Determinants of Economic Growth: A Cross-Country Empirical Study

by Robert J. Barro

Nothing matters more to the long-term economic welfare of a nation than its rate of economic growth. Compounded over many years, seemingly small differences in annual growth rates can lead to vast differences in standards of living. Research on economic growth has exploded in the past decade. Hundreds of empirical studies on economic growth across countries have highlighted the correlation between growth and a variety of variables. Determinants of Economic Growth , based on Robert Barro's Lionel Robbins Memorial Lectures, delivered at the London School of Economics in February 1996, summarizes this important literature.

The book contains three essays. The first is a survey of the research on the determinants of long-run growth through the estimation of panels of cross-country data. The second essay details the interplay between growth and political freedom or democracy and finds some evidence of a nonlinear relationship. At low levels of political rights, an expansion of rights stimulates growth; however, once a moderate level of democracy has been obtained, a further expansion of rights reduces growth. The final essay looks at the connection between inflation and economic growth. Its basic finding is that higher inflation goes along with a lower rate of economic growth.

Unlike recent work that has focused on "endogenous" growth theories, in which the long-term growth rate was determined by government policies and other forces contained in the model, cross-country empirical work draws heavily on the older neoclassical model. The neoclassical model's central idea of conditional convergence receives strong support from the holding measures of government policy, initial levels of human capital, and other variables constant, poor countries grow faster than rich countries.

Genres: Economics

160 pages, Hardcover

First published April 4, 1997

Reviews

[Glenn Lawrence · Rating 4 out of 5]

This book is quite technical. In fact, it reads much like a traditional academic paper. I don't write that as a complaint. It's not. It is simply a statement of fact for anyone who might by taking a look at this review in advance of reading the book themselves. It is filled with statistical analysis and is quite heavy on statistics language that might not be overly familiar except to those who have been trained in such areas. In fact, that is why I gave it only 4 stars. It will be an extremely difficult read for anyone not versed in statistical analysis.

Having said that, the book is filled with useful information, especially for those looking to develop a solid foundation in the various influences ("determinants") of economic growth. The author focuses on 3 main areas: (1) economic growth and convergence; (2) the interplay between economic and political development; and (3) inflation and growth. Although the book was published in 1997 it is still a valid tool for understanding these topics in the world today (almost 30 years later). To be fair, given the slow progress of most countries in economic areas, it is still highly applicable. There is much to ponder here from Barro's work and I spent quite a bit of time scribbling my own notes and thoughts in the margins throughout the book. I am certain it will become a reference book for my own continued research efforts in development aid and poverty alleviation.

[Don · Rating 2 out of 5]

Ghastly little book.