So Near Yet So Far! The Elusive Quest for the Engines of Economic Growth

Abstract

The fundamental question that Economics tries to answer is that of what are the sources or correlates of economics growth? In a cross-country setting the much perplexing issue is that why growth rate differs across economies and regions? In other words, what explains the persistence or growing differences in per capita income? Both mainstream growth theory and development economics try to seek explanations in terms of one or other economic variable or policy that could explain the large productivity differentials across countries. The growth theory attempts to identify the economic variable that could be the panacea for growth. The suggested growth factor ranges from capital to technology, domestic savings to FDI, geography to institutions, colonial origins to ethnicity, and culture to genetics. On the other hand, the development economics analyses the structural features of the economies and tries to identify the policy variable that could be the miracle policy towards the quest for growth. The suggested policy measures swings from protection to free trade, import substitution to export promotion, markets to state control, poverty alleviation to asset creation, investments in human capital to health and environment, nationalisation to deregulation, public sector to public-private partnership, financial reforms to microfinance, structural reforms to market reforms, open economy to regulated economy, building social capital to financial capital, reforming governance to institution building, and a host of polices and programmes.However, the search is simply an elusive quest and the development economics often fails to identify the factor and the simple mechanism or policy that could ensure growth. Still it can not be ruled thatgrowth is simply random and there could be some ‘ultimate’ economic or perhaps a fundamental source, a panacea waiting to be identified, of economic growth.