世界経済・社会統計 = World development indicators

Output per worker varies enormously across countries. Why? On an accounting basis, our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker--we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language.

/pdf/why-do-some-countries-produce-so-much-more-output-per-worker-r25pge75qn.pdf

Why Do Some Countries Produce so Much More Output Per Worker than Others

This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.

/pdf/corruption-and-growth-2z9d0x0u16.pdf

Corruption and Growth

https://link.springer.com/content/pdf/10.2307%2F3343168.pdf

Development as Freedom

Does finance affect economic growth? A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms. Specifically, we ask whether industrial sectors that are relatively more in need of external finance develop disproportionately faster in countries with more developed financial markets. We find this to be true in a large sample of countries over the 1980s. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality.

/pdf/financial-dependence-and-growth-2meheeba1z.pdf

Financial Dependence and Growth

The classic narrative of economic development -- poor countries are caught in poverty traps, out of which they need a Big Push involving increased aid and investment, leading to a takeoff in per capita income -- has been very influential in development economics since the 1950s. This was the original justification for foreign aid. The narrative lost credibility for a while but has made a big comeback in the new millennium. Once again it is invoked as a rationale for large foreign aid programs. This paper applies very simple tests to the various elements of the narrative. Evidence to support the narrative is scarce. Poverty traps in the sense of zero growth for low income countries are rejected by the data in most time periods. There is evidence of divergence between rich and poor nations in the long run, but this does not imply zero growth for the poor countries. Moreover, this divergence is more associated with institutions rather than the disadvantages of initial income. The idea of the takeoff does not garner much support in the data. Takeoffs are rare in the data, most plausibly limited to the Asian success stories. Even then, the takeoffs are not associated with aid and investment as the standard narrative would imply.

Reliving the '50s: The Big Push, Poverty Traps, and Takeoffs in Economic Development

Us poor neoclassical economists. Two decades after the fall of the Berlin Wall, which to the naked eye seemed to demonstrate the victory of free market economies over planned economies, we find ourselves beleaguered at every turn. The free market was already in full retreat in Latin America, Africa, the Middle East, the former Soviet Union, and parts of Asia. As if that was not bad enough, the Crash of 2008 discredited free markets even in its original home of Europe and North America.

Free Markets and Economic Development

One feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 or the 26 adjustment loans to Cote d'Ivoire and Ghana. The rate of repetition remains high and non-decreasing as cumulative adjustment loans increases. Repetition changes the nature of the selection problem, with the possible implication that new loans had to be given because earlier loans were not effective. Seventeen out of the eighteen countries that were IDA in 1980 and were in the top half of adjustment loans received became eligible for HIPC debt relief, compared to less than 50 percent of the IDA countries in the bottom half of adjustment lending -- again suggesting that previous loans were not effective at generating the growth necessary to service the debt. There were relative successes and failures, but none of the top 20 recipients of adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. Policies improved unevenly as adjustment loans accumulated, and even those policies that improved show a nonlinear satiation point after a certain number of adjustment loans is reached. An overall indicator of severe macroeconomic policy distortion does not improve as the number of adjustment loans increases in the overall sample, with about half the adjustment loan recipients showing severe distortions regardless of the number of cumulative adjustment loans. An instrumental variables regression for estimating the causal effect of repeated adjustment lending on policies shows a significant but small improvement for some macro policies, but none for others. None of the techniques in the paper is able to identify a growth effect, positive or negative, of repeated adjustment lending. The findings of this paper are in line with the foreign aid literature that shows that aid does not discriminate between good and bad policies. There's a big difference between structural adjustment lending and structural adjustment policies.

What did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans

/pdf/could-inflation-stabilization-be-expansionary-312i4gh13o.pdf

Could Inflation Stabilization Be Expansionary

This is our reply to Brendan Beareâ€™s comment on our paper. While we find his criticism to be both valid and helpful, a modified version of our original model still confirms that a low elasticity of substitution between capital and labor doomed the Soviet strategy of extensive growth through capital accumulation.

William Easterly

Papers

Reliving the '50s: The Big Push, Poverty Traps, and Takeoffs in Economic Development

Free Markets and Economic Development

What did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans

Could Inflation Stabilization Be Expansionary

Reply to Brendan Beare