Determinants of economic growth in Brunei Darussalam

This study analysed the factors that have influenced long-run economic growth in Brunei Darussalam using available data from government's archives and publications. Multiple regression analysis based on a relatively new cointegration technique was used to construct a variant of the neoclassical growth model. This model was based on annual growth of real gross domestic product (GDP) as the dependent variable. The independent variables were the annual growth of total exports, government size measured as the ratio of total government expenditures with respect to GDP, total investment-GDP ratio, annual growth of labor and a dummy variable representing the effect of the 1997/1998 Asian financial crisis. The results showed that the growth of exports significantly influenced long-run economic growth rates as expected. The other main factor influencing long-run economic growth was the relative size of government. The relative size of government influenced long-run growth rate in the form of a cubic function. Large government sizes impeded economic growth while moderate government sizes enhanced economic growth.