Recent Cross-Country Studies of Growth: A Survey

Abstract

Over the last decade there has been a renewed interest for understanding the phenomenon of growth both at theoretical and empirical levels. At the time of this paper there is an enormous volume of literature that uses cross-country regressions to link convergence in per capita output with economic policies, human capital accumulation, externalities and increasing returns. This paper analyzes the econometric results of recent cross-country studies of growth. After a brief review of this empirical literature, a discussion on testing the theory of growth, interpretation of the coefficients, robustness, error in variables, and measurement of human capital is provided. The main conclusion is that this type of studies provide useful sets of correlations between variables that tend to affect growth and long-run growth rate of per capita GDP. But, these correlations are not a test of the theory and furthermore there is a lack of alternative hypothesis. Another main disappointment is that these coefficients are not constant across all the observations, and therefore, structural equations for these coefficients should be considered. Country-case type of studies and the analysis of other proxies for human capital are suggested as further researches.