DefinePK

Abstract

It is more than two decades that economic growth and its determinants have been of great importance in both theoretical and applied aspects. All these theories have been focused to find out why growth rates across countries are different and what factors cause this difference. The primary origin of almost all growth theories and models is the needs and the requirements of developed countries manifested in the neoclassical theory. A key prediction of the neoclassical growth models which has been frequently applied as an empirical hypothesis in recent years is conditional convergence; in the sense that the lower (compare to long-run or steady-state position) the starting level of per capita gross domestic product, the faster the growth rate. Many less developed countries have had a growth experience that was very far from the conditions of a steady-state. This study reviews the literature of growth theories and models to investigate their relevance and applicability to less developed economies. The findings of this research showed that contemporary growth theories and models have not been capable enough to determine the main factors affecting economic growth rates in less developed countries. Even if a few of these determinants have been indicated in economic growth literature, their definitions and measurements in less developed countries are imprecise and different from those in developed countries. The current economic growth theories do not take into account cultural variables and religion as necessary, while religion is an important aspect of culture offering a set of values essential for economic development.