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Idea Gaps and Object Gaps in Economic Development Dataset

Non-Bank Author:Paul Romer
Web Address:Macroeconomics and Growth
Topics:Macroeconomic & Economic Growth


The dataset is used for Paul Romer's "Idea Gaps and Object Gaps in Economic Development", Journal of Monetary Economics 32 (3): 543-73, 1993 and covers 122 countries.

The data collected here come from two sources: 

  1. Blomstrom, Lipsey, and Zejan (1992) -- BLZ 
  2. Levine and Renelt (1992) -- LR

Levine and Renelt report make use of data from the World Bank (WB), Heston and Summers (1988) (HS), and Barro (1991).

Different authors have used different numerical codes and symbols to order the countries in this kind of data set. The first several columns in the worksheet list some of these. The data in this worksheet are organized following the order used for data reported from the World Development Report for 1991 -- WDR. The sample consists of the countries considered to be developing countries by the World Bank. The observation numbers and symbols used in the data set circulated with the WDR are reported in the first two columns. BLZ give both observation numbers and country codes. These, along with their country names are reported in the next three columns. The next column reports the observation number used by Levine and Renelt.

In replicating the results in the paper, readers should be sure to note that the data point for Singapore is not included in the regression because it has a ratio of equipment imports to GDP that is more than twice as large as the next largest value. See the paper for discussion of this point. This data point is, nevertheless, included in the data spreadsheet.

Some notes on the Data:
Column headings in the data set indicate the sources of the different variables.

Column G: IMPGDP
This is the ratio of imports of machinery and transport equipment (SITC 7) to GDP from BLZ. It is an average of the values reported for the six different 5 year intervals that cover the years from 1960 to 1990. In the paper, this is referred to as EM/Y.
Column H: GYP6089
This is the rate of growth of GDP per capita over the years 1960 to 1989 as reported by LR. It is calculated from World Bank data. In the paper, this variable is called Growth. (Note: The data appendix in the paper has a typo and mistakenly says that this has the data label RYGDP60. The actual label is GYP6089.)
Column I: INV6089
This is the ratio of investment to GDP averaged over the period from 1960 to 1989 as reported by LR. This variable is also based on World Bank data. In the paper this variable is called I/Y.
Column J: RGDP60
This variable is an estimate of income per capita in 1960 as reported in LR. The original source is HS, so this variable is based on data that have been adjusted to reflect variations in relative prices. In the paper this is called Y or Y1960.
Column K: SEC
This variable reports an estimate of the secondary school enrollment rate in 1960. From LR, who use the series from Barro 1991, which is based on data from UNESCO and ILO.

A nation that lacks physical objects like factories and roads suffers from an object gap. A nation that lacks the knowledge used to create value in a modern economy suffers from an idea gap. Object gaps are emphasized by mainstream economists who make use of formal models and statistical hypotheses tests. Idea gaps are emphasized by dissident economists who make use of a diverse body of evidence and avoid formal models. Economists need to use the formal models from the first approach and the diverse evidence from the second to fully appreciate the importance of idea gaps in economic development.

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