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Economics Research International
Volume 2014 (2014), Article ID 505230, 5 pages
http://dx.doi.org/10.1155/2014/505230
Research Article

Risk Management at the Macroeconomy Level and Development in Developing Countries

Economics, Eastern Illinois University, 600 East Lincoln Avenue, Charleston, IL 61920, USA

Received 29 March 2014; Revised 6 May 2014; Accepted 7 May 2014; Published 19 May 2014

Academic Editor: Udo Broll

Copyright © 2014 Minh Quang Dao. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

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.