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

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the growing gap between the theoretical and empirical growth literature and the policy needs of the developing economies. Growth literature has focussed mainly on the 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). This paper argues 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 on Singapore, Malaysia and Thailand we show that an extended version of the Solow (1956) model is well suited for this purpose. This is despite the common belief that the Solow model has no use for policy and is not applicable to the developing countries. 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)
Date: 2009-04-10
New Economics Papers: this item is included in nep-dev and nep-sea
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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:pra:mprapa:14573

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