Sources of Aggregate Growth in Developing Regions: Still More Questions than Answers?

In the last 40 years of the twentieth century, economic growth was a puzzle and a surprise, defying orthodox predictions and prescriptions.1 Growth has varied tremendously across and within developing regions, and over time. A selected group of Asian developing countries was the only region to have experienced persistent and high growth over the period. In others, especially Africa and Latin America, growth has been very disappointing and highly volatile, despite huge inflows of development finance and significant economic reforms since the 1980s. The transition economies have experienced larger initial drops in their GDP than anticipated by economists, and the Arab countries have witnessed marked volatility in their performance. In all of this period, and despite massive development assistance and a plethora of special global initiatives directed at eliminating underdevelopment traps, only Botswana and Mauritius have graduated from the list of least-developed countries. Rather, more countries continue to join the league, and currently there are 49 such countries with 34 of them in Sub-Saharan Africa. The economic recovery since the mid-1990s in most developing regions has been minuscule relative to the requirements for poverty reduction, and for Africa even the best performers are projected to remain very poor in 2020 if present trends continue (Berthelemy and Soderling, 2001).