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

GDP growth: +0.6% Q2 2018 year-on-year
Consumer price inflation: 2.9% Sept 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.2% Sept 2018
Last update: 13 Nov 2018

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 will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • 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.
  • 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.
  • 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.
  • 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 .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

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 2018