Conclusion and outlook

This study makes three contributions to the growth literature. First, it suggests that the most appropriate theoretical model of the long-run growth process is an augmented Kaldor model that includes physical capital, human capital and trade openness in the technical progress function. Second, it shows that the hypothesis of pair-wise cointegration derived from a number of theoretical models is present in the data for both rich countries and emerging markets. And third, it presents a set of forecasts for GDP growth for 40 countries until 2020 using weights on different models derived from a forecast competition.