{
  "title": "Openness, Human Development, and Fiscal Policies: Effectson Economic Growth and Speed of Adjustment",
  "publication": "IMF Working Papers, July 1, 1993",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/openness-human-development-and-fiscal-policies-effectson-economic-growth-and-speed-of-1065",
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  "summary": "The model developed here postulates that learning through experience plays a critical role in raising labor productivity over time, with three major consequences. First, the steady-state growth rate (of output) becomes endogenous and is influenced by government policies.",
  "sections": [
    {
      "heading": "Model and main theoretical findings",
      "content": "- The model postulates that learning through experience plays a critical role in raising labor productivity over time.\n- Three major consequences are identified:\n  - The steady-state growth rate (of output) becomes endogenous and is influenced by government policies.\n  - The speed of adjustment to steady-state growth is faster, and enhanced learning further reduces adjustment time.\n  - Both steady-state growth and the optimal net rate of return to capital are higher than the sum of exogenous rates of technical change and population growth."
    },
    {
      "heading": "Empirical findings and validation",
      "content": "- Simulation results confirm the model’s faster speed of adjustment.\n- Regression analysis explains a large part of divergent growth patterns across countries in terms of:\n  - The extent of openness,\n  - Human development,\n  - The quality of fiscal policies."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- Government policies can influence the steady-state growth rate, implying an active role for policy in shaping long-run output growth.\n- Enhancing mechanisms that foster learning-by-doing can shorten adjustment times to steady-state growth.\n- Fiscal policy quality, alongside openness and human development, is a key determinant of cross-country growth divergence and should be a focus for reforms aimed at improving growth and returns to capital.\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/openness-human-development-and-fiscal-policies-effectson-economic-growth-and-speed-of-1065"
    }
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    "[Markdown version](/en/publications/wp/issues/2016/12/30/openness-human-development-and-fiscal-policies-effectson-economic-growth-and-speed-of-1065/index.md)",
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    "Authors: Delano Villanueva",
    "Published: July 1, 1993",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451965780.001",
    "The model postulates that learning through experience plays a critical role in raising labor productivity over time.",
    "Three major consequences are identified:",
    "Simulation results confirm the model’s faster speed of adjustment.",
    "Regression analysis explains a large part of divergent growth patterns across countries in terms of:",
    "Government policies can influence the steady-state growth rate, implying an active role for policy in shaping long-run output growth.",
    "Enhancing mechanisms that foster learning-by-doing can shorten adjustment times to steady-state growth.",
    "Fiscal policy quality, alongside openness and human development, is a key determinant of cross-country growth divergence and should be a focus for reforms aimed at improving growth and returns to capital."
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