Review by Choice Review
Barro provides interesting, though perhaps questionable, evidence on the theory of convergence, on the interplay between democracy and growth, and on the relationship between inflation and growth. Using cross-country data, he makes four major points: (a) public policy can be used to stimulate growth by improving such factors as education, health, fertility rates, and the like; (b) for a given level for any of these factors, "growth is higher if a country begins with a lower starting level of real per capital GDP," indicating a pattern of convergence; (c) progress in democratic rights "initially increases growth but tends to retard growth once a moderate level of democracy has been achieved"; and (d) the direction of causation is from inflation to growth, not the reverse. Only the first point is of clear significance to the purpose of growth; the other three are questionable on the grounds of validity/credibility as well as policy implications (e.g., how many political rights must be tolerated, or suppressed, for a certain rate of economic growth?!). The first point, though not new, is nonetheless important as it represents a major modification of the real business cycle theory of growth. Barro's acknowledgment of public policy determinants of growth is a welcome rectification of this theory, which rejected macropolicy effectiveness for economic development. Of use to researchers and graduate students. E. Hosseinzadeh; Drake University
Copyright American Library Association, used with permission.
Review by Choice Review
