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Inside the Black box: Policies for Economic Growth

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  • Procter, Roger

    ()
    (Ministry of Economic Development, New Zealand)

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    Abstract

    Growth in income per capita is or should be a central objective of economic policy. This paper explores how the economy generates economic growth and what is actually going on in an economy when it does so. It describes economic growth as a fine-grained path-dependent process driven by entrepreneurs and involving transformation of the productive structure and the generation of new knowledge and capabilities. It concludes that, while the market is essential for organising economic activity, government intervention is necessary for markets to work effectively, and especially for them to work effectively in generating economic growth. The question then becomes not whether but how the government should intervene. The paper explores the nature of possible government interventions. It concludes that both broad-based policies (often thought of as framework or regulatory policies) and fine-grained policies (often thought of as facilitative or industry policies) have their place and that there is scope for action on both to improve New Zealand's economic performance.

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    File URL: http://www.med.govt.nz/about-us/publications/publications-by-topic/occasional-papers/2008/08-08-pdf/view
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    Bibliographic Info

    Paper provided by Ministry of Economic Development, New Zealand in its series Occasional Papers with number 08/8.

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    Length: 45 pages
    Date of creation: Sep 2008
    Date of revision:
    Handle: RePEc:ris:nzmedo:2008_008

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    Related research

    Keywords: Economic development; productivity; innovation; policy; industry policy;

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    References

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    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.:
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    1. Lipsey, Richard G. & Carlaw, Kenneth I. & Bekar, Clifford T., 2005. "Economic Transformations: General Purpose Technologies and Long-Term Economic Growth," OUP Catalogue, Oxford University Press, number 9780199290895.
    2. Brian Loasby, 2005. "Entrepreneurship, Evolution and the Human Mind," Papers on Economics and Evolution 2005-13, Max Planck Institute of Economics, Evolutionary Economics Group.
    3. John McMillan, 2004. "Quantifying creative destruction: Entrepreneurship and productivity in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 153-173.
    4. Philip McCann, 2003. "Geography, Trade and Growth: Problems and Possibilities for the New Zealand Economy," Treasury Working Paper Series 03/03, New Zealand Treasury.
    5. Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
    6. Davis, Nick, 2006. "Business R&D, Innovation and Economic Growth: An Evidence-Based Synthesis of the Policy Issues," Occasional Papers 06/8, Ministry of Economic Development, New Zealand.
    7. Ricardo Hausmann & Dani Rodrik, 2002. "Economic Development as Self-Discovery," NBER Working Papers 8952, National Bureau of Economic Research, Inc.
    8. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    9. Smith, Keith, 2006. "Public Policy Framework for the New Zealand Innovation System," Occasional Papers 06/6, Ministry of Economic Development, New Zealand.
    10. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
    11. World Bank, 2005. "Economic Growth in the 1990s : Learning from a Decade of Reform," World Bank Publications, The World Bank, number 7370, October.
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