in 2005/06? Why was growth in South Korea sustained at levels of 7–8 per cent
while growth in India was little more than 3.5 per cent in the three decades after
1950? What caused growth in India and China to accelerate rapidly in the early
1980s such that by the 2000s they were among the most rapidly growing
economies in the world, while after decades of rapid growth in Japan, that
country’s economy has been stagnant since the 1990s?
These millions of decisions can be grouped into those decisions related to
investment, to land, to labour and to productivity; each of these is a proximate
determinant of economic growth.
Chapter 3 examines domestic and foreign investment and finds these to have
(particularly the former) the most robust link with GDP growth of any of the
proximate growth determinants. Chapter 4 examines demography, which
impacts on growth through the supply of labour. Higher fertility can (with a lag)
increase entrants to, and declining mortality reduce exits from, the labour force.
Chapter 5 examines technology which impacts directly on labour productivity
or land yield. Chapter 6 examines education and health,both important proxi-
mate determinants of growth and end goals of human development.
The chapters can be read alone or in sequence or the reader may follow
through particular ideas across different chapters. Each one follows a similar
pattern. A concept (such as education or investment) is defined, the economic
theory and related empirical work showing how the concept is linked to
economic growth is reviewed, and finally each chapter examines relevant
policy conclusions.
22 Sources of Growth in the Modern World Economy since 1950