Dear Mohamed

There should be goals for the growth of countries but only if nations commit to major renovations. We must find ways to leverage economic growth through investment, competitiveness, trade and employment. Economic growth is a result of sound policies and overall coordination. Fiscal, taxation, social and political reforms are needed so that we can achieve adequate economic growth

Dear Mr Nelson,

Thank you so much for your comment. In general terms this makes sense. But if it is that simple, why are these countries failing even though they have policies in place,? and What is social reform?

Money in itself does not always guarantee success: e.g. in some countries, some officials, hospital directors, university rectors etc. will use a large share of such investments to buy themselves and their relatives new cars or build villas etc.. Also, money should be spent wisely (e.g. maybe a lab will not need a new microscope but something else but it gets funds to buy the microscope, so it will buy it) and universities should be encouraged to co-operate with firms so that they could benefit, too.

Dear Mehdi,

I welcome your comment with great enthusiasm. How about countries that have been engaged in the development effort for decades and got nowhere. What's wrong with Africa, South America, Iran, to name a few?

Dear Mohamed,

Long-run economic development requires more than just a boost to investment. It also requires rules and institutions that build trust and cohesion. See for example Rodrik and Subramanian (2003): "The primacy of institutions (and what this does and does not mean)", Finance & Development, June, 31-34.

Mohamed. You ask a good question. "What's wrong with Africa, South America, Iran, to name a few?". Well the reasons are many and varied. I agree with Nelson and Mehdi. You have to remember that among the ingredients for robust economic growth is existence of independent and well managed institutions in all aspects of the society. Secondly, you must have deliberate investment and actual growth in human capital development and make sure there is no serious flight of highly skilled personnel abroad (brain drain). These skills are necessary for many things like maintaining a high level of quality human health index (highly skilled surgeons, etc), engaging in manufacturing for exports (ICT and scientists). The political environment must not reflect a Failed State Status, otherwise foreign investors will shy away. May be you have not yet noticed that physical infrastructure development is also key for robust growth. Robust economic growth in all countries revolves around a strong and vibrant(innovative) Manufacturing Sector. Variants of this general model can be the only way forward with all other ingredients in place. Some will say that services sector is the largest fraction of GDP in most nations but the bedrock of robust economic growth will always be a strong Manufacturing sector. All the regions WITH THE SLOWEST growth rates are those where Primary Commodities are the major exports, not to mention that this is with high export commodity concentration. With or without serious brain drain, regions like Africa badly need foreign direct investment to spur growth rates that would converge to those of middle income countries. The LIST is very long, though.

Dear Barnabas,

I welcome your comment wholeheartedly. Thank you for your effort.

I can fully agree that relying on financial investment is not enough. As regards my research on innovation, the total financial amount is not even the deciding factor (more important is the structure of investments - less into machinery but proportionally more into R&D). 

Clearly,  developing countries  face different challenges than developed ones. In order to reach a  highly innovative economy, the developing ones rely more on cooperation (between companies and research sphere), mainly because the companies have rather weak own R & D capabilities. Also, much can be achieved in developing countries by improving nonfinancial innovation factors rather than financial ones (which are more difficult to obtain).

If interested, you can see more in the works of mine and colleagues, e.g.

- LEARNING FROM THE MOST INNOVATIVE: A COMPARISON OF SLOVENIA AND GERMANY 

- Nonfinancial innovation factors as an opportunity for high and medium-high technology companies

- Innovation of low and medium-low processing industry : a reference innovation model

Kind regards, Marko

If we go by Rostow's conditions of take-off then the country that mirrors those conditions most closely  in recent times is China. Partly because of the spare capacity that was unlocked when it began to transition towards more of a free market system:

• With ensuing changes to the governance framework.
• High investment rates into the productive capacity.
• Upgrade of interlinkages between regions, through high speed rails.
• Expanding choices & opportunities for economic and social mobility-evidenced by the increasing proportion of millionaires in its populace.
• Growth that is mainly driven by manufacturing and an industrialization-style technology base.

However I have reservations whether any nation can attain to the self-sufficiency that Rostow was also alluding to when he characterized take-off. Since in hindsight many nations have also crashed after take-off, because of their overdependence on external drivers of growth.Critical mass without momentum is just a short-lived bubble.