On the Determinant of Economic Growth

The fate of different countries is amazingly diverse. Some economies expand at a fast pace, quickly developing new sectors and introducing new products and technologies. Workers see their standard of living increase, while soaring stock markets reward domestic savings and attract eager foreign investors. In other economies everything goes wrong. Investment is scarce and flows often to technologically outdated sectors. Workers see little change in their standard of living; they have the same jobs and perform the same tasks as their parents. Investors see their capital earn meager rewards. The only sure ways to succeed seem to be across the border; domestic savings fly abroad in search of better returns and workers migrate in search of higher wages. This paper reports on the progress made by the literature about economic growth in answering the question "Why do Growth Rates Differ?" It reviews what we currently know about the mechanics of growth miracles and poverty traps, as well as the tentative policy advice that these mechanics suggest