The Anatomy of Start-Stop Growth

Benjamin Jones and Benjamin Olken

No 11528, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: O11 O47 (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-dev
Note: EFG
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Citations: View citations in EconPapers (46)

Published as Jones, Benjamin and Ben Olken. "The Anatomy of Start-Stop Growth." Review of Economics and Statistics 90, 3 (August 2008).

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