Growth trends in the developing world: country forecasts and determinants

Presenting real per capita GDP growth forecasts for all developing countries for the period 2005-14 the authors find that important factors determining economic growth in 55 of these countries are:

• continued improvements in public infrastructure
• rising secondary school enrolment
• trade openness
• financial deepening

Combined, these four policy indicators can result in an average, annual per capita GDP growth in the next decade of 1 percentage. Similarly, failure to improve public infrastructure alone could reduce growth by 50 percent.

The authors also observe that the qualitative and quantitative experience of various policies differ between and within regions. On average, countries in East Asia and Latin America will benefit more from improved trade openness to financial sector deepening. In South Asia, Sub-Saharan Africa, and the Middle East and Africa efforts to reduce the government burden will on average be beneficial for growth.

The authors also call attention to the inability of the growth model to:

• capture policy interactions
• allow for policy reform sequencing
• identify binding constraints to growth
• differentiate among policy actions within the four policy areas
• model the impacts of policy reforms.