An Analysis on Economic Opportunity

Although economic opportunity is considered as a latent variable, it can serve as another factor in promoting growth and development. Through the construction of an economic opportunity index, this paper identifies the extensity and intensity channels through which economic opportunity are created. Data on 24 variables for 184 world economies for the period 2000-2010 are collected for the empirical analysis. The methodology involves the use of principle component analysis in constructing three indices for the parametric and non-parametric regression analyses. The country sample is divided into OECD and non-OECD economies so as to examine their different performance. Extensity seems to be the more important channel to all economies, but for non-OECD economies, a higher performance in intensity can enrich the effect of extensity on economic opportunity.