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Mr. Berthélemy is a Professor of Economics at University of Paris 1 Panthéon-Sorbonne and Mr. Söderling is an Economist in the African Department. We are grateful to Pierre van den Boogaerde, David Coe, Markus Haacker, Jun IL Kim, Arend Kouwenaar, Donal McGettigan and Papa Ousmane Sakho for helpful and valuable comments. Any remaining errors are the sole responsibility of the authors.
Both authors worked at the OECD Development Center at the time the project was carried out. A full report of the project is available in French and English - see Berthélemy and Söderling (2001b). Further information is available on the website of the Development Centre at www.oecd.org/dev.
In fact, over the 1990-98 period, there was a gap of 25 percentage points of annual growth between the best performer (Equatorial Guinea) and the worst (the Democratic Republic of the Congo).
The error correction model will not be shown, to save space. The interested reader is referred to an earlier version of Berthélemy and Söderling (2001a), available on line at www.oecd.org/dev, Technical Paper 150.
Côte d’Ivoire also reached the decision point in 1998, but progress came to a halt due to political considerations. However, discussions have resumed recently.
Berthélemy and Varoudakis (1997) also argue that in a fixed effect model estimation, the role of financial development is to a large extent incorporated in the country fixed effects: the principal impact of poor financial development is that it locks the economy in a low-equilibrium trap.