Openness and economic growth in developing countries

Openness and Economic Growth in Developing Countries. — Openness appears to have a strong impact on economic growth especially in DCs which typically exhibit a high share of physical capital in factor income and a low share of labor. In the neoclassical growth model with partial capital mobility, physical capital’s share in factor income determines the difference in the predicted convergence rates for open and closed economies. With a 60 percent share as in many DCs, the convergence rates should differ by a factor of 2.5. The regression results for a sample of open and closed DCs roughly confirm this hypothesis.     

Market penetration by entry-exit dynamics

A generic characterization of the dynamics of market penetration by technological artifacts is here formulated on the basis of entry rate and exit rate considerations. It is shown that low-order reductions lead to the biologically based logistic dynamic, which—by empirical fit—has been found to be in very good agreement with numerous specific cases. In addition to the derivational justification of the logistic for artifact market penetration, we find that but a small number of parameters are involved in these autonomous characterizations suggesting therefore that market penetration may well be reduced to a similarly small number of dominant operative processes. Some nonautonomous extensions are also discussed.     

Accounting for the stock of human capital: Selected evidence and potential implications

Accounting for the Stock of Human Capital: Selected Evidence and Potential Implications. — Given the observed distribution of output and labor across countries, most capital flows should be from rich to poor countries. As is shown for a limited sample of countries, accounting for differences in the stock of human capital substantially reduces the implicit cross-country rate of return differentials. Additionally, accounting for human capital externalities based on independent empirical evidence, turns around the predicted rate of return differentials in favor of rich countries. Hence, the world economy may converge to a rather unequal distribution of incomes as long as human capital accumulation is neglected as the key variable limiting economic development.