What Explains Developing Country Growth?

36 Pages Posted: 27 Apr 2000 Last revised: 17 Oct 2022

See all articles by Magnus Blomstrom

Magnus Blomstrom

Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

Mario Zejan

SIDA

Date Written: August 1992

Abstract

Among developing countries, there was no gross relationship between real income per capita in 1960 and subsequent growth in per capita income. However, once other significant influences, such as education, changes in labor force participation rates, inflows of foreign investment, price structures, and fixed investment ratios are taken into account, the lower the 1960 income level, the faster the income growth. This "conditional" convergence was particularly strong among the poorest half of the developing countries, contradicting the idea of a "convergence club" confined to relatively well-off countries. Inflows of direct investment were an important influence on growth rates for higher income developing countries, but not for lower income ones. For the latter group, secondary education, changes in labor force participation rates, and initial distance behind the United States were all major factors.

Suggested Citation

Blomstrom, Magnus and Lipsey, Robert E. and Zejan, Mario, What Explains Developing Country Growth? (August 1992). NBER Working Paper No. w4132, Available at SSRN: https://ssrn.com/abstract=226794

Magnus Blomstrom (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

Mario Zejan

SIDA ( email )

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Sweden
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+46-8-20 88 64 (Fax)

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