DP4538 Growth Accelerations

Author(s): Ricardo Hausmann , Lant Pritchett , Dani Rodrik

Publication Date: August 2004

Keyword(s): economic growth , economic reform

JEL(s): O0 , O50

Programme Areas: International Macroeconomics , International Trade and Regional Economics , Public Policy

Link to this Page: www.cepr.org/pubs/dps/DP4538.asp

Unlike most cross-country growth analyses, we focus on turning points in growth performance. We look for instances of rapid acceleration in economic growth that are sustained for at least eight years and identify more than 80 such episodes since the 1950s. Growth accelerations tend to be correlated with increases in investment and trade, and with real exchange rate depreciations. Political-regime changes are statistically significant predictors of growth accelerations. External shocks tend to produce growth accelerations that eventually fizzle out, while economic reform is a statistically significant predictor of growth accelerations that are sustained. Growth accelerations tend to be highly upredictable: the vast majority of growth accelerations are unrelated to standard determinants and most instances of economic reform do not produce growth accelerations.