, Economic Growth.

Topic: Development economics