Working Paper: CEPR ID: DP2654
Authors: Nauro F. Campos
Abstract: How many years will the average transition economy need to reach the income level of the average OECD country? The favoured methodology in use to answer such questions is referred to as the BLR approach, because it uses specifications from Barro, and Levine and Renelt. The literature has so far refrained from identifying and testing the underlying assumptions of the BLR approach. This paper attempts to fill this gap. Our results contrast sharply with the assumptions and findings from the BLR approach, questioning its might and challenging our understanding of the transition process in its key dimension.
Keywords: economic growth; growth prospects; transition economies
JEL Codes: E23; O40; P20; P52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| BLR assumption of structural similarity (F12) | unsupported by evidence (Y40) |
| higher initial incomes (J31) | higher rates of economic growth (O49) |
| basic education (A21) | economic growth (O49) |
| investment (G31) | economic growth (O49) |