chapter  3
Sources of growth
Pages 13

Recent resurgence of interest in economic growth has led to a blossoming

literature.1 Among the many approaches proposed, cross-country growth

regressions have been widely applied to examine the role of various structural

and policy indicators in economic growth. The findings in this large and growing

literature are often conflicting and yet to be sorted out. For example, Levine and

Renelt (1992) carried out a sensitivity analysis of the determinants of the average

annual growth rate of GDP per capita for a sample of 101 countries during the

period 1960-89. According to their extreme bounds analysis, among many only

three variables (i.e., investment, international trade and initial income) are found

to possess fairly robust predictive power. Recently, Sala-i-Martin (1997)

presented a more optimistic study showing that a substantial number of variables

are strongly related to growth. This finding is supported by Ley and Steel (1999).