Diversity in Economic Growth

Diversity in Economic Growth

Global Insights and Explanations

Global Development Network series

Edited by Gary McMahon, Hadi Salehi Esfahani and Lyn Squire

Economists have long relied on cross-country regression analysis to identify the determinants of continued growth, but with only limited success. This book demonstrates the value of a different approach.

Chapter 1: Understanding Economic Growth in Specific Contexts: An Overview of the First Phase of Global Research Project ‘Explaining Growth’

Hadi Salehi Esfahani

Subjects: development studies, development economics, economics and finance, development economics, international economics

Extract

Hadi Salehi Esfahani This chapter provides an overview of Phase 1 of the Global Development Network’s (GDN) Global Research Project (GRP) ‘Explaining Growth’. The project seeks to enhance research on economic growth in developing countries through local capacity building. Phase 1 provided frameworks and background reviews for country studies planned for the second phase. This chapter highlights and synthesizes the key results of various growth themes examined by Phase 1 papers and draws connections and general lessons from these studies.1 The framework papers of Phase 1 show that while growth regressions have established some broad and important regularities, there are gaps and ambiguities in their results, especially concerning the role of various policies in each country setting. Among the major cross-cutting issues which emerge from the framework papers are the role of risk, competition and the extent of government controls on the economy. In these and many other areas, the papers find that interactions among numerous factors make the impact of many policies and other variables ambiguous and context-specific. The presence of this complexity calls for detailed case studies of individual countries along with improvements in the methodology of cross-country regressions to take better account of structural and dynamic aspects. This observation also highlights the importance of capacity building in developing countries, in order to allow them to come up with self-correcting policymaking processes which steer policies in the right direction under complex and dynamic conditions. Phase 2 of the GRP followed these implications and has contributed to the capacity-building...

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