Working Paper Series: Special Edition of 2016 to 2018 Interns

" It used to be that development was seen as simply increasing GDP. Today we have a broader set of objectives, including democratic development, egalitarian development, sustainable development, and higher living standards " (Stiglitz 1998: pg343). Whitehead (2011) explicitly distinguishes between economic growth and development, with the former constituting a quantitative widening of the economy, while the latter is qualitative in nature, primarily referring to the improved performance of the factors of production and greater institutional development. Traditionally, economic growth is measured by increases in real gross domestic product (GDP)or in GDP per capita. It usually means that a higher output is being produced in a certain region, with the expansion of production of marketable goods and services (Denison 1962: 3). Arraes and Teles (2003) have concluded that there are two major conceptual approaches to explaining the process of growth. These are the exogenous and endogenous growth approaches; the former popularised by authors such as Ramsey (1928), Solow (1956), Koopmans (1965) and Cass (1965), and the latter by Romer (1986) and Lucas (1988). Solow (1956) hypothesised that the single composite commodity is produced by combining labour and capital under the standard neoclassical assumptions used by the Harrod-Domar model. Bayhaqi (2006) views the neoclassical model as implying several proclivities including what he describes as the ‘catching-up’ and ‘convergence’ hypotheses of economic growth due to the assumption of diminishing returns to aggregate capital. Arraes and Teles (2003) criticises what they see as the model’s conclusion that (long-run) growth is exogenously determined (predominantly by the level of technological progress). They also highlight the limited role of government policy in influencing long-run growth as another weakness. ‘Generally, the empirical approaches to economic growth have examined three issues: (i) convergence and divergence; (ii) the sources of economic growth; and (iii) testing the export-led growth hypothesis’ (Francis 2003: 16). Rodrik (2003) points to the need for distinguishing between what he termed as the ‘proximate’ and ‘deep determinants’ of growth. He contends that physical capital deepening, human capital accumulation and productivity growth may be considered the ‘proximate’ determinants, while variables such as geography, integration (trade) and institutions the ‘deeper’ determinants of growth. The body of literature relating to education has largely surrounded the benefits that can accrue to individuals, families and nations if they have access to

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