Susan M. Collins

The Empirics of Growth: An Update

We argue that both growth accounting and growth regression analysis can yield useful insights into the growth process, particularly when used to study a large sample of countries over a long period. Much of the apparent variability in conclusions of previous studies arises from measurement problems, differences in data or definitions, and failure to include other conditioning variables. Using data for eighty-four countries over 1960-2000, and focusing attention on issues of measurement and consistency, we conclude that both capital accumulation and efficiency gains are central to the growth process. We find, at best, a weak correlation between growth and increased schooling. And we find that most of the variation in cross-national economic growth is well explained by differences in initial conditions and institutions. However, these variables provide little insight into the changes in growth rates before and after 1980, and policy differences play a minor role.

Capital Flows to Developing Economies: Implications for Saving and Investment

THE CURRENCY CRISES that broke out in East Asia in mid1997 have been followed by more than a year of tumult in international financial markets. These crises have had a serious impact on the emerging market economies, forcing many to raise domestic interest rates so as to stem an outflow of financial capital and prevent further exchange rate collapse. These interest rate increases have, in turn, depressed domestic economic activity. Not surprisingly, this severe financial instability has intensified discussions about the benefits and risks to developing economies from allowing capital to flow freely across national borders.1 For many developing countries, the ability to draw upon an international pool of financial capital offers large potential benefits. Low levels of capital per worker in these countries have long held output down. Net foreign resource inflows-current account deficits-can augment private saving and help these countries reach higher rates of capital accumulation and growth. Access to international capital markets provides the means to finance those resource flows. Some types of foreign capital inflows, principally foreign direct investment (FDI), may also facilitate the transfer of

United States-China trade: where are the exports?

This paper empirically examines US goods trade with China, focusing on the performance of exports. Throughout the analysis, we explore whether US trade is unusual by contrasting it with trade from Japan and the EU-15. The issue is examined from three perspectives: the commodity composition of exports, the role of multinational firms, and the estimation of a set of ‘gravity equations’ that explore the role of market size and distance from the United States. We find that the commodity composition of trade with China is not distorted, nor can the low level be related to an unusual role of US multinationals in China. Instead, distance does seem to exert a surprisingly large effect on trade. Finally, while exports to China may be a small share of US GDP, they are relatively substantial compared to US exports to other countries. In other words, the measure of US trade performance in China is distorted by the low level of its exports to all countries.

Determinants of U.S. Exports to China

This paper examines U.S. goods trade with China, focusing on the performance of exports. Throughout the analysis, we explore whether U.S. trade is unusual by contrasting it with trade from Japan and the EU-15.1 The issue is examined from three perspectives: the commodity composition of exports, the role of multinational corporations (MNCs), and the determinants of trade as specified in a formal gravity model. As an initial point of departure, we show that the commodity composition of U.S. exports to China is similar to the pattern of exports to the world as a whole, and that the operations of U.S. MNCs have only minor implications for trade with China. Consequently, we emphasize the estimation of a set of gravity equations that explore the role of market size and distance from the United States. Distance exerts a surprisingly large effect on trade. Finally, although exports to China may be a small share of U.S. GDP, they are relatively substantial compared to U.S. exports to other countries. In other words, the measure of U.S. trade performance in China is distorted by the low level of its exports to all countries. We present evidence that the United States underperforms as an exporter relative to a peer group of high-income European countries and Japan.

India’s Growth Slowdown: End of an Era?

This article examines the sources of rapid economic growth in India in the 2000s and explanations for the growth slowdown in more recent years. We use the Indian national accounts and the National Sample Survey (NSS) to perform a growth accounting analysis. We disaggregate the total economy into agriculture, industry and services and separately identify the contributions of labor, capital and improvements in productivity. Services account for the largest share of the acceleration in 2000-10. Industry, on the other hand, is the sector most reflective of the recent slowdown. The high growth of the 2000s can be traced to strong capital accumulation, improvements in labor skills and large productivity gains. A slowing in the pace of economic reform and a general deterioration in fiscal and monetary policies appear to be the major factors responsible for the slower pace of growth since 2010.