Determinants of LDC Output Growth during the 1980s

Empirical studies for various pre-1980 periods have alluded to a superior output performance for developing countries whose exports contain a higher manufacturing share. That finding is not observed in an analysis of low-income and middle-income less developed countries (LDC) for the period of the 1980s. Indeed, the results have shown that the Kavoussi (1984) claim of an important role for the commodity composition of exports would not have been made had he subjected the various results he obtained to a more consistent interpretation. Further, it does not appear that the growth in LDC labor forces was an important factor in explaining growth in these countries in the period under analysis. The results, however, do reveal that the rates of growth of capital - proxied by the rate of growth of energy consumption - and of exports have been important constraints to output growth. There is also evidence suggesting that the level of financial development in LDCs and the degree of financial deepening were important determinants of output growth in these economies during the period from 1980 to 1988.