Growth Diagnostics

This paper challenges the growth promoting potential of Washington Consensus based policy reforms. Instead, it proposes a framework for Growth Diagnostics, a strategy aimed at identifying the most binding constraints on economic activity.

This paper argues that a reform agenda based on the Washington Consensus is not guaranteed to improve growth. Hausmann argues that the impact of economic reforms is heavily dependent on domestic opportunities and constraints.

In this light, Hausmann proposes a framework for Growth Diagnostics - a strategy aimed at identifying the binding constraints on economic activity so that decision makers can prioritize their reform agenda appropriately. The paper's key insight is that the binding constraints are contextual and differ from country to country. A laundry list of reforms is inappropriate.

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