True growth

Understanding Economic Growth
OECD Observer

“The end of World War II marked the beginning of a long period of prosperity in most countries now members of the OECD… and in many countries per capita incomes tended to catch up with American levels,” OECD Chief Economist Jean-Philippe Cotis observes in his foreword to Understanding Economic Growth.

Mr Cotis continues: “The history of the past two decades tempered to a great extent that initial enthusiasm. In the major countries of continental Europe, per capita incomes stopped converging towards American levels as of the early 1980s, before falling in relative terms throughout the 1990s. Japan has suffered a similar reversal of fortune during the past 15 years.”

What happened? Why did some countries surge ahead, even those that had already reached a high level of innovation and growth, while others lagged behind? Such questions revived the debate over the underlying causes of economic growth, and Understanding Economic Growth is the fruit of the extensive OECD Growth Project.

The analysis focuses on the growth patterns of OECD countries during the last decade and identifies the fundamental drivers of growth, like human capital, R&D and innovation. It also looks at how and why countries respond differently to these drivers. It examines growth at the macroeconomic level, as well as industry and firm level, and analyses the contribution of information technology at each of these levels.

Packed with over 50 tables and figures, Understanding Economic Growth provides unique data to better understand the truth beyond the hype of the so-called new economy. What was the real contribution of IT to economic growth?

According to Mr Cotis, it plays a very important role, albeit one that “does seem to depend a great deal, in turn, on the regulatory and institutional framework in which technological innovation takes place.” The study points to empirical evidence that the opening up of product and services markets and the flexibility of the regulatory framework contribute to growth, as well as opening the way for small, highly innovative firms to flourish. But there is no magic formula that bypasses the fundamentals. As Understanding Economic Growth underlines, no one can overlook the contribution that sound macroeconomic policies – low and stable inflation, moderate tax burdens, openness to international trade – make to economic growth.

©OECD Observer No 243, May 2004




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017