Growth accelerations

Unlike most cross-country growth analyses, this paper focuses on turning points in growth performance. The authors 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.

The two main surprises that come out of the analysis are:

• growth accelerations are a fairly frequent occurrence. Of the 110 countries included in the sample, 60 have had at least one acceleration in the 35-year period between 1957 and 1992: a ratio of 55 percent. This suggests that achieving rapid growth over the medium term is not something that is tremendously difficult and it is well within most countries’ reach. This is a useful antidote to the pessimism that often pervades policy discussions on growth
• most growth accelerations are not preceded or accompanied by major changes in economic policies, institutional arrangements, political circumstances, or external conditions. Standard growth determinants have some statistical leverage over the timing of accelerations. But on the whole those determinants do a very poor job of predicting the turning points. It would appear that growth accelerations are caused predominantly by idiosyncratic, and often small-scale, changes.

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