Can Advanced Countries Stimulate Growth by following Emerging and Developing Economies?

The International Monetary Fund growth forecasts for 2010-11 suggest that emerging and developing economies (EDEs) are better positioned to weather the recent financial crisis. EDEs growth leads with forecasted levels of 6.25 percent, while advanced countries follow with growth levels of 2.5 percent. The recent US subprime crash provides evidence that a global recovery for advanced economies faces further threats as their financial sector still records capital shortages, asset deterioration continues and profits are weak. Starting with neoclassical growth models factors: total factor productivity, technological progress and long run growth policies; I also test the importance of EDEs factors: renewed capital flows, currency appreciation, booming domestic demand and strengthening democracies. Causality tests of countrywide data from 1960 to 2008 narrow down which of these factors will be better for stimulating growth in advanced economies.