The final report from the Independent Commission on Growth and Development, a global panel of eminent experts, report is out. It tries to answer that great question - what matters for growth? The Commission tries to provide important lessons from countries that have achieved high, long-term economic growth. If you can't be bothered to read the large report, here is a short presentation from Michael Spencer or you can simply watch this video. As well as the main report there are many working working papers from leading experts on nearly every area from institutions to agriculture to urbanisation.
There's nothing in the final report that we have not discussed on this blog. In some respect the report simply brings together existing research. A number of areas where the report comfirms our discussions here (good opportunity for new readers to read some old posts!):
Investment (see here) :
Based on the experience of the sustained, high-growth cases, the Report suggests that overall (private and public sector) investment rates of 25 percent of GDP or above is needed. The Report urges that about a third of that figure should be public investment in physical infrastructure and “human capital” (education and training).Girl Child Education (see here ) :
Investment in education and health and a focus on educational outputs, such as literacy and numeracy, are all viewed by the Commission as essential inputs to growth, concluding that currently educational spending in many countries is marred by waste and inefficiency. The education of girls provides one strong test of a government’s commitment to equality of opportunity. Educated women have fewer, healthier children…..Their children are then more successful in school. Educating girls is thus one way to break an intergenerational cycle of poverty.Infrastructure (see here , here , here and here) :
Infrastructure investment is also viewed as particularly important to growth by the Report. The Report argues the need for clearly written and monitored private/public sector partnerships with commercial risks born by the private party. Governments must also resist the temptation to see infrastructure as a source of revenue through increased taxation, leading to overpriced services, out of reach to large parts of the population.Urban - Rural Drift (see here and here)
With half of the world’s population now living in cities, the Report reminds us that no country has ever industrialized without also urbanizing. Rather than considering urbanization an unpleasant side-effect of growth, the Report calls for the better management of urbanization and its benefits. The Report calls for greater financing of urban infrastructure with clear guidelines and appropriate incentives, well regulated housing finance, sound planning principles, and a robust systems of property rights. The Report also looks at the role of agriculture and the importance of rural public services, so that it is productivity that motivates migration to cities, rather than access to better services.Mineral Resources (see here)
The Report also recommends that the first claim on resource rents be adequately funding public sector investments. The Commission recommends that the remaining rents should flow into a fund, managed by experienced investment professionals operating with a well defined set of parameters with respect return, risk and diversification. The fund should pay out (much as endowment funds in non-profit entities do) a percentage of the total each year for the benefit of the citizens either directly in the form of income or indirectly in the form of reduced tax burdens.