IDEAS home Printed from https://ideas.repec.org/a/taf/applec/44y2012i6p671-681.html
   My bibliography  Save this article

How useful is growth literature for policies in the developing countries?

Author

Listed:
  • B. Bhaskara Rao
  • Arusha Cooray

Abstract

Growth literature has focused mainly on the long-term growth outcomes, but policy makers of the developing economies need rapid improvements in the short- to medium-term growth rates. In this article, we argue that this widening gap can be reduced by distinguishing between the short- to medium-term growth effects of policies from their long-run growth effects. With data from Singapore, Malaysia and Thailand, we show that an extended Solow (1956) model can narrow this gap. We find that the short to medium term growth effects of an increase in the investment ratio are quite significant and persist for up to 10 years.

Suggested Citation

  • B. Bhaskara Rao & Arusha Cooray, 2012. "How useful is growth literature for policies in the developing countries?," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 671-681, February.
    • Handle: RePEc:taf:applec:44:y:2012:i:6:p:671-681
    DOI: 10.1080/00036846.2010.517188
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2010.517188
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2010.517188?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. B. Bhaskara Rao & Artur Tamazian & Rup Singh, 2010. "What is the long run growth rate of the East Asian Tigers?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(12), pages 1205-1208.
    3. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-558, June.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    6. Neil R. Ericsson & James G. MacKinnon, 2002. "Distributions of error correction tests for cointegration," Econometrics Journal, Royal Economic Society, vol. 5(2), pages 285-318, June.
    7. B. Bhaskara Rao, 2010. "Time-series econometrics of growth-models: a guide for applied economists," Applied Economics, Taylor & Francis Journals, vol. 42(1), pages 73-86.
    8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    9. B. Bhaskara Rao & Toani Takirua, 2010. "The effects of exports, aid and remittances on output: the case of Kiribati," Applied Economics, Taylor & Francis Journals, vol. 42(11), pages 1387-1396.
    10. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
    11. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    12. Rao, B. Bhaskara & Kumar, Saten, 2009. "A panel data approach to the demand for money and the effects of financial reforms in the Asian countries," Economic Modelling, Elsevier, vol. 26(5), pages 1012-1017, September.
    13. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    14. B. Bhaskara Rao & Rup Singh & Saten Kumar, 2010. "Do we need time series econometrics?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(7), pages 695-697.
    15. Greenwood, Jeremy & Krusell, Per, 2007. "Growth accounting with investment-specific technological progress: A discussion of two approaches," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1300-1310, May.
    16. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    17. Greiner, Alfred & Semmler, Willi, 2002. "Externalities of investment, education and economic growth," Economic Modelling, Elsevier, vol. 19(5), pages 709-724, November.
    18. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    19. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    20. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    21. Abdelhak Senhadji, 2000. "Sources of Economic Growth: An Extensive Growth Accounting Exercise," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 1-6.
    22. Luintel, Kul B. & Khan, Mosahid & Arestis, Philip & Theodoridis, Konstantinos, 2008. "Financial structure and economic growth," Journal of Development Economics, Elsevier, vol. 86(1), pages 181-200, April.
    23. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    24. Ryuzo Sato, 1963. "Fiscal Policy in a Neo-Classical Growth Model: An Analysis of Time Required for Equilibrating Adjustment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 30(1), pages 16-23.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Casadio, Paolo & Paradiso, Antonio & Rao, B. Bhaskara, 2012. "Estimates of the steady state growth rates for some European countries," Economic Modelling, Elsevier, vol. 29(4), pages 1119-1125.
    2. A Alodadi & J Benhin, 2015. "Long Term Economic Growth in Oil-Rich Saudi Arabia: What is the role for non-oil sectors?," Economic Issues Journal Articles, Economic Issues, vol. 20(1), pages 109-130, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rao, B. Bhaskara, 2010. "Estimates of the steady state growth rates for selected Asian countries with an extended Solow model," Economic Modelling, Elsevier, vol. 27(1), pages 46-53, January.
    2. B. Bhaskara Rao & Arusha Cooray, 2008. "How useful is the Theoretical and Empirical Growth Literature for Policies in the Developing Countries?," EERI Research Paper Series EERI_RP_2008_09, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Rup Singh, 2015. "Forces of economic growth in China, India, and other Asian countries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 29(1), pages 62-81, May.
    4. Rao, B. Bhaskara & Cooray, Arusha, 2010. "Determinants of the long-run growth rate in the South-Asian countries," MPRA Paper 26493, University Library of Munich, Germany.
    5. Rao, B. Bhaskara, 2007. "Estimates of the steady state growth rates for selected Asian countries with an endogenous growth framework," MPRA Paper 2389, University Library of Munich, Germany.
    6. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    7. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    8. Kwack, Sung Yeung & Lee, Young Sun, 2006. "Analyzing the Korea's growth experience: The application of R&D and human capital based growth models with demography," Journal of Asian Economics, Elsevier, vol. 17(5), pages 818-831, November.
    9. Rao, B. Bhaskara & Tamazian, Artur & Singh, Rup & Vadlamannati, Krishna Chaitanya, 2008. "Financial developments and the rate of growth of output: An alternative approach," MPRA Paper 8605, University Library of Munich, Germany.
    10. Rao, B. Bhaskara & Cooray, Arusha & Hassan, Gazi Mainul, 2011. "Growth effects of education with the extreme bounds analysis: some evidence from Asia," MPRA Paper 32279, University Library of Munich, Germany.
    11. Antonio Paradiso & Saten Kumar & B. Bhaskara Rao, 2013. "The growth effects of education in Australia," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3843-3852, September.
    12. Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
    13. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    14. Xavier Sala-i-Martin, 2002. "15 Years of New Growth Economics : What Have we Learnt?," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 5(2), pages 5-15, August.
    15. Yasir Khan & Attiya Yasmin Javid, 2015. "The Impact of Formal and Informal Institutions on Economic Performance: A Cross-Country Analysis," PIDE-Working Papers 2015:130, Pakistan Institute of Development Economics.
    16. Sakiru Adebola Solarin & Yuen Yee Yen, 2016. "A global analysis of the impact of research output on economic growth," Scientometrics, Springer;Akadémiai Kiadó, vol. 108(2), pages 855-874, August.
    17. Ilkhom SHARIPOV, 2016. "ECONOMIC GROWTH IN THE EU’S EaP COUNTRIES: DETERMINANTS AND PROSPECTS," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 169-187.
    18. Norman Gemmell, 2001. "Fiscal Policy in a Growth Framework," WIDER Working Paper Series DP2001-84, World Institute for Development Economic Research (UNU-WIDER).
    19. Alejandro Díaz-Bautista, 2003. "Convergence And Economic Growth Considering Human Capital And R&D Spillovers," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 2(2), pages 127-143, Junio 200.
    20. Turnovsky, Stephen J., 2008. "The role of factor substitution in the theory of economic growth and income distribution: Two examples," Journal of Macroeconomics, Elsevier, vol. 30(2), pages 604-629, June.

    More about this item

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:44:y:2012:i:6:p:671-681. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.