Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses

53 Pages Posted: 11 Jun 2000

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: January 1998

Abstract

This paper argues that domestic social conflicts are a key to understanding why growth rates lack persistence and why so many countries have experienced a growth collapse after the mid-1970s. It emphasizes conflicts interact with external shocks on the one hand, and the domestic institutions of conflict-management on the other. Econometric evidence provides support for this hypothesis. Countries that experienced the sharpest drops in growth after 1975 were those with divided societies (as measured by indicators of inequality, ethnic fragmentation, and the like) and with weak institutions of conflict management (proxied by indicators of the quality of governmental institutions, rule of law, democratic rights, and social safety nets).

Suggested Citation

Rodrik, Dani, Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses (January 1998). NBER Working Paper No. w6350. Available at SSRN: https://ssrn.com/abstract=226101

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