Workers manufacture garment that will be exported to the European Union in Huaibei city, Anhui province, Dec 8, 2015. [Photo/IC]

To understand the weak, deteriorating and fragile growth patterns seen in many countries nowadays and in the global economy as a whole, one should compare what is actually happening with what reasonably comprehensive growth strategies might look like. Of course, there are many policies that sustain high growth, and to some extent they are country-specific. But a few key ingredients are common to all known successful cases.

The first is high levels of public and private investment. In successful developing countries, investment is at or above 30 percent of GDP. The public-sector component (infrastructure, human capital, and the economy's knowledge and technology base) is in the 5-7 percent range. And public and private sector investments are complementary: the former raises the rate of return to the latter, and hence its level.

Private domestic and foreign investment is influenced by a host of other factors that affect risks and returns. These include the skills of the workforce, the security of property rights and related legal institutions, ease of doing business (for example, the process and time required for starting a business, and the absence of rigidities in its product and factor markets (those for labor, capital and raw materials).

Above all, the investment climate is positively influenced by stability－both competent and alert macroeconomic management and political effectiveness and continuity. Conversely, uncertainty about growth, or the commitment to a reasonably coherent reform agenda, will harm investment.

A second common ingredient of sustainable growth strategies is that financing these relatively high levels of investment comes from domestic savings. Substantial reliance on external savings (as reflected in persistent high current account deficits) seems to end badly－in debt crises and major growth setbacks.

Openness to the global economy with respect to trade and investment is critical as well.

Foreign direct investment, for example, is a key channel for transmitting and adapting the accumulated stock of global technology and knowhow. And export competitiveness is raised as investment pours into the construction of links in global supply chains.

The capital account is a more complicated story. Generally, successful developing economies have managed it to prevent excessive volatility, including volatility resulting from external shocks or imbalances and from excessive reliance on external financing. In addition, most successful countries manage the exchange rate to keep it in line with productivity growth, using a combination of capital controls, monetary policy and reserve accumulation or "decumulation". Overvalued and undervalued currencies both have different adverse effects, though persistent overvaluation is more problematic for stability and growth.

Finally, inclusiveness is also a key component of successful development strategies. Growth patterns that systematically exclude subgroups founder on the loss of political and social cohesion and, ultimately, on the loss of support for the strategy. By contrast, income inequality that is not too extreme, and that does not arise from corruption or privileged access to markets, is understood and accepted. The provision of high-quality basic services like education and healthcare is viewed as crucial for equality of opportunity and intergenerational mobility.

Against that backdrop, one can assess current growth patterns in the global economy and its various parts.

In short, a reasonably comprehensive strategy for restoring country-level and global growth would include measures to elevate and remove obstacles to public and private investment, thereby contributing to aggregate demand. It would also include a variety of reforms to strengthen private investment incentives. And it would include an inclusiveness agenda directed at structural disequilibrium in labor markets and potentially destructive income inequality. Thus far, with few exceptions, such comprehensive growth strategies have been missing.

The author, a winner of the Nobel Prize in economics, is professor of Economics at New York University's Stern School of Business and senior fellow at the Hoover Institution.

Project Syndicate