Belarusian Economic Research and Outreach Center

Open Lecture with Dzmitry Kruk

On December 10, 2018 Dzmitry Kruk presented his recent research Revisiting Growth Patterns and the Factors of Growth in Emerging Markets. This study aims at shedding the light on the relative importance of productivity determinants vs. external environment ones for growth in emerging markets. The issue is vital in the light of recent trends signaling about decoupling between growth and productivity gains in emerging markets. The author studied a panel of 34 emerging market economies during 11 years (2007-2017). He introduced a number of novelties to the research design. First, for measuring productivity directly, the author engages database of World Economic Forum (WEF). Second, he computed a set of new measures of external conditions for the panel being studied. Third, the author engaged into the analysis an alternative measures of growth (alongside with using standard one) – the speed of closing the gap towards the frontier (the US economy). In order to distinguish between the concept of sustainable growth and short-term one affected by business cycle fluctuation, the author used both annual output growth rate and trend one. He employed two different modeling frameworks – panel OLS and Arellano-Bond GMM estimator – for making inferences about the role of the external environment and productivity determinants in growth in emerging markets. Both modeling frameworks provide similar results. The main conclusion from them – both productivity and external environment determinants are meaningful for growth in an emerging market. However, the external environment determinants dominate in explaining short-term growth, while productivity determinants are more important for long-run sustainable growth. This view allows explaining recent signals of decoupling between growth and productivity in emerging markets, without challenging the foreground role of productivity for generating growth.