There is a difference between what the academic literature on growth suggests might be good for promoting growth and what some recent policy documents suggest is practical. This needs to be clarified through empirical work at the country level.
Whilst the academic literature suggests a specific role for public sector (e.g. solving specific market and co-ordination failures), rooted in, for example, new trade theories, policy documents on growth focus on the rules of the game (broad investment climate) imply more neutral policies for promoting growth and suggest that more specific vertical policies do not work in practice. In some cases horizontal policies e.g. supporting infrastructure, may be good to promote sector growth, but in other cases more specific support will be needed, e.g. removing the bias of education systems against new services sectors.
Investment incentives
We have undertaken a number of projects on investment incentives in a number of countries, aiming to understand whether specific investment policies work can attract more investment conducive to growth.
