Human capital use,innovation, patent protection,and economic growth in multiple regions

We provide the first theoretical analysis of the effects of human capital use, innovative activity, and patent protection, on economic growth in a model with many regions. In each region, consumers have constant relative risk-aversion preferences, there is no human capital growth, and there are three kinds of manufacturing activities involving the production of blueprints for inputs (machines), the inputs themselves, and a single final consumption good. Our analysis generates four results. For any given region, we first describe the balanced growth path (BGP) equilibrium and show that the BGP growth rate depends negatively on the rate at which patents expire. Second, we characterize the transitional dynamics in our model. Third, we determine the value of the patent expiry rate that maximizes the equilibrium growth rate of a region. Finally, we show that a policy of offering perpetual patent protection does not necessarily maximize social welfare in a region.     

Can sustained economic growth and declining population coexist?

Most of the developed countries have been experiencing sub-replacement fertility. This leads to worries over the sustainability of economic growth in these countries. Given this concern, we ask the following questions: Is there a force that would allow economic growth and declining population to coexist? Is there a mechanism that could reverse the decline in fertility? We argue that returns to human capital in production provide the key to understanding this relation. Our theoretical framework predicts that, when the degree of increasing returns to human capital in traditional production technologies falls, advanced economies switch their productive efforts from labor-oriented technologies that require a constant creation of young workforce toward human capital-oriented technologies that support an ageing population. We call this shift the “endogenous efficiency-augmenting mechanism”. This suggests that sustained economic growth and a declining population can coexist in the long run. Finally, we compare our model against the data and find: (i) The degree of increasing returns to human capital has been falling over time throughout the world along with population growth rates. (ii) Increasing returns to human capital and population growth rates are positively correlated. (iii) Predictions of our model are consistent with what the data reveal.     

Regional economic growth disparities: A political economy perspective

Regional differences in economic growth have been observed within many countries. Our story emphasises three region-specific factors driving growth—capital, labour and political factors. Conditional on differences in production factor (i.e., labour and capital) variations across democratic states, what role do differences in underlying “political factors” across regions play in accounting for regional growth disparities? We build a political economy model of endogenous growth where regions have the same political institutions, but experience different (and estimable) distributions over voter political biases (i.e., our “political factors”). In our model, political factors affect regional productivity as a consequence of politico-economic equilibrium. We discipline our regional growth accounting exercises by calibrating/estimating each model to American state-level economic and political-survey data. We show that the capital factor is the predominant driving force behind growth in American states. Nevertheless, regional variations in distributions of voter's political biases also account a great deal for regional growth disparities. We also evaluate how much politics would have distorted agents' welfare and regional growth, were regional economies given the opportunity to live under an efficient social planner's allocation system; and, if agents were to live under the same democratic system but where all voters have equal voting influence.     

Finance and sources of growth: evidence from the U.S. states

How does financial development affect economic growth: through its impact on accumulation of physical and human capital or by boosting total factor productivity (TFP) growth? We use a new data set on output, inputs, and total factor productivity for the US states to study this question. Unlike previous cross-country research that tries to disentangle the channels through which financial development impacts growth, we use a plausibly exogenous measure of financial development: the timing of banking deregulation across states during the period 1970–2000. At the same time our new data set allows us to go beyond what was previously done in the state banking deregulation literature and identify whether finance impacts states’ input accumulation or TFP growth. We find, in line with existing cross-country studies, that deregulation boosts growth by accelerating both TFP growth and the accumulation of physical capital without having any impact on human capital. In contrast to the cross-country studies, we also find that the effects of deregulation are largely independent of states’ initial level of development; both rich and poor states grow faster after deregulation. Additionally, since our data set breaks down aggregate output into three sectors: agriculture, manufacturing, and the remaining industries, we are able to show that deregulation accelerates the growth of productivity in manufacturing. This last finding answers an important critique of the banking deregulation studies which asserts that observed growth effects may be coming from the growth of financial industry itself and not from the beneficial effect of finance on other industries, such as manufacturing.     

Is foreign trade important for regional growth? Empirical evidence from Portugal

The aim of this study is to investigate whether openness, export shares or trade balances affect regional growth in Portugal. Human capital is also considered as a conditional factor to growth, expressed by the rate of success in high school education. Thus, we analyse whether the combination of international trade and human capital is relevant to explain regional growth in Portugal and how it affects the convergence process between regions. In the empirical analysis, interaction terms are introduced to explore the existence of different performances between regions of the Littoral and the Interior. As an alternative to the traditional approach that considers the population growth rate, we include the share of sectoral employment aiming to capture labour specialisation in the main sectors of economic activity and measure its impact on regional growth.The empirical analysis estimates the conditional convergence model of the Barro's type, applied to the Portuguese NUTS3 regions for the period 1996-2005. The GMM estimation approach applied to regional panel data reveals that factors associated with external trade, human capital and sectoral labour share (especially of the industrial sector) are relevant to explain regional growth and convergence in Portugal.     

人力资本与区域经济增长:只是线性关系吗

本文通过引入人力资本部门内的溢出效应,在理论模型推导基础上,利用中国省际面板数据考察了人力资本对经济增长的非线性影响。实证结果发现全国范围和东部地区的人力资本与经济增长之间存在鲜明的非线性关系,且东部地区人力资本溢出效应的门槛值(7.68)明显高于全国平均水平(5.81);同时,由于受人力资本自身存量以及区域经济发展阶段的影响,中、西部地区人力资本与经济增长之间并不存在非线性关系,只存在一般的线性关系。     

Non‐Scale Endogenous Growth with R&D and Human Capital

This paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. A general model is developed where, consistent with recent literature, growth is non‐scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non‐scale endogenous growth is possible under less stringent conditions. The findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.     

Output Growth Decomposition in the Presence of Input Quality Effects: A Stochastic Frontier Approach

How do physical capital accumulation and total factor productivity (TFP) individually add to economic growth? We approach this question from the perspective of the quality of physical capital and labor, namely the age of physical capital and human capital. We build a unique dataset by explicitly calculating the age of physical capital for each country and each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five regions of countries (Africa, East Asia, Latin America, South Asia and West). Physical capital accumulation generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth. The age of capital decreases growth in all regions except in Africa, while human capital increases growth in all regions except in East Asia.     

Granger causality tests among openness to international trade,human capital accumulation and economic growth in China: 1952–1999

Abstract

This study examines Granger causality among openness to international trade, human capital accumulation and economic growth in China using time series data over the period from 1952 to 1999 and a sub-period, i.e. a period from 1978 to 1999. For the 1952–1999 period, economic growth is found to Granger cause human capital accumulation and not vice versa. For the 1978–1999 period, economic growth and openness to international trade, economic growth and human capital accumulation, and human capital accumulation and openness to international trade are found to have bidirectional Granger causality, respectively. Thus, there is a dynamic relationship among openness to international trade, human capital accumulation and economic growth. The experience of economic reform in China could be an example to other developing countries.     

Social status, human capital formation and super-neutrality in a two-sector monetary economy

In this paper, we study how social status affects the impact of monetary policy on the long-run growth rate in a two-sector monetary economy with human capital accumulation, and find that the super-neutrality of money, with regard to the growth rate of the economy depends on the formation of human capital. In an economy with Lucas-type human capital formation, money is super-neutral; however, for an economy in which both physical and human capital are used as inputs for human capital accumulation, the money growth rate will have a positive effect on the long-run economic growth rate. The existence, uniqueness and saddle-path stability of balanced-growth equilibrium are also examined.     

Income inequality and economic incentives: Is there an equity–efficiency tradeoff?

What is the basis and direction of relationship between income inequality and economic growth? The equity versus efficiency dictum which predicts a positive relationship between inequality, capital formation, and real GDP growth—emphasizes the importance of economic incentives. Subsequently, this was challenged by the incomplete markets and political outcomes theories, because of increasing empirical evidence of an inverse relationship between income inequality and economic growth. In this paper, we offer a further explanation of the basis and nature of the inequality–capital–growth relationship which emphasizes the divergence between savings and investment. For the United States over the period 1970–2006, we have found no empirical evidence for the support of the equity versus efficiency hypothesis—that economic incentives are necessary for capital accumulation and growth. In fact, it was discovered that in most cases, inequality has had little or no impact on movements in the US capital stock, net investment, and consequently, economic growth. Another interesting finding of this study was that inequality exhibits hysteresis—implying that any positive shock, such as the dot-com boom, can lead to persistent and enduring increases in inequality.     

Growth of villages in China, 1990–2002

This paper examines the economic and noneconomic determinants of growth disparity among Chinese villages between 1990 and 2002. By estimating a growth equation, first, we confirm a significant positive effect of the initial level of human capital, as well as the initial condition of physical infrastructure. Second, social capital measured by the degree of stable social relations at the village level is also a significant growth-promoting factor. The policy implications of our findings are that public policy promoting social stability in rural areas should be strengthened, as well as increasing financial support for rural education and infrastructure construction, especially in lower income regions.     

THE FIFTH ASIAN DRAGON: SOURCES OF GROWTH IN GUANGDONG, 1979–1994

This paper presents a growth accounting exercise to uncover the sources of spectacular growth in the Guangdong Province in China, the so-called "Fifth Dragon" in Asia, for the post-open-door period 1979–1994. A large fraction of Guangdong's output growth cannot be attributed to the growth in its capital and labor inputs. Of the unexplained residuals, foreign direct investment is a significant growth-spurring engine while export expansion is not. In this sense, China's open door policy did not generate export-led growth although it did stimulate capital accumulation through the importation of foreign capital.
"East Asia has a remarkable record of high and sustained economic growth. From 1965 to 1990 the twenty-three economies of East Asia grew faster than all other regions of the world…. Most of this achievement is attributable to seemingly miraculous growth in just eight economies: Japan; the 'Four Tigers' —Hong Kong, the Republic of Korea, Singapore, and Taiwan, China; and three newly industrializing economies (NIEs) of Southeast Asia, Indonesia, Malaysia, and Thailand…."     

自然资源丰裕程度与经济发展水平关系的研究

“资源的诅咒”是经济学中的一个经典假说,但这一命题在一国内部不同地区是否成立尚缺乏验证。本文以中国的省际面板数据为样本,对这一假说进行了实证检验。计量结果显示,该命题在我国内部的地区层面同样成立,多数省份丰裕的自然资源并未成为经济发展的有利条件,反而制约了经济增长。自然资源的丰裕以及对这种资源的依赖,主要是通过资本投入的转移机制制约了经济增长,劳动投入的转移机制也存在这种效应,但不如前者显著。本文选择山西为典型省份,进一步揭示“资源的诅咒”的作用机制。结果表明,密集而过度的资源开采引致的制造业衰退和制度弱化是制约经济增长的主要原因。     

Scale Effects,Savings and Factor Shares in a Human Capital-based Growth Model with Physical Capital Accumulation

Using a balanced-growth model with physical and human capital accumulation, we analyze quantitatively the long-run effects of changes in the savings rate and in income distribution (i.e. the shares of physical and human capital in income) on investment in skill acquisition, income growth, and the ratio of human to physical capital. In the long run, the ratio of physical to human capital is constant, so that these two factor inputs can grow at the same rate. This rate is a function of the economy's exogenous technological and preference parameters and depends positively on the share of skills invested in human capital formation. We also find that population growth is neither necessary nor conducive to economic growth, that the level of real income depends linearly on the level of human capital and that it is independent of population size.     

Growth with many agents and wages paid ex ante

In this paper, we consider a one-sector model of economic growth with several infinitely-lived heterogeneous agents, who are endowed with diverse discount factors as well as preferences over consumption. In line with the classical Ramsey model, agents are not allowed to borrow against future income. Unlike the traditional assumption of ex post wage payment, wages are paid ex ante in our model. We first explain the difference between the assumptions of wages being paid ex ante and wages being paid ex post in the framework of a simple illustrative two-class model. Our main result shows that in contrast to the many-agent Ramsey model with ex post wage payment, the capital stock sequence converges to the steady state stock irrespective of production technology employed by the firms. Further, all impatient agents own zero capital stock, whereas the most patient agent owns the entire capital stock from some time onward. Thus, we have shown that a slight modification in the timing of wage payment in growth models can lead to significant changes in the stability properties of equilibrium dynamics.     

要素生产率和要素配置作用下的中国城乡收入差距

根据城乡生产函数差异的特征事实构建了城乡收入差距模型,利用我国各省1997—2009年数据研究城乡劳动力比、固定资产比、人力资本比、农业中间品投入、工业化和第三产业规模对城乡收入差距的影响。结果显示,我国城乡要素生产率与城乡要素配置的差异对城乡收入差距具有决定性作用;城乡劳动力比的增长明显有助于缩小城乡收入差距,而城乡人力资本比、固定资本投入比、农业成本、以及相邻地区间的相关性都导致了城乡收入差距的扩大。缩小城乡差距的重要途径是加快农村劳动力的城市化、增加农村教育投入、提高农业生产率、增加农村的物质资本投入,各省缩小城乡收入差距的努力对邻近省份也会产生积极影响。     

Vintage Human Capital, Demographic Trends, and Endogenous Growth

We study how economic growth is affected by demographics in an OLG model with a realistic survival law. Individuals optimally chose the dates at which they leave school to work and at which they retire. Endogenous growth arises thanks to the accumulation of generation-specific human capital. Favorable shifts in the survival probabilities induce longer schooling and later retirement but have an ambiguous effect on per-capita growth. The long-term relationship between fertility and per-capita growth is hump-shaped. Increases in longevity can be responsible for a switch from a no-growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish. Solving numerically the equilibrium, demographic changes can have important medium-term effects even if long-term changes are very small. Journal of Economic Literature Classification Numbers: 041, I20, J10.     

Non-convexities in the adjustment of different capital inputs: A firm-level investigation

Recent developments in investment research have highlighted the importance of non-convexities and irreversibilities in firms’ adjustment of quasi-fixed inputs. Aggregation across capital goods may smooth out the discontinuities associated with the adjustment of individual assets. Lack of suitable data is one of the reasons why empirical work has typically relied on the assumption of capital homogeneity. In this paper we exploit a data set of 1539 Italian firms which allows us to disaggregate capital into equipment and structures, and purchases and sales of assets. We construct measures of fundamental Q to capture investment opportunities associated with each asset. We uncover the pattern of dynamic adjustment by using non-parametric techniques to relate each individual investment to its own fundamental Q.     

Economic complexity,human capital and economic growth: empirical research based on cross-country panel data

Economic complexity reflects a country’s production capabilities and plays an important role in economic growth. This article measures the economic complexity of 210 countries using the method of reflections, and investigates the impact of economic complexity and human capital on economic growth. The measurement results show that there are significant differences regarding the level of complexity among countries. High-income economies have higher complexity than low- and middle-income economies. The empirical findings demonstrate that economic complexity and different levels of human capital have positive effects on long- and short-term growth. A positive interaction effect on economic growth exists between economic complexity and human capital. In addition, secondary education as a proxy for human capital has a relatively greater positive direct effect and a much stronger interactive effect with complexity on economic growth. In addition, the magnitude of the interaction effect between economic complexity and human capital on long- and short-term growth increases as the revealed comparative advantage threshold grows.