44 Chapter 2 Mozambique, and Zimbabwe, countries that instead turned out to be growth disasters despite high initial investment and high subsequent aid. We have real superstars like Singapore, Hong Kong, Thailand, Malaysia, and Indonesia (superstars until very recently, at least) that the financing gap predictions did not pick up. These were countries that had low initial investment or low subsequent aid (or both) yet grew rapidly. There is virtually no association between predicted and actual growth. Fifty Years Is Enough The aid-financed investment fetish has led us astray on our quest for growth for fifty years. The model should finally be laid to rest. We should eliminate the notion of the financing gap altogether, with its spurious precision on how much aid a country needs. We should not attempt to estimate how much investment a country ”needs” for a given target growth rate, because there is no stable short-run link between investment and growth. We should not attempt to estimate
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This note was uploaded on 10/13/2008 for the course ECON 204 taught by Professor Cabal during the Spring '08 term at Williams.