The embarrassing living conditions of more than one billion poor people in developing countries in combination with the increasing gap of living standards between the poor and the rich, has provided a strong motivation for development policy to change this situation. From its beginning, policy...

The growth diagnostics methodology pioneered by Hausmann et al. (2005) is becoming a key piece of the toolkit for donor agencies in formulate their operational strategies. This paper aims at clarifying the primary objectives of the approach, highlighting some limitations for operational use. The...