How Useful is Growth Literature for Policies in the Developing Countries?

Arusha Cooray and B. Rao

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: This paper examines the growing gap between the theoretical and empirical growth literature and policy needs of the developing economies. Growth literature has focused mainly on long term growth outcomes, but policy makers of the developing economies need rapid improvements in the short to medium term growth rates; see Pritchett (2006). In this paper we argue that this gap can be reduced by distinguishing between the short to medium term dynamic effects of policies from their long run equilibrium effects. With data from Singapore, Malaysia and Thailand, we show that an extended version of the Solow (1956) model is well suited for this purpose. We find that the short to medium term growth effects of the investment ratio are quite significant and they may persist for up to 10 years.

Keywords: Solow Growth Model; Endogenous Growth; Dynamic Growth Effects of Investment Ratio; Policies for Developing Countries. (search for similar items in EconPapers)
JEL-codes: O11 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2009
New Economics Papers: this item is included in nep-dev, nep-fdg and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.uow.edu.au/content/groups/public/@web/@ ... ts/doc/uow065431.pdf (application/pdf)

Related works:
Journal Article: How useful is growth literature for policies in the developing countries? (2012)
Working Paper: How useful is Growth Literature for Policies in the Developing Countries? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:uow:depec1:wp09-09

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