Emerging markets

The club of high-performing emerging markets is fairly concentrated in East Asia. Their TFP growth may not be extraordinary, though their growth rate is unprecedented. Factors argued to promote growth include trade, investment, external financing, and good governance. The importance of external financing is overrated - higher growth induces higher saving rate, allowing investment to be selffinanced. Institutional changes as the key for take-off remains debatable - India and China took off without any prior major institutional overhaul. Allowing newcomers to challenge incumbents and the capacity to adjust policies to shocks may be the keys for sustainable growth.