Macro-economists, Antonio Fatas and Ilian Mihov, described a framework called 4 I’s to describe the ‘essence’ of economic growth theory. It specifies four important characteristics that often help to explain or anticipate the rate and scale of economic development that nations experience.
4 I’s of Economic Growth
- Innovation fostered by incentives such as intellectual property rights to create productivity growth.
- Initial conditions describe the potential for poor or lagging countries to ‘catch-up’ through means of technology and productivity adoption / diffusion.
- Investment (unsurprisingly) in forms such as physical capital, education and technology.
- Institutions that enable political stability, investment and sound macroeconomic policies. This include independent central banks, checks and balances, rule of law, etc.
References
Source: Fatas, A., and Mihov, I. (2009). The 4 I’s of Economic Growth, INSEAD.
Available at <https://faculty.insead.edu/fatas/wall/wall.pdf>