Clearing out the dummies in growth theory

Economic growth theory is the study of what makes countries grow and how quickly they do it. It has been heavily studied in the last twenty years, and there are many different definitions and proposals associated with it.

Some of the ideas do not appeal to me because they seem to embed ignorance within the model. I've talked in an earlier post about how I often dislike lagged income terms in models such as
income this year = 1.06*income last year + other terms. The reason is that income does not magically appear this year because it existed last year, but rather because, for example, the networks which existed last year continue to exist this year. Income last year is a proxy term, and has all the inaccuracy associated with them.

The complaint I have about some other growth theoretical models is similar. For example, the inclusion of regional dummies, where different parts of the world have different potential income levels just because of where they are, gets me down. If a region has a dummy, then research should treat it as a transition model for quick replacement by models including more meaningful variables like climate, history, or politics. I have similar concerns about models with multiple equilibria, although they may have intrinsic value in exceptional circumstances such as for handling hysteresis where income depends on the timing of past economic development.