The last decade of the 20th century saw great progress in parts of the world. But it also saw stagnation and setbacks, even in countries that had previously achieved the fastest rates of economic growth. These gaping differences and sharp reversals teach us much about what contributes to development. At the center is economic growth, not just its pace but—as important—also its quality. Both the sources and the patterns of growth shape development outcomes.

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Complete text of the report (1.1 MB)

Table of Contents (120K)

Foreword (54K)

Preface (49K)

The Report Team (30K)

Overview (99K)
Also available in French (130K PDF), Russian (427K PDF), and Spanish (125K PDF)

• Development Outcomes and Growth Processes
• Principles of Development
• Neglected Actions in the Growth Process
• Shifting Priorities

1. A Mixed Development Record (162K)

• Assessing Development
• The Development Record
• Growth and Welfare
• External Factors Matter
• Domestic Policies Make a Crucial Difference
• Crucial Issues for Action

2. Assets, Growth, and Welfare (136K)

• A Framework
• Empirical Evidence
• Conclusions

3. Improving the Distribution of Opportunities (186K)

• Potential Benefits of Education
• Quantity Is Not Enough—Quality Matters
• Achieving Equitable Education and Social Inclusion
• Improving the Efficacy of Public Spending
• Making Education More Productive
• Conclusions

4. Sustaining Natural Capital (193K)

• Extensive Losses
• Significant Benefits of Environmental Action
• The Growth–Natural Capital–Welfare Nexus
• Incorporating Environmental Sustainability in Growth Policies
• Rethinking the State's Role
• Global Environmental Issues Must Be Confronted
• Conclusions

5. Dealing with Global Financial Risks (193K)

• Expansion of Capital Markets and Volatility of Capital Flows
• Causes and Consequences of Capital Flow Volatility
• Past and Present Risk Management
• A Broad Framework of Risk Management
• Conclusions

6. Governance and Anticorruption (211K)

• Governance Affects the Quality of Growth
• Corruption Undermines Growth and Development
• Causes of Corruption
• A Multifaceted Anticorruption Strategy
• Conclusions

7. Seizing the Opportunities for Change (98K)

• The Framework and Themes
• Actions to Ensure Quality
• Where Have the Policies for Quality Worked—or Not?
• Political Economy of Quantity versus Quality
• Going Forward
• Bibliography and References (188K)

Annexes

1. Broad Objectives and Instruments (83K)

• Goals and Policy Measures
• Composite Indexes of Human and Sustainable Development

2. Framework and Evidence (165K)

• A Welfare Function
• Private Sector Optimization
• Econometric Specification Used to Estimate Growth Functions

3. Distribution of Education, Openness, and Growth (115K)

• The Extended Production Function with Distribution of Education
• Empirical Analysis on Education and Investment Returns
• Selected Literature on Asset Distribution and Growth

4. Measuring Natural Capital (51K)

5. Financial Openness (96K)

• Note on Country Vulnerability and Volatility Measures
• Note on Gross Domestic Product Gaps
• Note on the Binomial Logit Model
• Summary Statistics for Variables Used in Chapter 5

6. Governance and Corruption Indexes: Aggregation (92K)

• Methods, New Empirical Measures, and Econometric Challenges
• Defining and Unbundling Governance
• Measuring and Unbundling Corruption