The ‘great inventions’ view of productivity growth ascribes the excellent growth from 1920 to 1970 in the US to a handful of advances, and suggests that today poor productivity performance is driven by a lack of breakthrough discoveries. This column argues instead that the development of an effective governmental infrastructure in the 19th century accounted for a major part of US technological progress and prominence in this period. Infrastructure design thus appears to have the power to reinvigorate technological progress.
Daron Acemoglu, Jacob Moscona, James A Robinson, 27 June 2016
Andrew B. Bernard, Valerie Smeets, Frederic Warzynski, 22 June 2016
Deindustrialisation is a major policy concern in high-income countries not only because of resulting unemployment, but also because of the long-run implications for growth. This column uses evidence from Denmark to analyse whether it is being measured in the right way. A substantial fraction of the decline in manufacturing actually reflects the changing nature of production. Service sector firms that still perform many of the value-adding activities of traditional manufacturing firms should not be overlooked by policymakers.
Marcela Eslava, Xavier Freixas, 31 May 2016
Public development banks play a significant role in the allocation of credit to businesses that may be unable to attain credit under normal circumstances, despite generating positive externalities. But there is concern that lending by these institutions may end up being allocated inefficiently. This column considers the costly screening that banks must do to allocate funds. It finds that the inefficient allocation of credit may arise when banks are unable to fully internalise the benefits of possible projects. Direct lending and the implementation of subsidies for intermediated lending are two possible ways to counter expensive screening.
Fredrik NG Andersson, Lars Jonung, 30 May 2016
The volume of credit to Swedish households has grown twice as fast as incomes since the mid-1990s. This has resulted in both rising house prices and rising household debt. This column argues that these trends expose Sweden to important economic vulnerabilities. Curbing these vulnerabilities will require prompt action by the authorities.
Cristina Constantinescu, Aaditya Mattoo, Michele Ruta, 25 May 2016
Trade has been growing more slowly since the Great Recession not only because global GDP growth is lower, but also because trade itself has become less responsive to GDP. The causes of the changing trade-income relationship have been studied, but its consequences have not. This column presents a simple framework to assess some of the demand-side and supply-side implications. The change hurts growth, although the quantifiable effects are not large.
Manuel García Santana, Josep Pijoan-Mas, Enrique Moral-Benito, Roberto Ramos, 23 May 2016
Spain enjoyed substantial growth in the decade prior to the Global Crisis, despite declining aggregate productivity. Recent research blames the poor productivity on different forms of a ‘financial resource curse’. This column argues that resource misallocation was particularly severe due to corruption and crony capitalism. This suggests future growth will require serious political reforms.
The Asian Development Bank Institute (ADBI) invites submissions of unpublished papers that focus on structural transformation and inclusive growth. Both theoretical and empirical research papers with policy orientation are welcome provided that findings, conclusions, and policy recommendations are based on solid evidence and analysis.
Manuscripts can focus on a group of countries, or individual economies.
The papers should be related to, though not limited to, one of the following topics:
Growth decomposition across the income quantiles1
Structural transformation and growth incidence2
Structural transformation and income inequality
Future of the Kuznets Curve hypothesis3
Structural transformation and livelihood diversification
Volker Grossmann, Thomas Steger, 09 May 2016
The ratio of wealth to income has increased substantially since WWII. Despite the key role of housing wealth in this process, an appropriate macroeconomic model that can explain recent history and assess the future is still lacking. This column presents a novel macroeconomic model designed to investigate the evolution of housing wealth in a growing economy with a fixed overall land supply. A key implication is that rising house and land prices are natural phenomena in a growing economy. Further, rising wealth-to-income ratios appear to be an important trigger for the long-term growth of the finance industry.
Stefano Scarpetta, Sandrine Cazes, Andrea Garnero, 20 April 2016
Job quality plays a significant role in individuals’ well-being as well as promoting labour force participation, productivity, and economic performance. But it can be an elusive concept if not grounded in hard data. This column presents a new OECD framework to measure and assess the quality of jobs based on three measurable dimensions – earnings quality, labour market security, and quality of the working environment. The data reveal a great deal of heterogeneity in job quality across OECD countries and also across socioeconomic groups. Furthermore, the relationship between the quantity and quality of jobs is more complex in the short term, especially in the aftermath of the Global Crisis.
Ryan A. Decker, John Haltiwanger, Ron Jarmin, Javier Miranda, 19 March 2016
Recent evidence suggests that transformational entrepreneurial firms – those that introduce major innovations and make substantial contributions to growth – have been in decline. This column uses US micro data to explore the behaviour of high-growth young firms between 1980 and 2010. A decline in young firm activity in the 1980s and 1990s was dominated by young firms in the retail trade sector. In the post-2000 period, in contrast, a sharp decline in high-growth young businesses in key innovative sectors like high tech suggests there has been a decline in transformational entrepreneurs in this sector.
Gerben Bakker, Nicholas Crafts, Pieter Woltjer, 05 February 2016
The Great Depression is considered one of the darkest times for the US economy, but some argue that the US economy experienced strong productivity growth over the period. This column reassesses this performance using improved measures of total factor productivity that allow for comparisons of productivity growth in the Depression era and in later decades. Contrary to Alvin Hansen’s gloomy prognosis of secular stagnation, the US economy was in a very strong position during the 1930s by today’s standards.
Longfeng Ye, Peter E. Robertson, 01 February 2016
The World Bank has identified 37 countries as being in a ‘middle-income trap’, but few formal tests of the middle-income trap hypothesis exist. This column presents a new test based on a more nuanced observation that incorporates information on a country’s long-run growth path. Only seven out of 46 middle-income countries are found to be potentially ‘trapped’. Some countries that are usually considered to be trapped may just be growing very slowly.
Raju Huidrom, M Ayhan Kose, Franziska Ohnsorge, 17 February 2016
A synchronous growth slowdown has hit emerging markets, especially the BRICS, since 2010, with the potential for significant adverse spillovers to the rest of the world. This column estimates that a 1 percentage point decline in BRICS growth could reduce global growth by 0.4 percentage points, and growth in other emerging markets by 0.8 percentage points, over the following two years.
M Ayhan Kose, Franziska Ohnsorge, Lei (Sandy) Ye, 07 January 2016
Emerging markets face their fifth consecutive year of slowing growth. This column examines the nature of the slowdown and appropriate policy responses. Repeated downgrades in long-term growth expectations suggest that the slowdown might not be simply a pause, but the beginning of an era of weak growth for emerging markets. The countries concerned urgently need to put in place policies to address their cyclical and structural challenges and promote growth.
Andrew Berg, Andrea F Presbitero, Luis-Felipe Zanna, 05 January 2016
Recent policy recommendations suggest that the output growth ‘bang’ for each additional ‘buck’ of public investment depends on the efficiency of public investment spending. This column argues that high-efficiency and low-efficiency countries may have similar growth impacts from additional public investment spending. This is because efficiency and scarcity of public capital are likely to be inversely related across countries. Efficiency and the rate of return need to be considered together in assessing the impact of increases in investment.
Mariacristina De Nardi, Giulio Fella, Fang Yang, 22 December 2015
Thomas Piketty’s "Capital in the Twenty-First Century" quantified the evolution of wealth inequality and concentration over time and across a number of countries. This column examines existing macroeconomic models of wealth inequality through the lenses of the facts and ideas in Piketty’s book. It further examines the importance of the mechanism that Piketty champions – post-tax rate of return on capital. Gaps in existing knowledge and directions for future research are identified.
Marco Buti, Vitor Gaspar, 10 December 2015
Designing fiscal policy for today’s complex and uncertain economic climate is a problem that perplexes governments worldwide. This column proposes a solution – a new fiscal architecture with strengthened but budget-neutral automatic stabilisers. It won’t be easy, but overcoming predominantly political challenges will help foster steady and enduring growth.
Peter A.G. van Bergeijk, 07 December 2015
The analysis and forecasts of the IMF are well covered in the press. This column deals with a less noted development in the data provided by the IMF, namely the nominal decrease in Gross Planet Product. Since the IMF forecast both positive growth and positive inflation, the nominal shrinkage of GPP puts into question the consistency of the IMF World Economic Outlook data and forecasts.
Kevin Daly, Tim Munday, 28 November 2015
The fallout from the Global Crisis and its aftermath has been deeply damaging for European output. This column uses a growth accounting framework to explore the pre-Crisis and post-Crisis growth dynamics of several European countries. The weakness of post-Crisis real GDP in the Eurozone manifested itself in a decline in employment and average hours worked. However, decomposing growth for the Eurozone as a whole conceals significant differences across European countries, in both real GDP growth and its factor inputs.
Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan, 27 November 2015
Economists often disagree on China’s prospects. This column provides the results from a survey of top UK-based macroeconomists by the Centre for Macroeconomics (CFM). It turns out that three quarters of the experts believe that China’s annual growth rate will be less than 6% over the next ten years or so. But the panel is divided on whether the slowdown will have a significant impact on the UK economy.