Working Paper: CEPR ID: DP4538
Authors: Ricardo Hausmann; Lant Pritchett; Dani Rodrik
Abstract: Unlike most cross-country growth analyses, we focus on turning points in growth performance. We look for instances of rapid acceleration in economic growth that are sustained for at least eight years and identify more than 80 such episodes since the 1950s. Growth accelerations tend to be correlated with increases in investment and trade, and with real exchange rate depreciations. Political-regime changes are statistically significant predictors of growth accelerations. External shocks tend to produce growth accelerations that eventually fizzle out, while economic reform is a statistically significant predictor of growth accelerations that are sustained. Growth accelerations tend to be highly upredictable: the vast majority of growth accelerations are unrelated to standard determinants and most instances of economic reform do not produce growth accelerations.
Keywords: Economic Growth; Economic Reform
JEL Codes: O00; O50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1% increase in the investment ratio (E22) | increase in the probability of experiencing a growth acceleration (O49) |
| political regime changes (P39) | increase in the likelihood of experiencing a growth acceleration (O49) |
| positive shift towards democracy (O17) | increase in the likelihood of experiencing a growth acceleration (O49) |
| economic reforms (E69) | sustained growth accelerations (O11) |
| external shocks (F69) | temporary growth accelerations (O49) |
| growth accelerations (O41) | unrelated to standard determinants (C29) |