Operationalizing Growth Models

Lucio Baccaro and Sinisa Hadziabdic

The growth model perspective requires new methodological tools to identify growth models, their key demand and sectoral drivers, and their relationship to structural determinants of growth. The goal of the project is to provide a rigorous operationalization of the notion of key growth drivers. Drawing on literature in international economics, we estimate import-adjusted components of final demand (consumption, government spending, investment, exports) for OECD countries. We extend the import-adjustment approach to the identification of key sectoral drivers of growth (manufacturing, low-end services, high-end services, public sector, construction, other sectors). Using this approach we are able to identify country by country and for different time periods which demand components and which sectors are most important for growth and by how much. We then explore the structural correlates of the most important demand drivers: consumption- and export-led growth.

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