Economic growth in low income countries: How the G20 can help to raise and sustain it
This paper aims to operationalise the G20 commitment to ensure that the benefits of global growth are shared with Low Income Countries. Growth is central to poverty reduction and the achievement of MDGs, and in developing countries it is episodic and volatile. However, while the current LICs have poor growth histories, the countries that started off the 1960s as LICs have had virtually the same average growth rates as other country groups. We review the evidence connecting long-run growth and growth accelerations and collapses to six areas of policy: trade, skills development, macro-stability, financial development, infrastructure investment and human development. Growth strategies have to be developed and owned by LIC governments and societies and they need to be tailored to individual country needs. However, there are some things which the G20 can do to help. We group these actions under three headings: mitigating downturns, boosting underlying growth rates and developing institutions and knowledge. A final annex describes how Korea’s spectacular growth strategy can be viewed through these lenses.
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- Joshua Aizenman & Jaewoo Lee, 2005. "International Reserves: Precautionary vs. Mercantilist Views, Theory and Evidence," IMF Working Papers 05/198, International Monetary Fund.
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