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Cross Country Growth Experiences


Sabyasachi Kar

EXPLAINING GROWTH IN SOUTH ASIA
Edited by Kirit S. Parikh
Oxford University Press, New Delhi, 2006, pp. 495, Rs. 675.00

VOLUME XXXI NUMBER 3 March 2007

What are the factors that make some countries grow faster than others? Economists have forever been perplexed by this question and have sought answers by looking for empirical regularities in cross-country growth experiences. This literature proliferated with the advent of the cross-country growth regression approach, which identified a very large number of factors as possible sources of growth. However, growth regressions have since been somewhat descredited as they are unable to capture country-specific factors adequately. This has led to a renewed interest in country specific case studies that can help identify robust sources of economic growth. Explaining Growth in South Asia contributes to this literature, by focusing on five countries, i.e., Bangladesh, India, Nepal, Pakistan and Sri Lanka. It is based on case studies from a Global Research Project undertaken by the Global Development Network (GDN) for each of these countries. Although researchers from the specific countries have written the papers separately, they have tried to answer similar questions, and this makes it possible to compare their experience and draw lessons from them. The common questions addressed by these papers are: (i) What were the initial conditions for growth in these economies? (ii) What were the different policy regimes adopted by them? (iii) What were the political conditions that led to these regimes? And finally, (iv) What were the outcomes of these regimes? Each of the case studies in this book gives insightful answers to these questions.   The paper on Bangladesh highlights the war ravaged initial conditions that the economy inherited at the time of its independence in 1972. Together with high population density and periodic natural disasters, these conditions evoked very little hope in the international community about the prospects of growth and development in the country. The authors characterize the following period (1972 to 1982) as one of reconstruction, bringing the economy back to pre-war levels. The political conditions included a brief stint of democracy followed by military rule. The policy paradigm was mostly that of a controlled and regulated economy. The military rulers attempted some partial reforms but deep-rooted structural problems thwarted such efforts resulting in a period of slow growth and macro instability (1983 to 1989). The nineties saw a change in political condition with a transition to democracy. The policy regime also adopted some major reforms during 1990-93 and these resulted in a jump in growth rates. The reforms were continued subsequently (1993 to 1999) although the country experienced significant political ...


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