DETERMINANTS OF ECONOMIC GROWTH: A CROSS-COUNTRY EMPIRICAL STUDY

DETERMINANTS OF ECONOMIC GROWTH: A CROSS-COUNTRY EMPIRICAL STUDY

August 1996 | Robert J. Barro
Barro's paper examines the determinants of economic growth across 100 countries from 1960 to 1990. It finds strong support for conditional convergence, where growth rates are higher for countries with higher initial schooling, life expectancy, lower fertility, lower government consumption, better rule of law, lower inflation, and better terms of trade. Growth is negatively related to the initial level of real per capita GDP. Political freedom has a weak effect on growth, but there is a nonlinear relationship: growth increases with political rights at low levels but decreases once moderate democracy is achieved. Prosperity strongly influences the likelihood of democracy. Inflation negatively affects growth, with higher inflation rates associated with lower growth rates. The paper also discusses the role of human capital, fertility, government consumption, and the rule of law in growth. It highlights the importance of conditional convergence and the impact of institutional factors on economic growth. The findings support the neoclassical growth model, emphasizing the role of human capital and institutional quality in long-term growth. The paper concludes that while endogenous growth theories have contributed to understanding long-term growth, the neoclassical model remains relevant for explaining conditional convergence and growth determinants.Barro's paper examines the determinants of economic growth across 100 countries from 1960 to 1990. It finds strong support for conditional convergence, where growth rates are higher for countries with higher initial schooling, life expectancy, lower fertility, lower government consumption, better rule of law, lower inflation, and better terms of trade. Growth is negatively related to the initial level of real per capita GDP. Political freedom has a weak effect on growth, but there is a nonlinear relationship: growth increases with political rights at low levels but decreases once moderate democracy is achieved. Prosperity strongly influences the likelihood of democracy. Inflation negatively affects growth, with higher inflation rates associated with lower growth rates. The paper also discusses the role of human capital, fertility, government consumption, and the rule of law in growth. It highlights the importance of conditional convergence and the impact of institutional factors on economic growth. The findings support the neoclassical growth model, emphasizing the role of human capital and institutional quality in long-term growth. The paper concludes that while endogenous growth theories have contributed to understanding long-term growth, the neoclassical model remains relevant for explaining conditional convergence and growth determinants.
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[slides and audio] Determinants of Economic Growth%3A A Cross-Country Empirical Study