Examining the Relationship Between Growth, Urbanization and Physical Capital with the Boostrap Causality Test: The Example of E-7 Countries

Mert A.  Atamer

doi:10.37241/jatss.2025.137

Authors

Mert A. Atamer Nevşehir Hacı Bektaş Veli University, Social Sciences Vocational School of Gülşehir, Department of Banking and Insurance, Nevşehir/Türkiye https://orcid.org/0000-0002-1238-9020

DOI:

https://doi.org/10.37241/jatss.2025.137

Keywords:

economic growth, physical capital, urbanization, causality analysis

Abstract

Introduction: The study investigated the causal relationship between economic growth, physical capital, and urbanization variables in E-7 countries (Brazil, China, India, Indonesia, Mexico, Russia and Türkiye). The purpose of this study is to contribute to the more effective design of economic growth strategies and development policies by revealing the structural characteristics of the relationships between the variables in question in E-7 countries. The limited number of comprehensive empirical analyses in the literature, which address the simultaneous effects of physical capital and urbanization on economic growth in these countries, highlights the originality and importance of the study.

Method: The analysis was carried out with annual data from 1990 to 2022. Boostrap Causality (2006) analysis was used.

Results or Findings: According to the findings obtained from the analysis, the panel results are as follows: bidirectional causality was determined between growth and urbanization, unidirectional causality was observed from growth to physical capital. Similarly, unidirectional causality was found from urbanization to physical capital. It was observed that the results differed at the cross-section level.

Discussion or Conclusion: The results emphasize that the effects of urbanization and physical capital on economic growth vary depending on country characteristics and policy preferences. In addition, policy inferences were made on both panel and country basis.

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