Growth, Macroeconomic Policies and Structural Change (Draft)

This paper is concerned with the long-run tendencies of economic growth and/or stagnation in developing economies, and in particular with the interrelationships between economic growth and structural transformation. It is divided into six sections, including a short introduction. The second section considers the aggregate growth experience of the world economy and of developing countries, with particular reference to the period since 1960. The third section looks at the significance of various engines of growth. The fourth section looks at the relationship between the financial sector and growth, in terms of financing growth as well as the changing role of financial institutions given financial liberalization. The fifth section examines the extent to which growth in developing countries tends to be associated with structural change in terms of the changing composition of output and employment. The sixth and final section is concerned with the impact of macroeconomic, trade and industrial policies, as well as development policies broadly considered, in affecting patterns of growth. The paper discusses impact of stabilization policies on growth trajectories, as well as the possible strategies for sustained growth of developing countries in the new international environment.