Empirics of Growth and Development

Abstract

We survey the recent literature on growth empirics in this paper. Modern growth economics has led to a rich and wide-ranging empirical literature replete with many new methodologies and many new findings. Yet in comparing the modern empirical literature to the traditional growth accounting analyses of the 1960's and 1970's, one cannot help but be struck by the relative lack of progress on substantive conclusions. The critical role of TFP found in recent work is consistent with claims as far back as Solow. Evidence of statistical notions of convergence represents a new set of stylized facts but suffers from a lack of connection to economically interesting notions of convergence. The search for empirically successful growth models has provided a range of candidate growth determinants that lie far outside the domain of the neoclassical growth model, but efforts to search for robust determinants have had mixed results, outside of the finding that physical capital accumulation affects growth, which is no surprise given the earlier literature. Evidence of nonlinearities and parameter heterogeneity is suggestive of multiple steady states and richer growth dynamics than neoclassical theories, but this evidence has yet to be integrated into a consistent whole. Together, this suggests that the next step in empirical growth research should be the unification of the vast array of statistical claims into a unified growth picture combined with efforts to link this picture more tightly with growth theories.

Keywords: Growth empirics, Economic growth, Development

JEL Classification: C49, C52, C59, O10