Social cohesion - that is, the inclusiveness of a country's communities - is essential for generating the trust needed to implement reforms. Citizens have to trust that the short-term losses that inevitably arise from reform, will be more than offset by long-term gains. However, in countries...

Modern political economy stresses"society's polarization"as a determinant of development outcomes. Among the most common dorms of social conflict are class polarization, and ethnic polarization. A middle class consensus is defined as a high share of income for the middle class and a low degree...

Are natural resources a blessing or a curse? The authors present a model in which natural resources have a positive effect on the level of income and a negative effect on its growth rate. The positive and permanent effect on income implies a welfare gain. There is a growth effect stemming from a...

Cross-national data on economic growth rates show that increases in educational capital resulting from improvements in the educational attainment of the labor force have had no positive impact on the growth rate of output per worker. In fact, contends the author, the estimated impact of growth...

Recent empirical studies question conventional wisdom about the importance of education to growth. These results partly reflect how international differences in the quality of education systems--defined by the systems'ability to produce one marginal unit of productive human capital--are not...

The Harrod-Domar growth model supposedly died long ago. But for more than 40 years, economists working on developing countries have applied -and still apply- the Harrod-Domar model to calculate short-run investment requirements for a target growth rate. They then calculate a financing gap...

The authors'study of aid, investment, and policies in Africa leads them to four principal conclusions: 1) The traditional links between aid, investment, and growth are not robust. Aid does not necessarily finance investment and investment does not necessarily promote growth. 2) Differences in...

The authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources-total factor productivity growth, physical capital accumulation, and private saving. They use (1) a pure cross-country instrumental variable estimator to extract...

Joining the European Union (EU) is perhaps the key political and economic objective of Central and Eastern European (CEE) countries as they approach the 21st century. But how successful the CEE countries are in achieving this goal depends not only on how well and quickly they adapt their legal...

How rich would resource-abundant countries be if they had actually followed the Hartwick Rule (invest resource rents in other assets) over the past 30 years? The authors use time series data on investments and rents onexhaustible resource extraction for 70 countries to answer this question. The...