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What determines economic growth?

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  • David M. Gould
  • Roy J. Ruffin

Abstract

Does increased investment in education enhance long-run economic growth, or does it simply reduce current consumption? Will free trade stimulate growth, or will it merely increase imports? ; For a long time, economists relied on an economic growth theory that offered little scope for understanding long-run growth movements. Recently, however, the study of economic growth has been reinvigorated by new developments in theory and empirical findings that suggest how long-run growth evolves. ; Because economic growth determines whether our grandchildren will have better lives than ours or whether poor nations will catch up with or fall further behind rich nations, David Gould and Roy Ruffin investigate recent lessons learned about growth and apply them to the above issues. Gould and Ruffin report on recent research suggesting that investment, particularly human capital investment, increases economic growth. They also investigate evidence showing that political stability, well-defined property rights, low trade barriers, and low government consumption expenditures enhance growth through positive effects on investment.

Suggested Citation

  • David M. Gould & Roy J. Ruffin, 1993. "What determines economic growth?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Apr, pages 25-40.
    • Handle: RePEc:fip:fedder:y:1993:i:apr:p:25-40
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    References listed on IDEAS

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    1. Quah, D., 1990. "Galton'S Fallacy And The Tests Of The Convergence Hypothesis," Working papers 552, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Garey Ramey & Valerie A. Ramey, 1991. "Technology Commitment and the Cost of Economic Fluctuations," NBER Working Papers 3755, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Niles Hansen, 1995. "Regional Science, Regional Policy, and the “New†Regional Economics: Future Possibilities in Historical Perspective," International Regional Science Review, , vol. 17(3), pages 337-342, July.
    2. Ford, John B. & Karande, Kiran W. & Seifert, Bruce M., 1998. "The role of economic freedom in explaining penetration of consumer durables," Journal of World Business, Elsevier, vol. 33(1), pages 69-86.
    3. Rohman, Ibrahim Kholilul, 2013. "The globalization and stagnation of the ICT sectors in European countries: An input-output analysis," Telecommunications Policy, Elsevier, vol. 37(4), pages 387-399.
    4. Ghazouani KAMEL, 2005. "Growth, private investment and reforms : A comparative perspective," GE, Growth, Math methods 0507012, University Library of Munich, Germany.

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    Keywords

    Economic development; Human capital;

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