Robert Solow was right. Growth seems to slow down as countries get to a certain level of per capita income. At the technological frontier, that is to say in the rich countries, TFP growth is largely a mystery. We do not know what propels it. And Robert Lucas and Paul Romer were right too. For the poorer countries, convergence is not automatic. This is probably not mainly because of spillovers. It is more that TFP is much lower in poorer countries, to a significant extent because of market failures. And therefore to the extent that business-friendly institutions have something to do with fixing
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