At the outset of its work, the Growth Commission identified a series of themes which it thought relevant and directly related to economic growth and development. For most of these themes, the Commission invited leading experts, academics and practitioners to contribute to its work either by authoring papers that captured the current thinking on specific topics or by presenting their ongoing current work at one of twelve workshops. Most of the themes listed below are detailed in "The Statement of Purpose"--the Commission's founding document--and others have been added as the Commission's work evolved over the last two years. All papers are available for free download.
The nature of the growth challenge
Our understanding of growth
The macroeconomics of growth
Projecting future trends
Global integration as a force of growth, and the role of industrial and trade policies
Demographics and migration
International trade in services
Bottom-up development strategies
Technological catch up, internet and communications technology
Labor Market policies and employment
Infrastructure and growth
Human resources and social policies as a source of growth
Women in development and in labor and capital markets
Risk management and mitigation
Lagging Regions and Growth
The nature of the growth challenge varies across countries, and over time. In some countries the challenge now is to break away from stagnation and put the economy on a sustained growth path. In others it is to address growing income disparities. And yet in others it is to modernize institutions, deal with vulnerability, or to reduce rapid environmental degradation.
A half century of theoretical and empirical work has enriched our understanding of growth experiences, as well as awareness of the strengths and weaknesses of economics in this area. The Commission will endeavor to clarify our best understanding of t he underlying dynamic model of rapid economic growth -- is export oriented growth the only model of growth that has generated sustained growth in the last few decades? Are there any other variants?
Understood as the incentives and rules governing human action -- in the economic, political and social areas, there has been increasing awareness that governance and institutions play a central role in development processes. At the same time there is much less clarity as to which institutions matter most for growth and development, and how they come about. Of all the aspects of development, the creation of institutions and the incentives ensuring their efficient functioning are perhaps the least understood.
The importance of sound macroeconomic policies to ensure a predictable environment is well recognized and accepted. Less well recognized and accepted is the fact that not all stable macroeconomic environments are equally conducive to long-term growth. The Commission will seek to explore these issues, review what we have learned from the currency and banking crises of the last decade, and identify the policies most likely to lead both to a stable macro-economy, and growth.
Several trends underway -- trade, migration, globalization of the labor force, aging of the labor force, aid, globalization of finance, technology -- are changing developing countries prospects and opportunities. In addition, over the next two decades, some developing countries will account for a much larger share of the world GDP, and claim a much larger share of natural resources.
Successful growth experiences are typically associated with greater integration in the world economy -- developing countries' domestic markets are much too small to support rapid and sustained expansions of production. And what a country has a comparative advantage in producing may not be what it should or wants to consume at the relatively low levels of income that define early stages of growth. The extent to which a country is able to trade is the result of its domestic policies, as much as of the policies of trading partners.
Changing demographics in the world is creating new opportunities and challenges for job creation and migration. Cross-border movement of people and labor has been significant in the last few decades, and has been an increasingly important source of prosperity in developing and industrialized countries alike. At the same time, this has created pressures in industrialized countries stemming from the strains associated to assimilation of diverse cultures, and actual or perceived loss of employment and income opportunities to the national labor force. The Commission may review the evidence on migration, its costs and benefits, and explore practical measures that could help create greater labor mobility.
For a few developing countries, trade in services, and exports of skills, have become important sources of income, growth, and employment. The Commission will examine the opportunities created by the internet and the expanding trade in services, potential for further growth in services trade, the resistance(s) likely to be encountered, both in developing (when accompanied by brain drain) and in industrialized countries (because potential losses of unemployment), and what are the possible policy responses that would facilitate the expansion of trade in services, and the technology changes that would be associated with such expansion.
For developing countries, the challenge has been less to innovate and create new technologies, than to absorb and adapt technologies existing already elsewhere in the world. Technological progress plays an important role in economic growth, and available estimates suggest that productivity growth has been an important factor in developing countries that have sustained their growth. Trade, particularly imports of capital equipment, FDI, tertiary education, basic and applied research, all played a role in this process. No papers were commissioned on this topic specifically. This topic was dealt with in a variety of papers and presentations during the Workshop on global trends and challenges.
While the majority of the poor live and work in rural areas today, this is not necessarily where they will live and work in the future. The world's urban population is projected to reach 4 billion in 2017 and 5 billion in 2030 (up from 3 billion in 2003). As urban areas gain in size, the share of the poor living in urban areas is expected to reach two-thirds by 2025 in Latin America and Eastern Europe, and between a third and a half in other regions. Economies of agglomeration have proven to be one of the main forces of growth and development, and thus urbanization has been central to modernization of society.
On the employment front, the Commission will take as point of departure the fact that growth is important not only to improve the living standards of the population, but also to provide jobs. How growth is translated into employment is determined by the structure and workings of labor markets. Most governments intervene in labor markets, sometimes to strengthen the power of firms vis-à-vis workers, and sometimes for the opposite reason. As a result emerge different degrees of informality in the labor market, different degrees of efficiency in the use of capital and labor, and different capacities in economies' ability to translate growth into expanding jobs.
This paper will provide an overview of the major current issues in infrastructure. The paper will start with a brief review of the evidence on the macroeconomic significance of the sector and of its role in defining the growth level and the growth path of countries. This will include a discussion of the role of infrastructure in the context of the rural s. urban debate. It will then discuss the evidence on its relevance for the poor, summarizing the evidence on access and affordability issues. Finally, it will address the institutional dimensions of the sector. This will include a discussion of the evolution on the view of the scope for the private sector in terms of financing and operating the sector -- including a discussion of large scale vs small scale operators--, the concerns for independent regulation and the importance of decentralization for the sector.
Technological innovation and diffusion have caused the green revolution and tremendous increases in agriculture productivity in the last few decades. At least in East and South Asia, famines have been eradicated. In other parts of the world, however, particularly in Africa, adoption of agriculture technology has lagged behind. And even in East and South Asia, yields remain well below potential in many areas. The "soft" institutional and policy aspects of adoption of modern agriculture technology (ownership rights, pricing policies, risk management, access to markets, access to credit, marketing, health conditions, female education, adaptive research) have proven at least as important as the "hard" aspects -- i.e. availability of high yielding seed varieties, fertilized and other basic inputs. No papers were commissioned on this topic specifically. The World Development Report 2008: Agriculture for Development was a useful source of analysis and information.
Over the last few decades, most developing countries have increased public spending on health and education. Higher spending has not always been translated into actual outcomes, however, e.g. in actual learning achievements in the case of education. In addition, measured rates of return on education tend to be low in most countries for which data exist, though there are probably measurement issues. The Commission could focus on the measures that could lead to a better use of public resources, and accelerate development of human resources while at the same time ensuring better economic returns from their development.
There is little question that the integration of women in the economy and in labor markets influences both growth and the achievement of broader development goals. The issue is what actions can governments take that would accelerate the process of integration? The Commission may wish to focus on reviewing the experience of different developing countries and draw lessons from failures and successes, and seek to formulate a practical agenda that in the next decade or so could make a material difference in this area. No papers were commissioned on this topic specifically. This topic was dealt with in a variety of papers and presentations during the Workshop on equity and growth.
Correcting for egregious income inequality and finding the appropriate balance between production incentives and redistributive programs is a long standing issue in economics and policy making. It is likely to gain even more prominence in the coming decades, as globalization continues, as growth rates are likely to continue to be highly differentiated, both within and across countries, and as labor relocates as new activities take off and old ones decline, also both within and across countries. Significant changes in income distribution can affect the political consensus underlying growth strategies.
Micro and macro risks are a major source of macro-economic instability in developing countries where they tend both to be more frequent and less insurable. This has been a particularly important challenge for smaller countries and highly specialized economies. From natural disasters (floods, earthquakes, cyclones, droughts) and exports prone to commodity price fluctuations, to macro-economic vulnerabilities and financial weaknesses, enterprises and households in developing countries face a much more uncertain world than those in industrialized countries. The Commission will explore possible actions, at the national and international levels that could help mitigate some of these risks, and increase their insurability.
First experimented with in the Marshall Plan in Europe and Japan, large scale external finance for development -- both through international development agencies (World Bank or the Asian Development Bank) and bilateral development agencies (USAID, Canadian CIDA or Swedish SIDA) -- has provided resources for a wide range of investment projects and also, support for policy reform in developing countries. Whereas in Japan and Europe external finance is believed to have accelerated the recovery while permitting higher consumption, there is much less confidence that aid has been effectively deployed elsewhere. No papers were commissioned on this topic specifically. This topic was dealt with in a variety of papers and presentations during the Workshop on global trends and challenges.
The Commission will endeavor to contribute to our understanding of regional growth issues. Against the background of economies of agglomeration, the Commission will explore the extent of regional imbalances in growth processes and the effectiveness and nature of policies needed to redress those imbalances, including fiscal federalism issues as appropriate.
Economists hold very different views on the role of financial sector in economic development. On the one hand, prominent researchers believe that the operation of the financial sector merely responds to economic development, adjusting to changing demands from the real sector and is therefore overemphasized. On the other hand, equally prominent researchers believe that financial systems play a crucial role in alleviating market frictions and hence influencing savings rates, investment decisions, technological innovation and therefore long-run growth rates.
The Commission will examine the nature of bottom-up development strategies, their effectiveness in reducing large-scale poverty, and the nature of policies and institutions supporting bottom-up poverty reduction strategies.