| dc.description.abstract | Economic growth in developing G20 member countries is increasingly influenced by global and domestic macroeconomic dynamics, particularly commodity price volatility, uncertainty in international financial markets, and fluctuations in monetary policies of advanced economies. This study aims to analyze the effects of inflation, interest rates, exchange rates, foreign direct investment (FDI), and government expenditure on economic growth in both the long run and the short run. The study employs annual panel data from nine developing G20 member countries over the period 2000–2023. The Panel Autoregressive Distributed Lag (Panel ARDL) method with the Pooled Mean Group (PMG) approach is applied to accommodate cross-country heterogeneity while maintaining consistency in long-run estimations. The long-run estimation results indicate that inflation has a positive and significant effect on economic growth, while interest rates have a significant negative effect. FDI is found to have a significant positive impact, as is government expenditure, which acts as a driving factor for long-term economic growth. In contrast, exchange rates do not exhibit a significant long-run effect. In the short run, only government expenditure shows a significant effect on economic growth, although at a relatively weak level of significance. Meanwhile, inflation, interest rates, exchange rates, and FDI do not demonstrate significant short-run effects. The presence of a significant error correction mechanism indicates a rapid adjustment process from short-run conditions toward long-run equilibrium. These findings emphasize that inflation stabilization, credible interest rate management, and the optimization of FDI inflows are key elements in supporting long-term economic growth in developing G20 member countries. Furthermore, the effectiveness of government expenditure serves as an important instrument both as a long-term growth driver and as a short-term economic stimulus. This study provides empirical contributions to the literature on open macroeconomics and serves as a reference for policymakers in formulating more adaptive and sustainable monetary and fiscal strategies. | en_US |
