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2014 | OriginalPaper | Chapter

16. Cultural Background, Growth and Economic Policy

Author : Panagiotis E. Petrakis

Published in: Culture, Growth and Economic Policy

Publisher: Springer Berlin Heidelberg

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Abstract

The stages of economic growth cover the transition from being a low-income country to becoming a middle-income one and, finally, a high-income one (advanced economy). This transition is not easy and, in most cases, comes up against obstacles and lack of appropriate resources. High growth rates were followed by periods of stagnation, or even recession, and then by growth again, meaning that such countries have been unable to exit from this vicious cycle and reach a permanent level of higher income. We describe this phenomenon as the “Cultural Growth Trap”, and by doing so, we attempt to explain the failure of middle-income countries to present and sustain economic development and avoid years of stagnation or economic recession. We consider that, except where low productivity is the main factor behind the middle-income trap, cultural background can explain the deeper sources of low income growth rates in middle-income countries. Later on, we discuss whether there is an ideal cultural background to increasing growth. This chapter closes with reference to issues of economic policy and, more particularly, austerity policy and the neo-Keynesian approach to stabilization policies, using South Europe as a case study.

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Footnotes
1
The 61 countries in the sample constitute 88.52 % of the global GDP in 2007 (IMF Database). The countries are: Argentina, Australia, Austria, Bangladesh, Belgium, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Czech Rep., Denmark, El Salvador, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, South Korea, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Morocco, the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovak Rep., Slovenia, Spain, Sweden, Switzerland, Thailand, Trinidad and Tobago, Turkey, United States, Uruguay, Venezuela and Vietnam.
 
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Metadata
Title
Cultural Background, Growth and Economic Policy
Author
Panagiotis E. Petrakis
Copyright Year
2014
Publisher
Springer Berlin Heidelberg
DOI
https://doi.org/10.1007/978-3-642-41440-4_16