Risk Management at the Macroeconomy Level and Development in Developing Countries

Abstract EN

This paper examines the impact of risk management at the macroeconomy level on economic development in developing countries.

Based on data from the World Bank, we use a sample of sixty-three developing economies and find that selected indicators related to risk management at the macroeconomy level do have a statistically significant effect on economic development in these countries.

We observe that high inflation rates do not seem to statistically affect economic development even though the coefficient estimate of this variable does have the anticipated negative sign.

Regression results show that almost sixty percent of cross-developing country variations in purchasing power parity per capita gross national income can be explained by its linear dependency on the share of international reserves in the GDP and the Worldwide Governance Indicators average.

Statistical results of such empirical examination will assist governments in developing countries identify risk management strategies at the macroeconomy level that may be used as powerful instruments for economic development.