Chapter 15 National Policies and Economic Growth: A Reappraisal The new growth literature using both endogenous growth and neoclassical models has generated strong claims for the effect of national policies on economic growth. Empirical work on policies and growth has tended to confirm these claims. This paper casts doubt on this claim for strong effects of national policies pointing out that such effects are inconsistent with several stylized facts and seem to depend on extreme observations in growth regressions. More modest effects of policy are consistent with theoretical models that feature substitutability between the formal and informal sector have a large share for the informal sector or stress technological change rather than factor accumulation.