Long-term growth in developing countries

Long-term economic growth is an essential engine for reducing poverty and improving living standards. Stimulating growth continues to be a top priority for policymakers in developing countries. But what rates of economic growth can we expect in developing countries over the coming decades? And what role are the different growth engines likely to play in each country? These questions are as difficult as they are important because of the difficulties in making long-term projections, the heterogeneity of national contexts, and controversies over the empirical determinants of economic growth.

In this Policy Research Talk, World Bank economist Steven Pennings will present the Long-Term Growth Model (LTGM), which is a suite of articles and toolkits that attempt to answer these questions in a simple and straightforward way. transparent. The Basic LTGM and its extensions analyze future long-term growth scenarios with data requirements low enough that they can be easily applied to almost any country. The tools build on the famous neoclassical Solow-Swan growth model by making assumptions about the future trajectory of growth fundamentals – such as total factor productivity (TFP) growth, investment rates, demographic trends and enrollment rates – to produce future trajectories of GDP growth, levels of GDP per capita and poverty rates over the next three decades. The LTGM suite (available at www.worldbank.org/LTGM) has been applied in World Bank policy reports (including national economic memoranda and systematic national diagnostics) in more than 40 countries in each region, and many officials were trained to use the tools. This Policy Research Talk will present the fundamentals of the long-term growth model, its various extensions, as well as examples of its applications in different countries around the world.