Determining the Degree of Development of the OIC State Members, for Establishing a Common Market

The rates of long run economic growth and the degree of economic interdependence among nations are related. These dependencies, linkages or spillovers are related to different aspects of development mainly to economics and geography. Adding a geography dimension, the Ordinary Least Squares models lead to inefficient estimates and invalid statistical inferences. A nonparametric2 spatial econometric methods and a distance based weight system is used to take into account spatial covariance in terms of the long run economic growth rates of a country s unobservable characteristics rather than a country s own observable characteristics, or the cross-country spillover effects among nations. To measure the degree of development among countries, there is a need to compute these relationships. This variance-covariation reflects more than the existence of common shocks. That is, a country s growth rate is closely related to its nearby countries, and trading alone does not appear responsible for these linkages, but being near a large market can contribute more to growth rates.