Learning from Double-Digit Growth Experiences
This extended memorandum identifies episodes of sustained double-digit growth in real GDP, defined as a compound annual growth rate of 10 percent or more over a period of 8 years or longer. Using a measure of real GDP reported in the World Development Indicators, we identify 33 country-episodes of double-digit growth since 1960. The narrative of each episode is presented, and key drivers of growth described. The double-digit growth episodes are then compared to episodes of sustained 6-7 percent growth on a number of economic and development indicators. Statistical tests show that differences in average episode values between the two groups are significant for: Amount of FDI received, the share of natural resource rents in GDP, investment, export growth, industrial composition, and public spending on education. Double-digit growth countries also tended to show worse performance on a number of business environment and governance indicators. From this analysis, lessons are drawn for Liberia. We conclude that with a continued inflow of aid, foreign direct investment, and a rapid increase in natural resource production, Liberia has the potential to achieve double-digit growth. However, as experiences of double-digit growth countries show, the challenge will be to convert the surge in unearned income into sustainable growth, sound policy reforms, and effective governance.