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BPEA Article

The Empirics of Growth: An Update



The past decade has seen an explosion of empirical research on economic
growth and its determinants, yet many of the central issues of interest
remain unresolved. For instance, no consensus has emerged about the
relative contributions of capital accumulation and improvements in total
factor productivity in accounting for differences in growth across countries
and time. Nor is there agreement about the role of increased education
or the importance of economic policy. Indeed, results from the many
studies on a given issue frequently reach opposite conclusions. And two
of the main empirical approaches—growth accounting and growth regressions—
have themselves come under attack, with some researchers going
so far as to label them as irrelevant to policymaking.
In this paper we argue that, properly implemented and interpreted, both
growth accounts and growth regressions are valuable tools, which can
improve—and have improved—our understanding of growth experiences
across countries. We also show that careful attention to issues of measurement
and consistency goes a long way in explaining the apparent contradictions
among findings in the literature. Our analysis combines
growth accounts and growth regressions with a focus on measurement
and procedural consistency to address the issues raised. The growth
accounts are constructed for eighty-four countries that together represent
95 percent of gross world product and 84 percent of world population,
over a period of forty years from 1960 to 2000. Appendix A lists the countries in the sample by region.1 This large data set also enables us to
compare growth experiences across two twenty-year time periods:
1960–80 and 1980–2000.


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