Assessing Potential Growth in Emerging Countries after the Global Financial Crisis

24 Pages Posted: 18 Apr 2015

Date Written: January 22, 2015

Abstract

We examine the growth performance of six emerging economies (Brazil, China, India, Indonesia, Russia and Turkey) in the last two decades and examine whether domestic structural constraints are affecting their present and future growth potential. In order to assess better the determinants of the recent synchronized slowdown of these economies, we concentrate on the dynamics of labor productivity (value added per worker, a synthetic measure of capital deepening, labor quality and total factor productivity) and of employment. We find that the ongoing slowdown in EMEs is largely structural, but there is still ample room for catching up in terms of output composition, reallocation of labor across sectors and within-sector productivity improvements. The scope for further reform and reform priorities differs across countries. In the longer run other structural factors will weigh on potential growth, particularly the evolution of the size and quality of the labor force.

Keywords: emerging markets, growth, potential growth, productivity

JEL Classification: E32, O47, O57

Suggested Citation

Di Stefano, Enrica and Marconi, Daniela, Assessing Potential Growth in Emerging Countries after the Global Financial Crisis (January 22, 2015). Bank of Italy Occasional Paper No. 256, Available at SSRN: https://ssrn.com/abstract=2595126 or http://dx.doi.org/10.2139/ssrn.2595126

Enrica Di Stefano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Daniela Marconi (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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