The growth literature has had problems explaining the "sub-Saharan African growth dummy" in cross-country regressions. Instead of taking the usual approach of focusing on long-run growth and assuming that sub-Saharan countries have homogenous parameters in growth regressions, we concentrate our analysis on episodes of growth turnarounds (identifying growth accelerations, decelerations, and collapses) and use only West African countries in our sample. The driving force of growth turnarounds are estimated by analyzing external shocks, political and institutional changes, economic reforms, and indicators particularly relevant to the region. Using probits for a group of 22 Western African economies for the period 1960-2006, we find that growth accelerations are most clearly associated with external shocks, economic liberalization, political stability, and closeness to the coast; decelerations occurred during short-lived regimes and when corruption indices weakened; and collapses are linked to external shocks, falling domestic credit, and proximity to the coast. We then identify policy implications.
While the endogeneity problem cannot be fully addressed in a macroeconometric study because instrumental variables are limited, we believe the growthturnarounds we identify are more likely to be determined by exogenous factors. Therefore, focusing on short-run growth episodes in Western Africa and analyzing mainly time-variant factors should help in formulating advice on what policymakers should attempt to do and what should be avoided. We attempt to identify growthturnaround periods as follows: when growth accelerated; when it decelerated; and when
Front Matter Page African Department
Authorized for distribution by Emilio Sacerdoti
II. West African Economic Performance in Perspective
III. GrowthTurnarounds and Their Determinants
A. Identifying GrowthTurnarounds
B. Stylized Facts of Turnarounds
C. Growth Determinants
Terms of Trade
Climate and Malaria
V. Econometric Analysis
VI. Conclusion And Policy
International Monetary Fund. Communications Department
“Can EMs Create Enough Jobs?”published in Economic Views, January 2021 .
Sources : Haver Analytics; and Institute of International Finance.
Growth for jobs
Slowing population growth
Significant action needed
ART: ISTOCK / AELITTA; ROBUART; AJWAD CREATIVE
1. Ireland’s successful fiscal consolidation and growthturnaround have created fiscal space in the medium term under the SGP, but more efficient public spending could further increase the “effective” fiscal space . A more efficient delivery of public services could yield better outcomes for a given cost, or the same quality of outcome at a lower cost. It would also provide for contingency in case the assumptions underpinning the existing fiscal space calculations do not materialize and help rechannel fiscal resources toward their most
This paper discusses potential growth and its drivers for Latvia 6 years after the growth turnaround and presents projections for the medium term. As the labor force is projected to decline, implementation of policies to increase investment and support total factor productivity (TFP) growth will be essential to ensure income convergence going forward. The level of potential growth has direct consequences for Latvia’s convergence path. Latvia’s GDP per capita was about 62 percent of the EU-15 average in 2015. A better understanding of potential output is important for policy setting. For example, an estimate of the output gap enters the fiscal reaction function through the cyclical adjustment of the fiscal balance and therefore directly influences policy makers’ assessments of whether fiscal policy should respond to deviations from potential. Potential output is an elusive concept and can be defined in various ways. Potential output is generally defined according to the Okun concept as the level of output consistent with stable inflation, while short-run deviations of actual from potential output, due to the slow adjustment of wages and prices to shocks, reflect the output gap—or economic slack.
Potential Growth: Confronting Crisis Legacies
Growth rates appear to have settled on a much lower path after the global financial crisis (GFC), negatively affecting the outlook for Latvia’s convergence path. This SIP reassesses potential growth and its drivers for Latvia 6 years after the growthturnaround and presents projections for the medium term. As the labor force is projected to decline, implementation of policies to increase investment and support total factor productivity (TFP) growth will be essential to ensure income convergence going forward
distribution by the European and Policy and Review Departments
October 18, 2005
II. What Happened?
A. The Macroeconomic Record: Some Snapshots
B. The IMF Program Record: Objectives and Outcomes
C. IMF–World Bank Cooperation
III. Accounting for the Macroeconomic Record
A. Accounting for the Trauma Years: 1992–99
B. Accounting for the GrowthTurnaround: 2000–04
IV. The Role of the IMF
A. Political and Administrative Obstacles to Program Effectiveness
B. Additional Factors
appear large in each one of these cases but, when they are adjusted for the debt service paid and terms of trade losses, the “net external resource availability” indicator is not large. Kenya’s growth record reflects some positive impact of adjustment. Clearly, Ghana’s growthturnaround was due far more to better policies than to the other changes.
Tanzania’s growth can be attributed to factors other than aid. Generally perceived as highly dependent on external donors, Tanzania has received very large sums of aid historically both during “normal” periods and during