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The Anatomy of Start-Stop Growth

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Author Info
Benjamin F. Jones
Benjamin A. Olken
Abstract

This paper investigates the remarkable extremes of growth experiences within countries and examines the changes that occur when growth starts and stops. We find three main results. First, all but the very richest countries experience both growth miracles and failures over substantial periods. Second, growth accounting reveals that physical capital accumulation plays a negligible role in growth take-offs and a larger but still modest role in growth collapses. The implied role of productivity in these shifts is also directly reflected in employment reallocations and changes in trade. Third, growth accelerations and collapses are asymmetric phenomena. Collapses typically feature reduced manufacturing and investment amidst increasing price instability, whereas growth takeoffs are primarily associated with large and steady expansions in international trade. This asymmetry suggests that the roads into and out of rapid growth expansions may not be the same. The results stand in contrast to much growth theory and conventional wisdom: despite much talk of poverty traps, even very poor countries regularly grow rapidly, and the role of aggregate investment in growth accelerations is negligible.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11528.

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Date of creation: Aug 2005
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Handle: RePEc:nbr:nberwo:11528

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Find related papers by JEL classification:
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Magnoli Bocchi, Alessandro, 2008. "Rising growth, declining investment : the puzzle of the Philippines," Policy Research Working Paper Series 4472, The World Bank. [Downloadable!]
  2. Rishi Goyal & Ratna Sahay, 2007. "Volatility and Growth in Latin America: An Episodic Approach," IMF Working Papers 06/287, International Monetary Fund. [Downloadable!]
  3. Törbjörn I. Becker & Paolo Mauro, 2006. "Output Drops and the Shocks That Matter," IMF Working Papers 06/172, International Monetary Fund. [Downloadable!]
  4. Naude, Wim, 2007. "Geography and Development in Africa: Overview and Implications for Regional Cooperation," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  5. Imbs, Jean & Mauro, Paolo, 2007. "Pooling Risk Among Countries," CEPR Discussion Papers 6461, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Ashoka Mody & Daniel Leigh & Stefania Fabrizio, 2009. "The Second Transition: Eastern Europe in Perspective," IMF Working Papers 09/43, International Monetary Fund. [Downloadable!]
  7. Olivier Basdevant, 2009. "How Can Burundi Raise Its Growth Rate?The Impact of Civil Conflicts and State Intervention on Burundi's Growth Performance," IMF Working Papers 09/11, International Monetary Fund. [Downloadable!]
  8. Eswar Prasad & Raghuram G. Rajan & Arvind Subramanian, 2006. "Patterns of international capital flows and their implications for economic development," Proceedings, Federal Reserve Bank of Kansas City, pages 119-158. [Downloadable!]
  9. João Paulo Martin Faleiros & Denisard Cnéio de Oliveira Alves, 2008. "Modelo de Crescimento Baseado nas Exportações: Evidências empíricas para Chile, Brasil e México, em uma perspectiva Não Linear," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807170923500, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
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