The Impact of Orthodox & Heterodox Policies on Economic Growth in Developing Countries: Empirical Evidence

The purpose of this paper is to examine the effects of orthodox and heterodox policies on economic growth in some developing countries. During recent decades especially after the establishment of the World Bank and International Monetary Fund which both supporting the so-called neoclassical growth theory, a similar policy package called orthodox policies was introduced to promote economic growth in developing countries. The package included policies such as lower government economic intervention; capital liberalization; and so on. However, the unsuccessful experiences of some developing countries used the prescribed package, cast some doubt in terms of efficiency of the these policies. In other words, some believe that countries used the package ended up with lower productivity as well as lower economic growth and experienced an increase in unproductive investment which caused financial crisis. In this paper we have used panel data in an econometrics model for some developing countries during ۱۹۹۰-۲۰۰۳, in order to determine the effects of orthodox & heterodox policies on economic growth of countries under consideration. Our findings indicate that due to inefficiencies of markets and structural bottlenecks in these countries, the orthodox policies did not have a significance effects. However, the usage of heterodox policies regarding the role of investment, have positive and significance effect on economic growth. Therefore, more emphasis on heterodox policies in these countries has been suggested.