The Determinants of Economic Growth - Article Example

DETERMINANTS OF ECONOMIC GROWTH Name: Roll No: Class: Subject: Teacher: April 27th, 2008 University Table of Contents Table of Contents 2 SOLOW SAWAN THEORY 4 ENDOGENOUS GROWTH THEORY 5 HUMAN CAPITAL: DETERMINAT OF ECONOMIC GROWTH 6 Distribution of income 18 References 21 DETERMINANTS OF ECONOMIC GROWTH In the present paper, it has been discussed about the economic growth in general and then the study will move on to discuss the prevailing theories as to economic growth and in the end different determinants, which have been declared as determinants of economic growth. Economic growth is the enhancement in terms of value of products and provisions that are developed and generated by any economy or financial institution (Barro, 1991).There are various methods of calculating economic growth. The most significant and renown measure is the use of the GDP approach. The GDP measurement of economic growth can be done by a number of methods; 1) Expenditure Approach, 2) Income Approach 3) Product Approach. However, the rate of economic growth is a phenomenon, which incorporates percentages. Inflation-adjusted terms are calculated for assessment of inflation regarding cost of the developed goods (Barro, 1991). Economic growth and economic growth theory can be defined as increase or growth of probable outcome, for example, generation of complete service, which is there in case of improved growth in terms of demand and pragmatic output. In terms of study, development economics sees economic growth differently. The former is primarily the study of how advanced countries can further advance their economies, while the latter is the study of how poor countries can match up with advanced ones. The concept of economic growth is not newer one, it has got its traces since centuries and different economists have given different determinants to gauge the economic growth of any given country. There are the different theories, which have been applied to consider the economic growth of a country. The Harrod-Domar model is phenomenon widely used in studying ,constructing or explaining the various models and growth theories in development economics. It most significantly the growth rate of an economy in terms of its level of saving and productivity of resources (capital). The fundamental hypothesis of the model is that there is no natural rationale for an economy to have balanced growth. The model was, build by Sir Roy F. Harrod in 1939 and Evsey Domar in 1946 and later on Harrod-Domar model became the predecessor to the Exogenous growth model. According to the study conducted by John E. La Tourette (1964), the threshold of growth is widely dependant on the technological advancement of a country as it reduces the expenditure on the human capital. Hence, more efficient results are produced with less cost level. Harrod Domar was the exponent of this theory and all the followers of Harrod Domar have been advocating that capital out put ratio is fixed and equilibrium growth path must be achieved to have stable and viable economic growth (Barro, 1991). The theory was necessarily based upon the presumption that population must grow with the growth of the capital. SOLOW SAWAN THEORY Another theory which was considered to be the yardstick for determining the economic growth of any country was Swan theory. The theory was based on the presumption that capital out put ratio must be flexible and it also included in its fold the concept of technology and resultant thereupon the role of technology in the economy growth as well (Barro, 1998, 45). It was different to Classical theory in the sense that Classical theory postulates that capital out put ratio is fixed but it declared and proved it to be flexible and at the same time, the ratio of technology in economic growth was also acknowledged. The findings of around 100 countries from 1960 to 1990 strongly support the general notion of conditional convergence (Barro and Lee, 1994). According to the study of K. Hawtery. (1990) in her article Dynamic Behaviour of a Unionized Solow-Swan Economy, Hawtery specifically discussed the effect of union behaviour on the economy. This area has recently received fresh theoretical attention lately, however all the work to date, has been carried out in a comparative static framework .The study reported in this paper attempts to achieve an innovative measure in this field by placing the unionized labour market in the frame of a dynamic (Solow-Swan) growth model . ENDOGENOUS GROWTH THEORY According to the two distinctive arguments against endogenous growth theory, the received perception seems to be that semi endogenous growth theory is superior. However, from this viewpoint, endogenous growth theory seems to be a rather special case. Solow's criticism was directed primarily towards the first wave of endogenous growth models, i.e., the AK model as in Frankel (1962) and Romer (1986), others such as Jones (1999) and Li (2000, 2002) have recently disagreed. According to them, the improvement and novelty based endogenous growth theory initiated by Romer (1990), Grossman and Helpman (1991), and Aghion and Howitt (1992) stands on a similar knife edge assumption. The Endogenous growth theory is another theory applicable to determine the economic growth of any country. The theory lays down that human resource development is the major and most dominant factor in economic growth, the greater the human capital is efficient and skilled, the greater the economic growth will be of any country (Grier and Tullock, 1989, 259). HUMAN CAPITAL: DETERMINAT OF ECONOMIC GROWTH In a given starting level of real per capita GDP, the growth rate is improved by higher initial schooling and life expectation, lower fecundity, and lower government expenditure, better maintenance of the rule of law, lower inflation, and improvements in the terms of trade (Jones, 1994). In lieu of these and other variables, growth is negatively related to the initial level of real per capita GDP (Barro and Lee, 1994). Political freedom has only a weak effect on growth but there is some sign of a nonlinear relation. At low levels of political rights, a growth of these rights stimulates economic growth (Barro, 1991). However, once a modest amount of democracy has been achieved, a further expansion reduces growth. In contrast to the small effect of democracy on growth, there is a strong positive influence of the standard of living on a country's proclivity to experience democracy. Human resource development is one of the most important and key determinants for the economic growth (Barro, 1998). The economic growth of any country is directly dependent upon the skill and development of its human resources, the greater and better the human resources are managed and skilled, the greater and better the country would grow (Durlauf, Johnson and Temple, 2005). It can be discussed as: Dy = f (y, y*), where Dy is the growth rate of per capita output, y is the current level of per capita output and y* is the steady state level of per capita output. In the neo-classical framework technological progress is labours augmenting, that is a given worker is increasingly effective. The level of output per efficiency adjusted worker is reaching a constant, y*, the output per worker as an individual can be increasing (Sachs and Warner, 1995). The convergence in this model is caused by diminishing returns to capital. The y* differs from country to country because of differences in endowments and economic policy variables (Limongi and Przeworski, 1993). For instance countries with deficient law and order-enforcement will - keeping all other things the same - have lower y* than countries having efficient law and order enforcement (Barro, 1998,). Countries having adopted distort incentive with punitive taxation will likewise have a lower y*. So countries are not predictable to converge to some uniform y*. There might be economies with similar y* and hence club convergence. So given a nation=s y* the lower initial income, y, the higher the rate of convergence (Barro, 1998, ). It is pertinent to mention here that y* is amendable through political action. It is a mode for the new neo-classical growth theory to take on board findings from endogenous growth theory which has asserted that economic policies matter a lot for growth (Barro, 1991). For example: spending on education and R&D (research and development) can increase and improve the level of y*. Endogenous growth theory argues that a decentralized market economy tends to under-invest in R&D, so there is scope for public action (Sachs and Warner, 1995). Other areas for political intervention are: The savings rate can increase if government beats inflation decreasing or if taxation changes or if the public get more confident in the stability of the banking system. Interpreted in this way there is conditional convergence in the large sample for the period 1970-1995 (Barro, 1998). The coefficient on initial level of GDP measures the percentage rate of convergence to the economy long run or target level of income. It means that initial income has a negative impact on residual growth, i.e. growth not accounted for by all other variables, which is in line with the prophecy from neo-classical growth theory (Durlauf, Johnson and Temple, 2005). (It does not exclude other interpretations, such as that initial income is an index of the level of technology, rather than capital per labourer, and the lower it is the more scope there will be for catch up (Barro and Lee, 1994). So the higher the initial income is the closer you are to the technological leader and the lower will growth is.) Another important and less controversial findings are *Positive effect of secondary and upper schooling but not of primary education (Sachs and Warner, 1995, 41). *Interactive effect of schooling and initial GDP/capita that is convergence speed will increase if low initial GDP is combined with high score on education, remember the Sandberg thesis: Scandinavia as the impoverished sophisticate poor but well educated, Scandinavia was able to absorb new technology fast (Barro, 1998). Positive effect of rule of law, good government is desirable. There are certain controversial results of the above-referred discussion. Democracy has ambiguous results, seems to stimulate growth a low initial income but not a high. Government consumption - exclusive of education and defence - has negative effect. (Distortion of incentives through taxation and transfers presumably) (Sachs and Warner, 1995). Inflation seems to hurt when it is very high but below 10 percent there are no clear effects. Economic growth gains benefits as well as disadvantages in case of its calculation in terms of GDP (Gross Domestic Product) as an annual transformation assessment with percentages (Barro and Lee, 1994). Temporary stability and long-lasting development Short-term financial stabilization and long-term financial development can be seen differently and if the subject of economic growth is seen, it is related to the long-term span of finance. Business cycle can be defined as the dissimilarity of economic growth in terms of short-term and all financial institutions go through different times of downturn (Rodriguez and Rodrik, 2001). The fluctuations are not always regular which render the very cycle as misnomer, and explanation of the fluctuations is one of the main focuses of macroeconomics (Barro and Lee, 1994). The recessions in all economies are caused due to many reasons such as oil upsetting, in case of wars or any other political disturbances and breakdown in terms of harvesting and crops. Economic growth due to long-term stability is the fundamental question of economics. If the GDP of a country increases, it is generally thought that the people of that country are also having a rise in terms of their standard of living and the issues in terms of calculation are not judged in this GDP increase (Barro, 1991). Even if the growth within a country in terms of GDP is low, still it can have major effects with the help of compounding. Over long periods of time (see exponential growth), it is seen that GDP can be made twice if there is an annual growth of 2.5% and it is noticed by researchers that an annual increase of 8% in the GDP is seen in Asian continent by four Asian countries (Barro, 1998). In the early 20th century, most of the nations encouraged this policy to achieve growth of this kind, requiring enacting policies, and ability to measure the results of those policies, giving rise to the importance of econometrics , or the field of creating measurements for underlying conditions (Durlauf, Johnson and Temple, 2005). Increase of GDP is only beneficial if there is no increase in inflation. Mainly, many government policies are made that are associated to increase in economy activity but the government makes policies keeping in view that economic growth should be there but the costs of products should not increase because this increase brings inflation (Barro and Lee, 1994). The very combination is indicative of an increasing stock of capital. There have been strong discussions dealing with issues such as the stability of prices of products and the increase of economy of a country (Barro, 1998). Stable prices indicate that the country keeps the capability of production and has a capital that is worthy enough as it can afford low costs on one product. GDP is seen generally as the symbol of the growth of economy in a country and this increase is also seen as improving the standard of living of people at a place, if the GDP of a country increases, there is also an improved and enhanced level in terms of people’s living standard (Barro, 1991). The calculation of GDP increase can also create some issues that are problematic that are associated to betterment of common people. GDP is different and dependent on a number of things in terms of economy. The buying of products per year is a sort of measurement of GDP (Kormendi and Meguire, 1985). It also does not provide any information relevant to the distribution of income and take into account negative externalities from environmental damage consequent to economic growth, which may lead to overstate the amount of growth once we take environmental damage into account (Barro, 1998). GDP that is calculated in terms of capital is only concerned to products and not to services that are also provided in a country. The services and provisions can be education and medical facilities. GDP is also not concerned to anything, which is there outside the market such as activities associated to hiking (Barro and Lee, 1994). It also negates the performances of the informal sector of economy. GDP has many disadvantages as well as advantages. The people who are related to economics keep the knowledge about all the benefits and drawbacks associated with GDP (Limongi and Przeworski, 1993). That is the reason due to which they did not consider GDP as the overall standard measurement of economy growth in a country. According to the economists, GDP is only a symbol of improvement and it is not the standardized version that informs about the overall improvement in terms of economy (Barro, 1998). The economists make use of certain tools that are mathematical and help them to assess any inequality such as Gini Coefficient (Barro, 1991, 417). Except Gini Coefficient, there are other measurement tools that are helpful in calculating the externalities that are negative such as pollution and depletion of natural resources. If we see GDP in terms of long run, its disadvantages are very significant but we cannot negate the fact that it is also a good symbol to indicate economic growth (Rodriguez and Rodrik, 2001). GDP is the most acceptable indicator for economic growth universally. For the calculation of national income, there are other measures also except GDP like Sustainable Economic Welfare or the Genuine Progress Indicator (Sachs and Warner, 1995, 45). The measures mentioned are generated to attain an overall analysis of public welfare in terms of economic growth but all the assessments indicate that GDP is the closer and the best in terms of economic growth analysis of a country (Durlauf, Johnson and Temple, 2005, 116). GDP is used as the most appropriate toll for assessment of a country’s growth in terms of its financial status. The number of jobs is also assessed with the GDP growth (Grier and Tullock, 1989, 276). The increase in population, leads the way to increase the available labour. Because of increase in GDP of a country, the standard of living increases and people move towards luxurious life and because of increasing demand of luxury, the profit in terms of luxury also increases (Barro and Lee, 1994). The country develops various techniques to attain luxury products for its people. The value that is related to the products of luxury increases and the profit that is associated to these products is also made manifold. The rate of production increases, due to which there is a clear indication of profit (Sachs and Warner, 1995). Likewise, the profit increases. There are chances of additional labour, which provides both luxury and economic growth. People from European nations have the view that economy is not only about survival, it needs to be developed. Finance is not only necessary to survive; it can be used for gaining comforts and luxuries of life (Barro, 1998, 62). The wealth that is gained can be used for the development of other beneficial institutions. Previously, it was seen that population and taxes can help the country in getting a surplus revenue. In that era, only that trade was considered advantageous that resulted in economic growth and that trade that was on equal terms with any nations was not that much advantageous so those trades were not considered by the governments (Sachs and Warner, 1995). Mercantilism was not about restrictions in terms of trade; it was also there for helping in trade functions such as it helped to beak any kind of boundaries that were there in the way of any trading (Barro, 1998, 62). The Mercantilism helped in minimizing the trade barriers, it also helped in the construction of new routes and it also helped in terms of effacing local toll booths and all these actions helped the markets in terms of their expansion. The evaluation of Mercantilism by the support of Physiocrats and Scottish thinkers associated to the concept of Enlightenment like David Hume and Adam Smith an other establishments related to political economy, all in a combined whole resulted in the evolution of the current concept of economic growth (Barro, 1991). According to Physiocrats, the capability in terms of production helped in the growth of economy and due to all this, there were economic improvements and increase in terms of capital and all these improvements and transformations resulted in making nations wealthy. The rural area was considered significant enough and its importance in terms of agriculture was standardized whereas the urban areas were not considered as that much productive (Durlauf, Johnson and Temple, 2005). This theory was improved by Smith, who stated that construction and development are the foremost jobs of the whole economy (Sachs and Warner, 1995). According to David Ricardo, the trade could always be considered as advantageous for the country because in case of one person’s buying of a product in fewer amounts from a foreign country then it’s buying from his own country means that there is more profit involved in his own country as compared to other countries (Barro and Lee, 1994). This is called the theory of comparative advantage, it is this theory that involved a number of intellectuals in arguments in support of free trade, and all the researchers conclude that free trade is a necessary part of economic growth (Sachs and Warner, 1995). When there was industrial revolution, the income per capita was flat necessarily. The period of industrial revolution is also termed as Malthusian period as all the policies and laws were those that were stated by Thomas Malthus and the essay in which he wrote all this was “Essay on the Principle of Population” (Barro, 1991). The economic growth according to Thomas Malthus always outputs in the population growth. In case of increase of aggregate income, there was constancy in income per capita. It has been stated in main stream theory of economic growth that with the advent of industrial revolution and medical enhancements and progress, there have been a number of transactions in the social conditions of societies such as there was transformation in terms of people’s expectations concerned to life, the death ratio of infants was reduced and the educational costs were higher as compared to previous rates (Sachs and Warner, 1995). The parents of children were more concerned to the quality of their children in place of quantity (Barro and Lee, 1994). The Malthusian regime concerned to economic growth and population growth failed as people were more concerned to decrease population and increase economy. Joseph Schumpeter and Austrian economists should be given the ownership to the work that is associated to comprehension of entrepreneurship (Rodriguez and Rodrik, 2001). They describe entrepreneur as a person who has the capability to transform a latest thought or imagination into a victorious invention. There have been Austrian economists such as Ludwig von Mises, Israel Kirzner and Friedrich von Hayek who have worked for the development of reciprocal theory related to capitalist and commercial process (Sachs and Warner, 1995). According to their stated theory, human beings are going through a process of entrepreneurship that is uncertain and there have been chances of mutual benefits that were not viewed earlier (Barro and Lee, 1994). One can get the chance of mutual benefit if the commodities that are to be exchanged are of different nature and keep the capability of substitution and this exchange should be beneficial for both of the contestants and should result in a profit. This entrepreneurial procedure in terms of exploration always results in financial betterment and advancement and the explorations are very profitable and gradual (Durlauf, Johnson and Temple, 2005). The exploration in terms of profitable chances in any economy makes the system able to be in Walrasian equilibrium and there is so much economic progress that the mistakes continue to be overcome. There have been many researches in 20th century related to global economy due to which there are some nations who are rich and there are many nations who are very poor (Rodriguez and Rodrik, 2001). The researches were about global economy and transformation of survival strategies and natural resources dependence of countries to the countries, which believed in development and utilization principle (Barro, 1991). This is the reason of what took the countries towards economics and its policies and principles and a number of researchers contributed towards these developments. There have been confounding results associated to human betterment. When one is involved in thinking about the effects and reasons of them, he has nothing else to think and he is helpless with all issues of life. The assessment that is done keeping in consideration the current economies that gained success; it has been proved that the weather and economic growth are closely related (Barro and Lee, 1994). There can be case that the association between them is just an imagined association and there is no probability of an accurate mechanism. In warmer locations of the world, there have been strategies, which gave importance to economy as well as culture (Rodriguez and Rodrik, 2001, 59). If we see history, we will notice that the association that exists between greater earnings and cold weather is an issue of history and is not what is there currently. According to researchers, all this is the outcome of wrong policies of governments that were not democratic and were there because of corruption (Barro, 1991). Colonizers that held captive the nations for their own economic benefits appointed most of these governments. Egalitarian societies that were the outcome of the theories of Marx who saw everything in terms of financial gains and loss and these theories were associated to the societies that were made colonies (Sachs and Warner, 1995). The investment that was done there was done keeping in mind the principle of long-term investment. Environmental conditions were not kept in mind before setting certain economical growth plans due to which there were problems in terms of areas and economic growth (Barro and Lee, 1994). The environmental conditions were disturbed because of wrong advancement steps taken by colonizers. According to some critics, this was not the case that led to environment’s disturbance. It has been stated in a report by United Nations in 2005 that most of the people of the world are surviving in means that are not in their control (Durlauf, Johnson and Temple, 2005). The population of the planet earth as compared to available resources is greater and all the humankind is unable to access all the resources because of their fewer amounts. People are in greater number while the resources present currently are less. The earth capacity in terms of accommodation of a person is less as what is required in terms of environmental conditions. Nearly 21.9 hectors is required for a person to live and the available space is only 15.7 (Jones, 1994). Because of economic growth, the non-renewable resources are depleting rapidly (Durlauf, Johnson and Temple, 2005). Distribution of income The current researches show that there lies a gap between the richest and the poorest and this social gap is increasing day by day (Kormendi and Meguire, 1985). World Bank and the supporters of economic growth are of the view that with the increase of global economy, the gap that exists between rich and poor is going towards its end and global economy increase is helping to eliminate the inequalities and poverty from the world (Barro, 1998). The growth performance that is reported in Africa is very low and so is the minimization of poverty. According to the World Band and supporters, with the increase in GDP, the ratio of happiness also increases. Many earlier predictions of resource depletion, such as Thomas Malthus (1798) predict about the exhaustion of raw materials within a region in some time in future. According to him the resources are commonly divided between renewable resources and non-renewable resources. The utilization of either of these varieties beyond their rate of replacement is would cause shortage of resources. This was further, propagated by (Rodriguez and Rodrik, 2001) wo predicted that the shortage of resources would cause inevitable famines in Europe. The intellectuals are of the opinion that economic growth along with globalization are taking the planet earth towards an end in which there will be no more natural resources and earth will be devoid of any resources that are currently present naturally (Kormendi and Meguire, 1985). Along with economic growth, the growth in terms of expenditure and utilization is also there. For example, goods need resources and energy consumption for their production and without the needed objects, production cannot be done (Barro, 1991). Similarly, people and the products cannot be taken from one place to another without the consumption of energy that is needed in almost every field of live so, for economy growth, inputs are as important as outputs. Stable growth of economy is also a function that is exponential (Sachs and Warner, 1995, 89). Doubling time can be defined as an amount that goes through an increase in terms of exponential function that doubles in terms of size at constant gaps of time. In case of stable increase in use of non-renewable resources, the ratio will be doubled on regular basis (Barro, 1991, 439). If the growth rate per year is 5 %, it will be doubled in 14 years and after an additional 14 years, the rate of economic growth will be four times of its original rate and in case of a century, the economic growth rate will be 130 times as compared to its original rate. The industries of mining, forestry, agriculture and other industries will also be affected because of climate change, which will include the atmosphere and ecology (Sachs and Warner, 1995). Researchers are of the view that the whole ecosystem will be disturbed because of the current environmental conditions all over the globe. According to the researchers, due to the disturbance of ecosystem, the economic growth will also be affected negatively (Durlauf, Johnson and Temple, 2005). They also give instances of those civilizations that have effaced from the surface of the earth and give reasons that the civilizations were unable to control their ecosystems. The economic growth is linked to the climate change as the effects of green houses and gas emissions are also there so in terms of increase of economic growth, the green house effect and other climate changes can not be negated (Durlauf, Johnson and Temple, 2005). For the next 100 years, this concept of climate change is very significant and will have significant effects on economic growth. Insurance companies are of the view that till 2065, there will a havoc change in climate due to which the properties will have to be destructed and there ratio will be greater than the economic development ratio (Barro, 1991, 434). According to UK Government’s Stern Review in 2005, it was researched and stated that if a GDP increase of 1% is there per year, it is enough for making a state reliable to control any climate or global transformation breakdowns and it will also affect on global increase of GDP (Durlauf, Johnson and Temple, 2005). In case of long term and stable economic growth, the generations to come will be frightened with nothing as they will be rich enough to accomplish anything and they will be better off to live their lives according to their own wishes and dreams. References Alesina, A., and D. Rodrik, 1994, “Distributive Politics and Economic Growth,” Quarterly Journal of Economics ,vol. 109:465-490. Barlow, R., 1994, “Population Growth and Economic Growth: Some More Correlations,” Population and Development Review, vol. 20:153-65. Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2):407–443. Barro, R. J. and Lee, J.-W. (1994). Sources of economic growth. Carnegie-Rochester Conference Series on Public Policy, 40:1–46. Barro, R. J. (1998). Determinants of Economic Growth: A Cross-country Empirical Study. Lionel Robbins Lectures. MIT Press, first edition. 45-62. Birdsall, N., D. Ross, and R. Sabot, 1995, “ Inequality and Growth Reconsidered: Lessons from East Asia,” World Bank Economic Review, vol. 9(3). Bruno, M., M. Ravallion, and L. Squire, 1998, “Equity and Growth in Developing Countries,” in V. Tanzi and Ke-young Chu (eds), 1998, Income Distribution and High Quality Growth, MIT Press. Durlauf, S. N., Johnson, P. A., and Temple, J. R. W. (2005). Growth econometrics. In Aghion, P. and Durlauf, S. N., editors, Handbook of Economic Growth. North-Holland. 112-130. Grier, K. B. and Tullock, G. (1989). An empirical analysis of cross-national economic growth. Journal of Monetary Economics, 24(2):259–276. Harris, J. R., F. Schiantarelli, M.G. Siregar, 1994, “The Effect of Financial Liberalization on the Capital Structure and Investment Decisions,” World Bank Economic Review, vol. 8(1). Henderson, J.V., A. Kuncoro, M. Turner, 1995, “Industrial Development in Cities,” Journal of Political Economy, vol. 103(5):1067-85. J. E. La Tourette (1964).Technological change and equilibrium growth in the Harrrod-Domar Model. Kyklos 17 (2) Jones, C. I. (1994). Economic growth and the relative price of capital. Journal of Monetary Economics, 34(3):359–382. Jorgensen, Dale. W., 1990, “Productivity and Economic Growth,” in E.R. Brendt and J.E. K. Hawtery. (1990) Dynamic Behaviour of a Unionized Solow-Swan Economy Economic Record 66 (2) Triplett(eds), Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, National Bureau of Economic Research, University of Chicago Press. Harvard Institute of Economic Research. Judson, R., 1998, “Economic Growth and Investment in Education: How Allocation Matters,” Journal of Economic Growth, vol. 3(4). Kang H. Park, 1998, “Distribution and Growth,” Applied Economics, vol. 30. Kormendi, R. C. and Meguire, P. (1985). Macroeconomic determinants of growth: Cross- country evidence. Journal of Monetary Economics, 16(2):141–163. Kuznets, S., “Economic Growth and Income Equality,” American Economic Review, vol. 45: 1-28. Limongi, F. and Przeworski, A. (1993). Political regimes and economic growth. Journal Of Economic Perspectives, 7(3). 45-58. Lucas, R.E., 1988, “On the Mechanic of Economic Development,” Journal of Monetary Economics, vol. 22: 3-42 Mankiw, N.G., D. Romer, D.N. Weil, 1992, “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics, May. Park, K.H., 1998, “Distribution and Growth: Cross-country Evidence,” Applied Economics, vol. 30:943-949. Rodriguez, F. and Rodrik, D. (2001). Trade policy and economic growth: A sceptic’s guide to the cross-national evidence. In Bernanke, B. S. and Rogoff, K., editors, NBER Macroeconomics Annual 2000. Cambridge, MA: MIT Press. 56-98. Sachs, J. D. and Warner, A. M. (1995). Economic reform and the process of economic integration. Brookings Papers on Economic Activity, (1):1–95. Schmidt-Hebbel and Serven, (eds) 1999, The Economic of Saving and Growth: Theory, Evidence and Implications Policy for Policy, Cambridge University Press. Read More