Ideas for Growth - Research

Macroeconomics

The macroeconomics programme looks at the role of monetary and fiscal policy in stimulating growth and reducing output fluctuations. The first goal is to understand the main impediments to economic growth in the world’s poorest economies, and to design appropriate policies to enhance sustainable development. The second is to identify the sources and propagation mechanisms of economic fluctuations in developing economies and to propose policy responses to mitigate their effect on well-being. By understanding the sources of economic volatility and its economic effects, the research programme will also help develop suitable policy responses to shorter-term fluctuations.

Director(s): Peter Klenow, Silvana Tenreyro

Members: Philippe Aghion, Timothy Besley, Willem Buiter, Ricardo Caballero, Francesco Caselli, Paul Collier, Steven Davis, Eduardo Engel, Gita Gopinath, Pierre-Olivier Gourinchas, John Haltiwanger, Peter Henry, Chang-Tai Hsieh, Anil K Kashyap, Adeel Malik, Maurice Obstfeld, Torsten Persson, Christopher Pissarides, Richard Portes, Danny Quah, Andrés Rodríguez-Clare, Rick van der Ploeg, David Vines

Trade

Many observers agree that engagement with the world economy is essential for sustained increases in living standards. “A flourishing export sector is a critical ingredient of high growth, especially in the early stages,” writes the Commission on Growth and Development in its influential 2008 report. But the precise mechanisms through which trade affects key aspects of the growth process – learning, innovation, and productivity growth more generally – remain controversial and, arguably, poorly understood. The main goal of the IGC trade program is to better understand the myriad relationships between international integration and learning and innovation, in order to inform policies to help developing countries derive maximum benefit from engagement with the world economy.

Director(s): Andrés Rodríguez-Clare, Eric Verhoogen

Members: David Atkin, Paul Collier, Dave Donaldson, Jonathan Eaton, Marcel Fafchamps, Penny Goldberg, Gordon Hanson , Ann Harrison, Beata Smarzynska Javorcik, Shang Jin Wei, Amit Khandelwal, Kala Krishna, Guy Michaels, Dilip Mookherjee , Peter Neary, Emanuel Ornelas, Gerard Padro i Miquel, Albert Park, Nina Pavcnik, Stephen Redding, Esteban Rossi-Hansberg , Daniel Sturm, John Sutton, Dan Trefler, James Tybout

Infrastructure and urbanisation

The infrastructure and urbanisation programme looks at how large-scale investments in physical capital drive growth. IGC partner countries have signalled a keen interest in work relating to transport, communication and power networks. Agglomeration economies are particularly important in explaining the spatial distribution of production and living. Urban areas tend to have the highest per-worker productivity and generate most of the economic output. While some of this concentration is explained by the presence of natural advantages, this alone cannot account for the observed degree of agglomeration and better grasp of this phenomena is needed.

Director(s): Enrico Moretti

Members: Robin Burgess, Taryn Dinkelman, Dave Donaldson, Esther Duflo, Eduardo Engel, Edward Glaeser, Ian Goldin, Vernon Henderson, Beata Smarzynska Javorcik, Matthew Kahn, Patrick Kline, Guy Michaels, Edward Miguel, Stephen Redding, Daniel Sturm

Firm capabilities

The firm capabilities programme examines the existence of and reasons for heterogeneity in productivity between different firms in different countries, to understand the causes of the productivity shortfall of firms in developing countries and to find ways of boosting competitiveness in the manufacturing sector. Job creation is another policy priority. A first step to answer these questions is to document the existence of this heterogeneity at the firm level to develop a portrait of how they are different and evolving. Longitudinal cross country information is sparse because country data is generally not focused on firms. Thus the programme has identified two priority areas; we will aim to create a new repository of data on the role that firms have in economic development, and will support novel research into the sources of heterogeneity in performance between firms in different countries.

Director(s): Luis Garicano, Chris Woodruff

Members: Christopher Adam, Nick Bloom , Saul Estrin, Marcel Fafchamps, Greg Fischer, Ray Fisman, John Haltiwanger, Thomas Hubbard, Beata Smarzynska Javorcik, Peter Neary, Andrea Prat, Danny Quah, Esteban Rossi-Hansberg , John Sutton, Chad Syverson, Francis Teal, John van Reenen

State capabilities

The public sector plays a crucial part in growth-promoting investment. Unfortunately, less developed countries often feature states with poor revenue-raising capacity and inefficient procurement. The state also has an important role as a guarantor of security and contract enforcement to secure further investment. The IGC country teams have discovered the high research demand for these issues in our partner countries, to which the state capabilities programme responds. For example, policymakers in Bihar emphasised the need for continuous improvements in law and order. The government of Pakistan has also underlined the importance of expanding the reach of taxation to agriculture and services sectors. The research programme will foster better understanding of what makes states effective in raising revenues, procuring goods and services, providing public goods and a sound legal system.

Director(s): Oriana Bandiera, Henrik Kleven

Members: Daron Acemoglu, Nava Ashraf, Anthony Atkinson, Marianne Bertrand, Timothy Besley, Chris Blattman, Robin Burgess, Raj Chetty, Michael Devereux, Oeindrila Dube, Marcel Fafchamps, Ray Fisman, Roger Gordon, Henrik Kleven, Colin Mayer, Edward Miguel, Torsten Persson, Andrea Prat, Canice Prendergast, Emmanuel Saez, Monica Singhal, Joel Slemrod, Nicholas Stern

Governance, accountability and political economy

The governance, accountability and political economy programme investigates economic performance under different political regimes in developing countries. A large volume of research will deal with corruption, and illicit behaviours. In addition, recent research has found that female elected representatives make policy choices that are systematically different from those of their male counterparts, so gender will be also an important factor. Conflict and post-conflict management will also receive significant attention. As many of less developed countries have been plagued by violent conflict, a deeper understanding of its causes and consequences will be of paramount importance and this research programme aims to contribute to the design of policies and institutions to manage post-conflict reconstruction.

Director(s): Eliana La Ferrara, Gerard Padro i Miquel

Members: David Anderson, Anthony Atkinson, Timothy Besley, Chris Blattman, Robin Burgess, Paul Collier, James Fearon, Ray Fisman, Anke Hoeffler, Asim Khwaja, Edward Miguel, Rohini Pande, Torsten Persson, Daniel Posner, James A Robinson, Bhavya Srinivasan, Daniel Sturm, Pedro C Vicente, Jeremy Weinstein

Finance

Less developed countries often have underdeveloped and inefficient financial markets, implying that resource allocation is suboptimal. Dysfunctional financial markets may also be associated with less willingness to invest on profitable yet risky assets. The finance programme investigates such issues. There is a high research demand on these issues. For instance, the government of Bihar has raised a shortage of agricultural credit as one of their key policy concerns, and the governments of Pakistan and Ghana are keen to develop their banking and finance sector. The finance programme also addresses the issues of household risk management and the impact of financial access for the poor. The impact of micro-finance and the implications of its various designs, therefore, are also relevant topics. For its methodology, a large fraction of the research under the finance programme will make use of the growing expertise in randomised interventions.

Director(s): Greg Fischer, Colin Mayer

Members: Marianne Bertrand, Timothy Besley, Willem Buiter, Robin Burgess, Stefan Dercon, Esther Duflo, Marcel Fafchamps, Ray Fisman, Maitreesh Ghatak, Dean Karlan, Anil K Kashyap, Asim Khwaja, Imran Matin, Daniel Paravisini, Tarun Ramadorai, Imran Rasul, Antoinette Schoar

Human capital

The human capital research programme investigates returns on investments in health and education. The programme focuses on the four major topics; investments in human capital, measurement of the private and social returns to investments in human capital, the accumulation of human capital over the life cycle, and the Organisation of health and education systems. Many projects will have a strong gender component. Investments in female health and education may be particularly beneficial. A large fraction of the research under the finance programme will make use of the growing expertise in randomized interventions.

Director(s): Steve Machin, Imran Rasul

Members: Orazio Attanasio, Oriana Bandiera, Timothy Besley, Robin Burgess, Stefan Dercon, Esther Duflo, Marcel Fafchamps, Greg Fischer, Maitreesh Ghatak, Asim Khwaja, Victor Lavy, Bentley MacLeod, Imran Matin, Costas Meghir, Edward Miguel, Albert Park, Miguel Urquiola

Agriculture

The IGC agriculture programme has defined four interlinked forces affecting the current spatial distribution of agricultural production and its growth potential. Trade policy such as the protectionist measures related to biofuels is one. Climate change and the shift in comparative advantage towards high latitude areas is another. The returns of technological development and its beneficiaries will be also critical for countries focused on agriculture. Lastly, the programme deals with the issues of general market environment such as determinants of input and output prices and relevant labour market implications.

Director(s): Chris Udry

Members: Jean-Marie Baland, Oriana Bandiera, Chris Barrett, Timothy Besley, Robin Burgess, Stefan Dercon, Marcel Fafchamps, Greg Fischer, Maitreesh Ghatak, Douglas Gollin, Paul Jensen, Chris Leaver, William Masters, Imran Matin, Imran Rasul, Mark Rosenzweig, Tavneet Suri, Yoto Yotov

Climate change, environment and natural resources

The climate change, environment and natural resources research programme looks at the role of the physical environment and natural resources in growth. It investigates the trade-off between growth and environmental protection, and attempts to set a novel agenda for stimulating low-carbon growth (e.g. by providing incentives to introduce production technologies and infrastructures that consume less carbon). Managing natural resources including oil and mineral deposits is one policy priority. Research is also needed on how to best draw developing countries into a global system aimed at reducing greenhouse gas emissions. At the national level, designing optimal environmental tax and subsidy policies are likely to be a critical issue. Furthermore, the programme supports the research on how to mitigate the detriments caused by climate changes.

Director(s): Douglas Almond

Members: Robin Burgess, Francesco Caselli, Paul Collier, Lucas Davis, Dave Donaldson, Michael Greenstone, Raymond Guiteras, Rema Hanna, Thomas Heller, Seema Jayachandran, Guy Michaels, Mushfiq Mobarak, Benjamin Olken, Albert Park, Torsten Persson, Nicholas Stern, Rick van der Ploeg