The Determinants of Economic Growth

289 Pages·2000·6.853 MB·English

by  Thijs de Ruyter van Steveninck, Nico van der Windt (auth.), M. S. Oosterbaan, Thijs De Ruyter Van Steveninck, N. Van Der Windt (eds.)

The Deter.minants of Economic Growth
The Determinants of Economic Growth
Edited by
M.S. OOSTERBAAN
THIJS DE RUYTER VAN STEVENINCK
and
N. VANDER WINDT
Netherlands Economic Institute
SPRINGER SCIENCE+BUSINESS MEDIA, LLC
Library of Congress Cataloging-in-Publication Data
The determinants of economic growth / edited by M.S. Oosterbaan, Thijs de Ruyter
van Steveninck, and N. van der Windt.
p.cm.
"Proceedings of the conference on Economic Growth and its Determinants,
which was held on March 23 and 24, 1998, in the "Hague"--Ackn.
Includes bibliographical references and index.
ISBN 978-1-4613-7020-8 ISBN 978-1-4615-4483-8 (eBook)
DOI 10.1007/978-1-4615-4483-8
1. Economic development. 2. Economic policy. I. Oosterbaan, M.S.
(Maaike S.) II. Ruyter van Steveninck, Thijs de. III. Windt, N. van der (Nico)
HD75 .D482 2000
338.9--dc21 00-044779
Copyright © 2000 Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers, New York in 2000
Softcover reprint of the hardcover 1st edition 2000
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, mechanical, photo
copying, recording, or otherwise, without the prior written permission of the publisher,
Springer Science+Business Media, LLC .
Printed on acid-free paper.
Contents
Contributors ix
Abbreviations and acronyms xi
Acknowledgements xiii
Introduction: Economic growth and its determinants-An overview 1
THus DE RUYTER VAN STEVENINCK, NICO VAN DER WINDT,
AND MAAIKE OOSTERBAAN
1 Recent developments in endogenous growth theory 13
ROBERT J. BARRO
1.1 Framework for the empirical analysis of growth 14
1.2 Empirical findings on growth across countries 15
1.3 Implications of the cross-country findings for advanced
countries 32
Discussion
DAVID DOLLAR 35
vi
Contents
2 The joys and sorrows of openness: A review essay 39
WILLIAM EASTERLY
2.1 The many dimensions of openness 39
2.2 The joys of openness 41
2.3 The sorrows of openness 48
2.4 Conclusions 57
Discussion
MOSHE SYRQUIN 58
AUGUSTIN Fosu 68
3 Technology in growth 75
LOUISE C. KEELY AND DANNY QUAH
3.1 Introduction 75
3.2 Development of the literature 77
3.3 Empirical studies: R&D and the impact of property rights
on growth 93
3.4 Conclusions 99
Discussion
GRAHAM PYATT 103
4 Financial markets, financial flows, and economic
growth in LDCs 107
MAXWELL J. FRY
4.1 A fiscal foreword 107
4.2 Domestic finance 113
4.3 Foreign debt accumulation 138
4.4 Foreign direct investment 148
4.5 Conclusions 157
Discussion
Ross LEVINE 162
vii
Contents
5 Institutional development and economic growth 165
DEEPAKLAL
5.1 Introduction 165
5.2 What are institutions? 166
5.3 Culture and social equilibria 170
5.4 Extensive and intensive growth 172
5.5 Changing material and cosmological beliefs 175
5.6 The family, the market, and the state 180
5.7 Conclusions 191
Discussion
ARISTOMENE VAROUDAKIS 198
THEO VAN DE KLUNDERT 204
6 Human capital and growth: The cost of rent seeking activities 209
JEAN-CLAUDE BERTHELEMY, CHRISTOPHER PISSARIDES,
AND ARISTOMENE V AROUDAKIS
6.1 Introduction 209
6.2 Standard fonnulations of the role of human capital
in empirical growth equations 210
6.3 Rent-seeking as an economic activity 216
6.4 The impact of rent-seeking on economic output 217
6.5 Rent-seeking and growth in an endogenous growth model 219
6.6 Empirical assessment: Evaluating human capital
devoted to rent-seeking activities 223
6.7 Conclusions 227
Discussion
GEORGE J. BORJAS 230
viii Contents
7 Recent advances in economic growth: A policy perspective 235
ROBERT LENSINK AND GERARD KUPER
7.1 Introduction 235
7.2 Growth theory: Some basic concepts 237
7.3 Education and human capital 240
7.4 Technology, R&D, and trade 243
7.5 Financial markets and capital flows 249
7.6 Institutions and inequality 252
7.7 Empirical studies 255
7.8 Conclusions 260
Epilogue 267
JANPRONK
Index 273
Contributors
Robert Barro Harvard University
Jean-Claude Berthelemy Centre d'Etudes Prospectives et d'Information
Internationales, Paris
George Borjas Harvard University
Willem Buiter University of Cambridge, Bank of England
David Dollar The World Bank, Washington, DC
William Easterly The World Bank, Washington, DC
Augustin Fosu Oakland University
Maxwell Fry University of Birmingham
Louise Keeley London School of Economics
Theo van de Klundert Catholic University of Brabant, Tilburg
Gerard Kuper University of Groningen
DeepakLal University of California, Los Angeles
Robert Lensink University of Groningen
Ross Levine University of Virginia
Maaike Oosterbaan Netherlands Economic Institute
Christopher Pissarides London School of Economics
Jan Pronk Minister for Development Cooperation, The
Netherlands
Graham Pyatt Institute of Social Studies, The Hague
Danny Quah Centre for Economic Performance, London
School of Economics
Thijs de Ruyter van Netherlands Economic Institute
Steveninck
Moshe Syrquin The World Bank, Washington, DC
Aristomene Varoudakis OECD Development Centre, Paris
Nico van der Windt Netherlands Economic Institute
Abbreviations and acronyms
BDV Berthelemy, Dessus, and Varoudakis (1997).
BPV Berthelemy, Pissarides, and Varoudakis (this book).
CGE computable general equilibrium model.
CRS constant returns to scale.
EU European Union.
FDl foreign direct investment.
GDP gross domestic product.
GNP gross national product
GMM generalized moments methods
lCOR incremental capital-output ratio.
LDC less developed country.
LHS left hand side (of an equation).
LSDV least square with dummy variables
MENA Middle East and North Africa
MRW Mankiw, Romer, and Wei! (1992).
MSV Murphy, Shleifer, and Vishny (1991).
OECD Organization for Economic Cooperation and Development.
PPP purchasing-power parity.
R&D research and development.
RHS right hand side (of equation).
TFP total factor productivity.
Acknowledgements
This book consists of the proceedings of the conference on Economic
Growth and its Determinants, which was held on March 23 and 24, 1998, in
The Hague. It was organized by the Netherlands Economic Institute (NEI)
on behalf of the Netherlands Ministry of Foreign Affairs. Apart from the
participants in the conference, we would like to thank Jan Pronk, the then
Minister of Development Cooperation for his personal interest and active
involvement. The NEI is also grateful to Willem Buiter for his excellent
performance as chair and his maintenance of a tight schedule without too
many delays, as well as to Sweder van Wijnbergen, at that time Secretary
General of the Netherlands Ministry of Economic Affairs, for opening the
conference. Support from Frederick Haver Droeze and Freek van den Bosch
from the Netherlands Ministry of Foreign Affairs before, during, and after
the conference is also gratefully acknowledged. The same goes for Teus van
Walderveen, Paulien van Noort, Albert de Groot, and Ulrika Lundgren from
the NEI. Finally, Joost van Acht assisted in both the organization of the
conference and in a very thorough way with the technical editing of the
book.