What underlies the recent growth comeback in developing economies?

We find that the frequency of growth takeoffs in developing economies has risen markedly in the past two decades, with recent takeoffs lasting longer than those prior to the 1990s. Also, unlike takeoffs prior to the 1990s, developing economies in recent takeoffs experienced an improvement in economic policies, with lower post-takeoff debt and inflation; more competitive real exchange rates; and stronger structural reforms and institutions. These conditions have tended to be associated in the literature as conducive to sustaining strong growth. We also find that the chances of starting a takeoff in the 2000s was triple that before the 1990s, with domestic conditions accounting for most of the increase. Thus, if developing economies improve their economic policies and sustain them forward, they are more likely to jumpstart takeoffs and avoid the reversals in economic fortunes that affected many developing economies in the past.