10 While these new approaches to growth research have shed light on important questions, they have not provided sufficient guidance on how policymakers could foster the process of industrial upgrading and structural change. It would be desirable to complement them with structural analyses of the determinants of growth—specifically the identification of factors that would allow poor economies to move from one stage of development to another.

# **3. THE UNIQUE CONTRIBUTION OF THE GROWTH REPORT**

Despite intellectual progress, some of the key questions on the growth research agenda today remain the same that confronted previous generations of researchers: If growth is driven in large part by innovation, why are some countries successful at innovating and adapting to change, while others are not? What are the forces that drive convergence and what are the factors that stifle material progress? What are the conditions for the kind of structural change that allow lowincome countries to become middle-income and then high-income economies? What are the most important determinants of growth (initial conditions, institutions, and policies)? What is the appropriate role for governments and markets in the growth dynamics?

Faced with the difficulty of providing clear answers to such pressing questions and the impossibility of deriving actionable policy recommendations from growth analyses, some growth researchers have found it useful to avoid searching for robust determinants of growth, but to look instead for the stylized facts that can guide economic policy in developing countries. This approach goes back several decades, most notably to Kaldor’s six characteristics of 20<sup>th</sup> century growth, derived from United States and United Kingdom macroeconomic data: (i) sustained rate of increase in labor productivity; (ii) sustained rate of increase in capital per worker; (iii) stable real interest rate or return on capital; (iv) stable ratio of capital to output; (v) stable shares of capital and labor as fractions of national income; and (vi), a wide variation in the rate of growth of fast growing economies, of the order of 2-5 percent (1961).

More recently, Jones and Romer (2009) have identified a different set of stylized facts: (i) increases in the extent of the market—via globalization and urbanization; (ii) acceleration of the pace of growth over time, from virtually zero to relatively rapid rates; (iii) variation in the rate of growth of GDP per capita, which increases with the distance from the technology frontier; (iv) large income and total factor productivity differences; (v) increases in human capital per worker; and (vi) long-run stability of relative wages.

_The Growth Report: Strategies for Sustained Growth and Inclusive Development_ , a landmark study issued in 2008 by the Commission on Growth and Development, followed a similar approach but took it to a new level. It built on the findings of several other empirical studies initiated by the World Bank during the past two decades to reassess the past theories of economic growth and poverty reduction, and rethink its policy advice to developing countries.<sup>15</sup> Launched in April 2006, the Commission brought together 22 leading practitioners from government, business and the policymaking arenas, mostly from the developing world. It was chaired by Nobel Laureate Michael Spence and Danny Leipziger, a World Bank Vice-President. Over a period of two years the Commission sought to “gather the best understanding there is about the

> 15 These previous studies include, among others, the _East Asian Miracle_ (1993), the _Growth in the 1990’s_ (2005), the World Development Report on _Agriculture for Development_ (2008).