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Growth literature and policies for the developing countries

Author

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  • Rao, B. Bhaskara
  • Cooray, Arusha

Abstract

This paper examines a recent view of Pritchett (2006) that there is a wide gap between growth literature and the policy needs of the developing countries. Growth literature has focussed on the long term growth outcomes but policy makers of the developing countries need rapid improvements in the growth rate in the short to medium terms. We take the view that this gap can be reduced if attention is given to the dynamic effects of policies. With data on Singapore, Malaysia and Thailand we argue that an extended version of the Solow (1956) model is well suited for this purpose. We found that the short to medium term growth effects of investment rate are much higher than its long run effects. Dynamic simulations for Singapore showed that these short run growth effects are significantly higher than the steady state growth rate for up to 10 years.

Suggested Citation

  • Rao, B. Bhaskara & Cooray, Arusha, 2008. "Growth literature and policies for the developing countries," MPRA Paper 10951, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:10951
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    File URL: https://mpra.ub.uni-muenchen.de/10951/1/MPRA_paper_10951.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Cooley, Thomas F. & Greenwood, Jeremy & Yorukoglu, Mehmet, 1997. "The replacement problem," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 457-499, December.
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    Cited by:

    1. Rup Singh, 2015. "Forces of economic growth in China, India, and other Asian countries," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 29(1), pages 62-81, May.
    2. Rao, B. Bhaskara & Hassan, Gazi, 2009. "How can we double per capita incomes in Bangladesh in 15 years?," MPRA Paper 17302, University Library of Munich, Germany.

    More about this item

    Keywords

    Solow Growth Model; Endogenous Growth; Dynamic Growth Effects of Investment Rate; Policies for Developing Countries;

    JEL classification:

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

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