Are any Growth Theories Robust?

Abstract

The recent growth literature has seen an explosion of work exploring the role of new and fundamental theories of growth such as geography, institutions, ethnic fractionalization, and religion. Nevertheless, claims about the empirical validity of these new growth theories are typically made within very particular specifications of the growth model. In this paper, we investigate the robustness of these theories when the researcher appropriately accounts for model uncertainty. We first consider the robustness of these theories within the canonical growth regression framework. We then deviate from this framework to explore the impact of these new growth theories on the components of growth – TFP growth and physical and human accumulation rates – derived from a growth accounting exercise. We find very little evidence to support the contention that any of the new growth theories play an important and robust role in explaining growth and its components. We find instead that variation in growth may be robustly explained by differences in macroeconomic policies and unknown heterogeneity associated with regional groupings. We also find that, consistent with endogenous growth models, physical and human capital externalities are the main determinants of TFP growth.