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This paper investigates the main postulations of the R&D based growth models that innovation is created in the R&D sectors and it enables sustainable economic growth, provided that there are constant returns to innovation in terms of R&D. The analysis employs various panel data techniques and uses patent and R&D data for 20 OECD and 10 Non-OECD countries for the period 1981–97. The results suggest a positive relationship between per capita GDP and innovation in both OECD and non-OECD countries, while the effect of R&D stock on innovation is significant only in the OECD countries with large markets. Although these results provide support for endogenous growth models, there is no evidence for constant returns to innovation in terms of R&D, implying that innovation does not lead to permanent increases in economic growth. However, these results do not necessarily suggest a rejection of R&D based growth models, given that neither patent nor R&D data capture the full range of innovation and R&D activities.

Investments: Stocks --- Labor --- Macroeconomics --- Production and Operations Management --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Personal Income, Wealth, and Their Distributions --- Labor Economics: General --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Investment & securities --- Labour --- income economics --- Stocks --- Human capital --- Personal income --- Total factor productivity --- Income --- Labor economics --- Industrial productivity --- United States --- Income economics

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Under what conditions should grants be preferred to loans? To answer this question, we present a simple model à la Krugman (1988) and show that, for any given level of developmental assistance, the optimal degree of loan concessionality is positively associated with economic growth if countries are poor, have bad policies, and high debt obligations. We then test our model by estimating a modified growth model for a panel of developing countries, and find evidence supporting our predictions. Finally, we assess the determinants of current aid allocations and find that the degree of concessionality is negatively correlated with countries' levels of development.

Economic assistance. --- Grants-in-aid. --- Economic development. --- Federal grants --- Grants --- Intergovernmental fiscal relations --- Economic assistance, Domestic --- Local finance --- Economic aid --- Foreign aid program --- Foreign assistance --- Grants-in-aid, International --- International economic assistance --- International grants-in-aid --- Economic policy --- International economic relations --- Conditionality (International relations) --- Development, Economic --- Economic growth --- Growth, Economic --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Budgeting --- Exports and Imports --- Industries: Financial Services --- Environmental Economics --- Foreign Aid --- Debt --- Debt Management --- Sovereign Debt --- Economic Growth and Aggregate Productivity: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- National Budget --- Budget Systems --- Environmental Economics: General --- International Lending and Debt Problems --- Finance --- International economics --- Budgeting & financial management --- Environmental economics --- Loans --- Aid flows --- Budget planning and preparation --- Environment --- Concessional external borrowing --- Financial institutions --- Foreign aid --- Public financial management (PFM) --- External debt --- Economic assistance --- Budget --- Environmental sciences --- Debts, External --- United States

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Using firm-level data from more than 39,000 firms in 111 economies, this paper tests the hypothesis that corruption impedes productivity more at higher levels of regulation. The analysis finds that there is a significant negative relationship between corruption and firm productivity when regulation is high and an insignificant relationship when it is low. These findings are robust to different controls and specifications.

Access to Finance --- Business Environment --- Corporate Governance and Corruption --- Corruption --- Firm Productivity --- Private Sector Development --- Public Sector Development --- Public Sector Reform --- Regulation --- Service Delivery

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Panama's growth model is at crossroads and the country must be prepared for the new growth model. The objective of this study is to investigate the drivers and constraints of growth and productivity in Panama and explore areas with high growth potential. The value added of the study is to provide an in-depth analysis of the drivers and constraints of Panama's growth using a wide range of analytical tools. The analysis employs several quantitative methods to provide an objective assessment of the drivers and constraints of growth in Panama, including the long-term growth model (LTGM), computable general equilibrium model (CGE), growth diagnostics and product space analyses. The novelty of this study is to employ the same framework, analytical tools, and data to conduct a parallel analysis for each Central American country to allow for a meaningful cross-country comparison. Therefore, given the wide breadth of the study, in terms of the methodologies used, themes analyzed, and countries covered, it does not envisage to deep dive into each driver and constraint of growth and provide granular policy recommendations. The core objective of this study is to inform the policy makers and other interested parties about the country's strengths and weaknesses for its growth, and to establish the analytical basis for a subsequent investigation of specific areas.

Access To Finance --- Corruption --- Economic Growth --- Export Competitiveness --- Innovation --- Labor Market --- Macroeconomics and Economic Growth --- Social Protections and Labor --- Total Factor Productivity

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Central America comprises a diverse set of countries, including two high-middle-income countries (Costa Rica and Panama), two of the poorest countries in Latin America and the Caribbean (Honduras and Nicaragua), and two middle-income economies (Guatemala and El Salvador). Low productivity and weak institutions are behind the modest economic growth in Central America in recent years. Both the common features and striking differences among Central American countries provide a fertile ground for exploiting complementarities. Common features include: (i) strong economic links to the United States; (ii) high labor mobility across countries and a high level of informality; (iii) the relatively poor quality of infrastructure, including border crossings; (iv) a concentration of poverty in rural areas, with a low provision of public services, that affect particularly vulnerable groups such as indigenous and Afro-descendent populations; and (v) a high exposure to natural disasters and economic and financial volatility. The economies of each of the six countries in the sub-region were heavily affected by Coronavirus disease 2019 (COVID-19). In order to restore economic activity in the short run and increase potential output over the long run, Central America should launch coordinated policy action in five areas: (i) global value chain (GVCs); (ii) trade integration; (iii) formalization; (iv) management of volatility; and (v) remittances (for the northern Central American countries). The findings and recommendations emerging from the analyses are presented in the report.

Business Environment --- Economic Growth --- Export Competitiveness --- Fiscal Policy --- Foreign Direct Investment --- Global Value Chains and Business Clustering --- Investment Climate --- Labor Mobility --- Macroeconomics and Economic Growth --- Private Sector Development --- Productivity --- Remittances --- Trade Facilitation