This paper studies the effects of financial structure on the sources of economic growth. We find that as financial systems become relatively more stock market-oriented this has positive effects on productivity growth while bank-based systems have a stronger positive effect on capital accumulation. The positive effect of market-based financial structure on productivity growth is particularly strong in Latin America and the Caribbean (LAC) compared to other regions.

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This paper analyses in depth Russia’s recent growth and prospects for its continuation. It shows that the role of the private oil sector for recent growth has been severely underestimated, as official data - not accounting for transfer pricing - fail to reflect the importance of the hydrocarbon sector. It is argued that, though Russia is bound to remain a resource-dependent economy, barring major policy errors it would have the potential to sustain high growth rates over the medium term.

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This paper analyses some unnoticed predictions of the two-sector AK model. It generates the secular downward trend of the relative price of equipment investment and the rising real investment rate. It reconciles the empirical facts of trending real investment rates and stationary output growth. The model predicts a negative relation between GDP per capita and the price of equipment. A technology shock reproduces the main features of the productivity slowdown.

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The paper extends existing work on inequality and economic development by estimating a cross-country structural model that identifies bi-directional relationships between income inequality and other indicators of economic development. Overall, lower inequality is associated with improvements in other development indicators. The most striking feature of the structural model is the insight it provides into the reasons behind the negative “Africa dummy” in previous cross-country growth studies.

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Whereas many theoretical models predict that inequality is harmful for growth, the cross-country empirical evidence that uses income inequality measures is not conclusive on this matter. This paper uses a new inequality indicator that measures human capital inequality and finds the empirical regularity that inequality is harmful for growth in both the long term and the short term. The negative relation is mainly due to a discouraging effect of inequality on the investment rates.

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This paper analyzes economic development through a co-evolutionary process where formal institutions linked to the rule of law are transformed jointly with cultural values. This type of dynamic makes possible to attain multiple equilibriums and, hence, economic backwardness is explained by the presence of an ‘opportunistic’ culture that coexists in an environment where illegality prevails. By means of an evolutionary game theory model, it is shown that a low income per-capita scenario is very difficult to eradicate. This is the case because of the existence of a cultural inertia generated by the co-evolution itself, and because of the relevance that remote factors (socio-cultural and geographical) have on determining the probability that the economy can move following certain growth path.

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