A Cross‐country Causal Panorama of Human Development and Sustainability

This paper conducts a multivariate causal analysis for: human development, demographic transition, urbanization, technology, sustainability, democracy/autocracy, good administration, and economic integration. A 15 × 18 causal coefficient matrix is estimated using a cross‐country panel for the 1985–2010 quinquennia. Each matrix entry is estimated using three types of instrumented regressions: (a) levels regressions; (b) growth regressions; (c) growth regressions also containing the contemporary growth of independent variables. The instruments are the 1970–1980 values of the variables. It is found that from 1980 to 2005 income and human development reacted relatively quickly and positively to globalization. However, institutions changed slowly, and the fundamental long‐term causes of divergence, namely demographic transition, urbanization, and technology, were weakly and even negatively affected by integration. The results also suggest human development and sustainability are complementary. Hence technology transfer to the poor and poor regions may provide a sustainable policy tool for development, promoting demographic transition, human development, and convergence.