NS4053 Winter Term 2015 Modern Stage Theory Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

Overview I Robert Looney, Modern Stage Theories and Emerging Economies, in Handbook of Emerging Economies Looks at the World Economic Forum’s country classification scheme to profile countries in various stages of development Purpose is to develop an empirical framework for identifying the likely constraints impeding growth of various emerging economies at each stage of development. Tries to identify critical constraints to growth from several perspectives: Lack of competitiveness due to limitations such as infrastructure, education, technical capacity etc Limited governance – rule of law, control of corruption Insufficient economic reforms that hinder open markets and trade.

Overview II Approach attempts to extending stage theories Rostow Lack of mechanisms moving from one stage to the next Difficulty placing countries in stages Porter Lack of institutional, governance dimensions While identifies many variables potentially contributing to growth, and per capita income, no assessment of binding constraints shifting from one stage to another. Which grouping? Governance/Economic performance groupings WEF groupings?

Country Groupings I

Country Groupings II

WEF Groupings: Governance

WEF Groupings: Economic Freedom I

WEF Groupings: Economic Freedom II

Factor Analysis I

Factor Analysis II

Factor Analysis III

Factor Analysis IV

Factor Analysis I\V

Discriminate Analysis

Entrepreneurship I

Entrepreneurship II