The Ingredients of Sustained High Growth

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Since 1950, 13 economies have managed to grow at an average rate of 7 percent or more for at least 25 years in a row. How did they do it? And, more important, can such high growth be repeated in other countries on a sustained basis? For over two years, these were the questions that guided the work of the Commission on Growth and Development, comprising leaders from business, government, and academia, including two Nobel laureates.

Diversified and engaged

Sustained fast growth is not a miracle-it is possible for developing countries, as long as their leaders are committed to it and take advantage of the opportunities provided by the global economy. The 13 successes identified by the Commission (see table) include the familiar Asian examples, but the list is otherwise well diversified in terms of size, resource endowment, and political regime.

Since economies can learn faster than they can invent, developing countries can catch up through much faster growth than was experienced by today's industrialized countries when they were creating their own growth levers. Even with high rates, catching up is a long-term process that takes two generations or more.

Critical to success is engagement with the global economy that enables developing countries to import knowledge and technology, to access markets, and to generate a strong export sector, which is especially important in the early stages of growth.

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The five common characteristics of sustained high growth

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In addition to engaging with the global economy, these high-growth countries share other important characteristics. Macroeconomic stability-which includes relatively low infl ation and avoidance of excessive debt-helped them ride out economic shocks and uncertain investment horizons. Their economic policies and collective choices were oriented toward the future, helping them achieve high investment and saving rates.

These 13 countries also relied on markets, including mobility of labor, to allocate resources. And strong leadership-in the form of individuals, parties, or political systems-forged a consensus around the goals of growth and development, and ensured the process was inclusive and fair in terms of opportunities.

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How did they do it?

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