Based on the literature review you finished, now you should develop theory and hypothesis. The number of hypotheses need not be too many, 1-3 hypotheses is enough as long as these hypotheses are TESTABLE. Please think of the data and methods that you will use in order to test the hypotheses that you developed. Theoretical Model The theory draws from the model developed by Barro and Lee (1994) which is consistent with the endogenous growth theory. Endogenous growth theory takes into account the sources of technological progress such as human capital and role of government (Romer, 1994). The theory contends that economic growth is related with developments of new ideas, innovation and overall technological change and total factor productivity.
Based on the literature review you finished, now you should develop theory and hypothesis.
The number of hypotheses need not be too many, 1-3 hypotheses is enough as long as these hypotheses are TESTABLE. Please think of the data and methods that you will use in order to test the hypotheses that you developed.
Theoretical Model
The theory draws from the model developed by Barro and Lee (1994) which is consistent with the endogenous growth theory. Endogenous growth theory takes into account the sources of technological progress such as human capital and role of government (Romer, 1994). The theory contends that
Following endogenous growth theory, the concept of “trade openness” in this paper is measured by three variables that take into account of sources of technological change. The three variables that measure trade openness are, trade dependency ratio, quality index and variety index.
The dependent variable of the model is economic growth. Economic growth measures the annual change in real GDP.
The independent variables of the model are the three indicators of trade openness: trade dependency ratio, quality index and variety index.
Research Hypotheses:
Following the theoretical model outlined above, the hypothesis of the paper are as follows:
1. There is a positive relationship between trade dependency and economic growth
2. There is a positive relationship between trade quality and economic growth
3. There is a positive relationship between variety in trade and economic growth
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