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112
Growth Strategies
, 2003
"... This is an attempt to derive broad, strategic lessons from the diverse experience with economic growth in last fifty years. The paper revolves around two key arguments. One is that neoclassical economic analysis is a lot more flexible than its practitioners in the policy domain have generally given ..."
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Cited by 77 (1 self)
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This is an attempt to derive broad, strategic lessons from the diverse experience with economic growth in last fifty years. The paper revolves around two key arguments. One is that neoclassical economic analysis is a lot more flexible than its practitioners in the policy domain have generally given it credit. In particular, first-order economic principles—protection of property rights, market-based competition, appropriate incentives, sound money, and so on—do not map into unique policy packages. Reformers have substantial room for creatively packaging these principles into institutional designs that are sensitive to local opportunities and constraints. Successful countries are those that have used this room wisely. The second argument is that igniting economic growth and sustaining it are somewhat different enterprises. The former generally requires a limited range of (often unconventional) reforms that need not overly tax the institutional capacity of the economy. The latter challenge is in many ways harder, as it requires constructing over the longer term a sound institutional underpinning to endow the economy with resilience to shocks and maintain productive dynamism. Ignoring the distinction between these two tasks leaves reformers saddled with impossibly ambitious, undifferentiated, and impractical policy agendas.
Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty and Inequality from India” (unpublished
- Institute of Technology). Available via the Internet: http://www.isid.ac.in/~planning/ Topalova.pdf
, 2005
"... Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by external factors, to measure the causal impact of trade liberal ..."
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Cited by 63 (6 self)
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Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by external factors, to measure the causal impact of trade liberalization on poverty and inequality in districts in India. Variation in preliberalization industrial composition across districts in India and the variation in the degree of liberalization across industries allow for a difference-in-difference approach, establishing whether certain areas benefited more from, or bore a disproportionate share of the burden of liberalization. In rural districts where industries more exposed to liberalization were concentrated, poverty incidence and depth decreased by less as a result of trade liberalization, a setback of about 15 percent of India’s progress in poverty reduction over the 1990s. The results are robust to pre-reform trends, convergence and time-varying effects of initial district-specific characteristics. Inequality was unaffected in the sample of all Indian states in both urban and rural areas. The findings are related to the extremely limited mobility of factors across regions and industries in India. Indeed, in Indian states where inflexible labor laws impeded factor reallocation, the adverse impact of liberalization on poverty was more pronounced. The findings, consistent with a specific factors model of trade, suggest that to minimize the social costs of inequality, additional policies may be needed to redistribute some of the gains of liberalization from winners to those who do not benefit as much. Creating a flexible institutional environment will likely minimize the need for additional interventions. 1
The Prospects for Sustained Growth in Africa: Benchmarking the Constraints
, 2007
"... This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to eli ..."
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Cited by 23 (6 self)
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This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. A dozen countries had weak institutions in 1960 and yet sustained high rates of growth subsequently. We use data on their characteristics early in the growth process to create benchmarks with which to evaluate potential constraints on sustained growth for sub-Saharan Africa. This analysis suggests that what are usually regarded as first-order problems—broad institutions, macroeconomic stability, trade openness, education, and inequality—may not now be binding constraints in Africa, although the extent of ill-health, internal conflict, and societal fractionalization do stand out as problems in contemporary Africa. A key question is to what extent Africa can rely on manufactured exports as a mode of “escape from underdevelopment,” a strategy successfully deployed by almost all the benchmark countries. The benchmarking comparison specifically raises two key concerns as far as a development strategy based on
Helping Infant Economies Grow: Foundations of Trade Policies for Developing Countries
"... Conventional wisdom has it that trade enhances economic efficiency and thus promotes growth. At least since Robert M. Solow’s (1957) pioneering work, however, technological progress has been recognized as the dominant factor in determining the rate of growth. This is presumably even more true for de ..."
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Cited by 20 (2 self)
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Conventional wisdom has it that trade enhances economic efficiency and thus promotes growth. At least since Robert M. Solow’s (1957) pioneering work, however, technological progress has been recognized as the dominant factor in determining the rate of growth. This is presumably even more true for developing countries, for which the possibilities of closing the knowledge gap with advanced industrial countries offers especially large growth potential. We examine the impact of trade restrictions in economies in which technological spillovers within countries and across industries are fundamental to the process of growth (see Kenneth J. Arrow, 1962a, 1962b; Paul M. Romer, 1986; Stiglitz, 1987). Since that work, it has been clear that markets, by themselves, do not necessarily, or in general, lead to overall dynamic efficiency; and that there are often trade-offs between static inefficiencies (e.g., associated with patent protection) and long-term growth. We find, here in particular, that the dynamic benefits of broad trade restrictions may outweigh their static costs. Our analysis provides the basis of an infant economy (as opposed to an infant industry) argument for protection. This paper develops a simple two-sector model with an industrial (modern) and a traditional (craft or agricultural) sector. There are four key features to the model: (a) there are spillovers from the industrial sector to the craft sector, for which firms in the industrial sector are not compensated; (b) such spillovers are geographically based, that is, it is only productivity increases in the industrial sector in the developing countries that affect productivity increases in the traditional sector; (c) innovations are concentrated in the industrial sector; and (d)
The contribution of population health and demographic change to economic growth in China and India
- Journal of Comparative Economics
, 2010
"... We find that a cross-country model of economic growth successfully tracks the growth takeoffs in China and India. The major drivers of the predicted takeoffs are improved health, increased openness to trade, and a rising labor force-to-population ratio due to fertility decline. We also explore the ..."
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Cited by 8 (4 self)
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We find that a cross-country model of economic growth successfully tracks the growth takeoffs in China and India. The major drivers of the predicted takeoffs are improved health, increased openness to trade, and a rising labor force-to-population ratio due to fertility decline. We also explore the effect of the reallocation of labor from low-productivity agriculture to the higher-productivity industry and service sectors. Including the money value of longevity improvements in a measure of full-income reduces the gap between the magnitude of China's takeoff relative to India's due to the relative stagnation in life expectancy in China since 1980.
The Indian Growth Miracle and Endogenous Growth. Journal of Development Economics, forthcoming (doi:10.1016/j.jdeveco.2009.06.002
- Robustness of Macroeconomic Indicators of Capital Mobility. In: Leiderman, L. , Razin, A. (Eds.), Capital Mobility: The Impact on Consumption, Investment and Growth
, 2009
"... Using over half a century of R&D data for India, this paper examines the extent to which India’s recent growth experience can be explained by R&D, international R&D spillovers, catch-up to the technology frontier and financial liberalization. Furthermore, the paper also tests whether any ..."
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Cited by 7 (6 self)
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Using over half a century of R&D data for India, this paper examines the extent to which India’s recent growth experience can be explained by R&D, international R&D spillovers, catch-up to the technology frontier and financial liberalization. Furthermore, the paper also tests whether any of the competing second-generation endogenous growth theories can explain India’s growth experience. The findings provide support for Schumpeterian growth theory and indicate that the recent high growth rates in India are likely to continue well into the future.
Reasonable Expectations and the First Millennium Development Goal: How Much Can Aid Achieve?*
, 2007
"... While a political consensus has emerged to increase aid flows to Sub-Saharan Africa, empirical studies of the effectiveness of aid in stimulating growth and reducing poverty have yet to yield conclusive results. The present paper takes a different approach. Using the standard neoclassical growth mod ..."
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Cited by 7 (0 self)
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While a political consensus has emerged to increase aid flows to Sub-Saharan Africa, empirical studies of the effectiveness of aid in stimulating growth and reducing poverty have yet to yield conclusive results. The present paper takes a different approach. Using the standard neoclassical growth model, we ask how much should be expected from aid a priori. Using a range of different parameter values and model specifications, we address three questions. (i) How much growth should aid flows have produced in Sub-Saharan Africa over the last 3 decades? (ii) How much aid would be needed to attain the First Millennium Development Goal (MDG#1) of cutting poverty in half by 2015? (iii) Taking proposed aid flows as given, how much would structural characteristics, such as domestic savings rates and productivity, have to change in order to reach the MDG#1? Our analysis indicates that, even under optimistic assumptions for the effectiveness of aid, past and future expectations for aid in fostering growth and poverty reduction have been too high.
India Transformed? Insights from the Firm Level 1988-2005
, 2009
"... Using firm-level data this paper analyzes, the transformation of India’s economic structure following the implementation of economic reforms. The focus of the study is on publicly-listed and unlisted firms from across a wide spectrum of manufacturing and services industries and ownership structures ..."
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Cited by 6 (1 self)
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Using firm-level data this paper analyzes, the transformation of India’s economic structure following the implementation of economic reforms. The focus of the study is on publicly-listed and unlisted firms from across a wide spectrum of manufacturing and services industries and ownership structures such as stateowned firms, business groups, private and foreign firms. Detailed balance sheet and ownership information permit an investigation of a range of variables such as sales, profitability, and assets. Here we analyze firm characteristics shown by industry before and after liberalization and investigate how industrial concentration, the number, and size of firms of the ownership type evolved between 1988 and 2005. We find great dynamism displayed by foreign and private firms as reflected in the growth in their numbers, assets, sales and profits. Yet, closer scrutiny reveals no dramatic transformation in the wake of liberalization. The story rather is one of an economy still dominated by the incumbents (state-owned firms) and to a lesser extent, traditional private firms (firms incorporated before 1985). Sectors dominated by state-owned and traditional private firms before 1988-1990, with assets, sales and profits representing shares higher than 50%, generally remained so in 2005. The exception to this broad pattern is the growing importance of new and large private firms in the services sector. Rates of return also have remained stable
Politics of Economic Growth in India, 1980–2005. Part I: The 1980s’, Economic and
- Political Weekly, 1 April, 1251–1259 Kohli, A. (2006b), ‘Politics of Economic Growth in India, 1980–2005. Part II: The 1990s and Beyond’, Economic and Political Weekly
, 1361
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The Scorecard on Development: 25 Years of Diminished Progress
, 2005
"... Th is paper examines data on economic growth and various social indicators and compares the past 25 years (1980-2005) with the prior two decades (1960-1980). Th e paper fi nds that the past 25 years in low- and middle-income countries have seen a sharp slowdown in the rate of economic growth, as wel ..."
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Cited by 6 (1 self)
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Th is paper examines data on economic growth and various social indicators and compares the past 25 years (1980-2005) with the prior two decades (1960-1980). Th e paper fi nds that the past 25 years in low- and middle-income countries have seen a sharp slowdown in the rate of economic growth, as well as a decline in the rate of progress on major social indicators including life expectancy and infant and child mortality. Th e authors conclude that economists and policy-makers should devote more eff ort to determining the causes of the economic and development failure of the last quarter-century. JEL Classifi cation: O10, O40, O11
