The Determinants of Long-Run Growth

Discussions of economic growth usually focus on differences in growth performance. The rapid growth of the 1960s is typically contrasted with the slowdown of the 1970s and 1980s. We contrast the super growth of Asia with the sluggish growth of the European and North-American economies and the economic regression of Africa. In Australian policy discussions, it is particularly common to contrast our comparatively modest rate of economic growth over the past 20 years with the dynamic performance of the leading East-Asian economies. From this perspective, it is natural to examine the institutional and policy differences between countries in order to isolate those features that mark the successful growth economies. From there it is typically a short, albeit courageous step, to advocating adoption of those policies and institutions that appear to be stamped with the hallmark of success. I want to suggest that it is also possible to view the post-war evidence in a rather different light, one that emphasises similarities rather than differences. It is possible to view a substantial part of the development record over the past 40 years, in particular the growth experience of the Asian, European and OECD economies, as following a common development path of take-off, acceleration and subsequent maturation and slowdown. Of course, at any one time, countries and regions are at different stages of development, but there are strong similarities in the rate of progress along the path of industrialisation and technical progress.