Government and Economic Growth

Abstract

This ambitious title suggests two questions, distinct but readily confused. First, what is the role of government in the decades surrounding the turning point from extensive to intensive growth? What part does government play in initiating intensive growth? Second, once a country has embarked on intensive growth, how does the policy stance of government influence its growth rate in subsequent decades? These are perhaps the most important questions that can be asked about the development process. They have called forth an enormous theoretical and empirical literature. In what follows we shall attempt a brief summary of this literature, at the risk of oversimplifying complex events.