A Development Club and Groupings in Europe, and Growth Strategies
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A Development Club and Groupings in Europe, and Growth Strategies MARJAN SENJUR Faculty of Economics, University of Ljubljana, Kardeljeva ploscad 17, 1000 Ljubljana SI-Slovenia. E-mail: [email protected]
The concept of development clubs and groupings is defined. A development club comprises a group of countries at similar levels of per capita income, which are converging to a common steady state, and that have similar growth patterns. There is only one development club in Europe. It consists of the economies from the core of Western Europe. Other European countries can be grouped into two or three additional groupings according to certain similar characteristics, yet they do not form development clubs. The dynamics of development groupings are also considered. Finally, some applications and implications for growth strategies are indicated. Comparative Economic Studies (2007) 49, 660–682. doi:10.1057/palgrave.ces.8100222
Keywords: Development clubs, convergence clubs, Europe, strategies JEL Classifications: O11, O40, O52
INTRODUCTION In 2000 the European Council of the European Union launched an agenda for reforms in order to strengthen employment, economic reforms and social cohesion. In 2005 the European Council issued conclusions on ‘Re-launching the Lisbon strategy: A partnership for growth and employment’. Slovenia is a transition country that joined the EU in 2004. In 2005 it launched the ‘Framework of economic and social reforms in order to increase the welfare in Slovenia’. These are just two instances of recent attempts to formulate a growth policy. The formulation of growth policy which would accelerate and sustain a high growth rate is of great concern to policy-makers. A subject of growth policy and the question of finding a framework for formulating a growth policy for specific nation-state conditions has recently
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come onto the research agenda. Rodrik (2005), Hausmann et al. (2005), Aghion and Howit (2005), and Sapir et al. (2004) have made recent contributions here. What should an analytical framework discuss or advise about the growth policy of a particular country? Does economic theory give straightforward instructions for how to form a growth policy? Rodrik (2005, pp. 993, 1009) reports that no country has experienced rapid growth without minimal adherence to higher-order principles of sound economic governance – property rights, market-oriented incentives, sound money, and fiscal solvency. He points out that the key is to realise that general theoretical principles do not translate directly into specific economic growth policy recommendations. A similar statement could be made with regard to theories and models of economic growth. Pritchett (1997, p. 15) expressed the opinion that it is conceivable there is an all-purpose theory of economic growth, but it is more plausible that the appropriate growth policy will differ according to the particular situation. I conclude from these two statements that general gro
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