Examining the effects of urbanization and purchasing power on the relationship between motorcycle ownership and economic development: A panel data

Abstract

The aim of the present study was to examine the effect of urbanization, purchasing power, and income on motorcycle ownership and the effects of interactions between these factors. Specifically, we examined how the inverse-U relationship between motorcycle ownership and economic development changed in response to different levels of purchasing power and urbanization. We apply a fixed effects negative binomial panel regression analysis on a panel data of 73 countries between 1963 and 2013. Results revealed evidence of an inverse-U relationship between purchasing power and motorcycle ownership. Motorcycle ownership increases during the beginning stages of consumer price index (CPI), due to higher purchasing power. Once a threshold level was exceeded, higher CPI (lesser purchasing power) created an inverted effect, which led to a decline in motorcycle ownership. Importantly, the turning point increased in accordance with an increase in urbanization. The estimation results also suggested that the inverse-U relationship between motorcycle ownership and per capita GDP varied in accordance with both purchasing power and urbanization.

Keywords

• Motorcycle ownership
• Kutznet curve
• Purchasing power
• Urbanization
• Economic development