Growth Diagnostics: the case of Palestine

Chiara Marazzi, Gianni Vaggi and Angelica Vitali
Additional contact information
Chiara Marazzi: Department of Economics and Quantitative Methods, University of Pavia
Angelica Vitali: Department of Economics and Quantitative Methods, University of Pavia

No 137, Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods

Abstract: Growth Diagnostics, GD, by Ricardo Hausmann, Dani Rodrik and Andrés Velasco, represents a useful and practical approach in order to identify the most binding constraints to explain low economic growth. According to the authors the full list of specific economic constraints is unknowable ex-ante, and as a second best solution it is worth trying to identify the feature which represents the major obstacle to the unleashing of the growth potential of a country. This paper has two major aims. In the first part we try to expand the GD method by concentrating on those constraints which appear to be on the 'market/demand side' of the determinants of economic growth, and which widens the 'decision tree' by including a new diagnostic branch represented by Demand-Side variables. This helps to capture the influence of market conditions on profitability and investments. In the second part of the paper we apply the new decision tree to Palestine. The original GD would not allow to identify the most binding constraints to economic growth in Palestine. In fact, Demand-Side elements are fundamental to explain the constraints to Palestinian development. In particular, Palestine suffers from the small dimension of the local markets and from the impossibility to effectively integrate the different markets. Therefore, Palestinian firmsdo not grow and do not reach a size which could make them competitive.

Keywords: Palestine; market size; investment constraints (search for similar items in EconPapers)
JEL-codes: E22 O11 O53 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-12
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/wpaper/q137.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pav:wpaper:137

Access Statistics for this paper

More papers in Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods Contact information at EDIRC.
Bibliographic data for series maintained by Paolo Bonomolo ( this e-mail address is bad, please contact ).