Achieving high growth rates is not a rare phenomenon. There is a study released in 2005 on this issue (the details f the study are given below). The authors examine the cases for rapid acceleration in economic growth which lasted at least eight years. They differentiate these episodes from typical takeoffs after economic contraction. The episodes they analyze mark an increase in per-capita growth of 2 percentage points and a post-acceleration growth rate of at least 3.5 percent a year sustained for at least eight years.

Here are the findings of the study: first, they identify 80 of such episodes since the 1950s. In other words, they identify that the probability that a country will experience a growth acceleration in a decade is around 5 percent.

Therefore, they stress, that episodes of growth accelerations are quite common. Second, classifying the 80 episodes as “sustained” or “unsustained” the authors state that economic reform and democratization has a positive effect on the likelihood of sustained episodes of growth acceleration. Most critically, the authors find that growth accelerations are highly unpredictable and that most growth episodes, sustained or not, are not related to economic reforms. In addition, periods of economic reform generally are not followed by an episode of growth acceleration.

Within the context of the findings, a couple of points should be stressed: first, high growth over a certain period does not necessarily mean that those rates will be sustained. Such episodes might appear in correlation with a certain set of conditions and disappear when these conditions cease to hold. Second, it is critical to ponder on steps needed to sustain an episode of growth acceleration. Third, it is not easy to successfully implement economic reforms. If you do not reform the economy, you cannot progress. And even if you do reform the economy, success is not guaranteed.

Eichengreen et al., in a study I have cited in the previous commentaries, take departure from the above study on growth accelerations. They investigate the factors that help sustain episodes of rapid growth.

Two factors came to the fore: the share of the population with secondary education and higher and the share of high-tech products in exports. Both are closely connected, as you might notice. The higher the skill level of human resources of a country, it is more likely that it will produce advanced products and become productive and innovative. I have been comparing the BRICs, Korea and Turkey. Next, I will summarize the findings. Then I will open to discussion the implications for economic policy.

Note on the study cited above: Hausmann, Pritchett and Rodrik, Growth Accelerations, Journal of Economic Growth), Volume 10, 2005.

This commentary was published in Radikal daily on 19.01.2013