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The Lost Decades: Developing Countries’ Stagnation in Spite of Policy Reform 1980-1998 Dataset

Authors:William R. Easterly
Topics:Macroeconomic & Economic Growth

The document in this paper a puzzle that has not received previous attention in the literature. In 1980-98, median per capita income growth in developing countries was 0.0 percent, as compared to 2.5 percent in 1960-79. Yet I document in this paper that variables that are standard in growth regressions -- policies like financial depth and real overvaluation, and initial conditions like health, education, fertility, and infrastructure generally improved from 1960-79 to 1980-98. Developing country growth should have increased instead of decreased according to the standard growth regression determinants of growth. The stagnation seems to represent a disappointing outcome to the movement towards the “Washington Consensus” by developing countries. I speculate that worldwide factors like the increase in world interest rates, the increased debt burden of developing countries, the growth slowdown in the industrial world, and skill-biased technical change may have contributed to the developing countries' stagnation, although I am not able to establish decisive evidence for these hypotheses. I also document that many growth regressions are mis-specified in a way similar to the Jones (1995) critique that a stationary variable (growth) is being regressed on non-stationary variables like policies and initial conditions. It may be that the 1960-79 period was the unusual period for LDC growth, and the 1980-98 stagnation of poor countries represents a return to the historical pattern of divergence between rich and poor countries.

Access to Dataset (part 1)

Access to Dataset
  • Macro-2001 (zipped file, 1.73mb)

  • Micro Time Series (MS Excel file 865kb)

  • Government Finance 2001 (zipped file, 2.51mb)

  • Government Finance 2001 (zipped self-extracting file, 2.53mb)

  • Paper (pdf file, 318kb)

  • Government Finance 2001 (MS Excel file, 13.6mb)

  • Macro Time Series 2001 (MS Excel file, 5.16mb)

  • Macro-2001 (zipped self-extracting file, 1.75mb)

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