Growth Diagnostics is a strategy for identifying policy reform priorities to drive economic growth. The process works by identifying the binding constraints, or most pressing barriers, to economic growth, and then prescribes policy reforms aimed at addressing these issues. This method acknowledges that each country and context is different, and aims to provide country-specific recommendations on reforms that will provide the most “bang for the buck.”
Source: Hausmann, Rodrik, & Velasco, 2005.
Why Growth Diagnostics?
While most economists agree on the fundamental list of reforms identified as growth promoting, it is clear that the success of these reforms is dependent on each country’s context. Growth Diagnostics is an important tool when deciding how to strategically allocate limited resources based on the specific country’s context and most pressing constraints to growth.