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Growth miracles and failures in a Markov switching classification model of growth

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  • Kerekes, Monika
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    Abstract

    In this paper economic growth is interpreted as a sequence of transitions between distinct growth regimes that countries visit with different frequencies. Countries featuring similar growth dynamics are endogenously grouped into three different clusters. The first cluster comprises successful countries that are characterized by lengthy periods of high or very high growth. Moderately successful countries in the second cluster experience both periods of reasonable growth and periods of stagnation, whereas failing countries in the third cluster suffer from highly volatile growth rates with frequent episodes of crisis. Successful countries are characterized by better initial conditions, policies and institutions compared to the other countries. Neither initial conditions nor institutions distinguish moderately successful from failing countries; what makes them different is policy in the form of investments into infrastructure and human capital, trade liberalization and limited policy volatility.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Development Economics.

    Volume (Year): 98 (2012)
    Issue (Month): 2 ()
    Pages: 167-177

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    Handle: RePEc:eee:deveco:v:98:y:2012:i:2:p:167-177

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    Web page: http://www.elsevier.com/locate/devec

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    Keywords: Economic growth; Regime switching; Latent class models;

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    Cited by:
    1. Sen, Kunal, 2013. "The Political Dynamics of Economic Growth," World Development, Elsevier, Elsevier, vol. 47(C), pages 71-86.
    2. Owen, Ann L. & Videras, Julio, 2012. "The quality of growth," MPRA Paper 38342, University Library of Munich, Germany.

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