Many countries, both industrialized and developing, appear to have experienced a slowdown in economic growth. Recent research on structural change in time-series econometrics has made considerable progress in recent years, enabling an endogenous determination (that is, with no ex ante preference given to any particular year) of the timing and significance of each country's break year. In Discussion Paper No. 1111, Research Affiliate Dan Ben-David and David Papell examine a sample of 74 countries, finding that a majority exhibit a significant structural break in their post-war growth rates. They document the scale of that phenomenon.

Three dimensions in particular are examined in an attempt to locate some common features. These include: a) the timing of the breaks; b) their regional characteristics; and c) the severity of the slowdowns. In nearly all of these cases the break was followed by a growth slowdown. The breaks fall into two primary periods which delineate countries by developmental and regional characteristics as well as by the magnitude of the subsequent slowdowns. According with popular conception, most of the industrialized countries experienced a negative break in their post-war GDP growth during the years of the first oil embargo. But what appears to be a relatively strong finding for the industrialized countries is not nearly as strong elsewhere in the world. Developing countries, particularly Latin American ones, experienced their turnaround between 1978-83, years that coincided with the second oil shock, and possibly more important for these countries, the beginning of the debt crisis.

Slowdowns and Meltdowns: Post-war Growth Evidence from 74 Countries
Dan Ben-David and David H Papell

Discussion Paper No. 1111, February 1995 (IM)