Relative growth rates: the experience of the advanced economies

Abstract

This paper tests by simple least squares regression analysis for some of the factors which might explain why growth rates have differed among twenty-two advanced economies. The principal result is confirmation of the very orthodox hypothesis that high rates of growth of exports and imports are necessary, though of course not sufficient, conditions for achieving a high rate of growth of gross domestic product. The policy implications of this result are explored in the concluding section of the paper. Their main thrust is that much greater exchange rate flexibility might be advantageous for economies where low rates of growth of total output have been associated with low rates of growth of exports and imports.

JEL: E42, O47