Search

This paper constructs a stochastic growth model that anchors on technology diffusion and improvement in social infrastructure to explain the growth of developing countries. The model is based on the technological diffusion model by Barro and Sala-i-Martin (1997) with two significant extensions: the (productivity) parameter in the model which represents social infrastructure is being endogenized and probability of adverse shocks is being incorporated. The stochastic technological diffusion model is able to explain the various economic growth and transition phases of developing economies. Technology diffusion is modeled as the determinant of conditional convergence, while technological progress and economic openness further strengthen the social infrastructure bringing about absolute convergence. The model is also able to explain why some developing economies experience economic take-off while others do not.

In an attempt to advance our understanding of the potential long-run benefits of macroeconomic stabilization policies, the paper studies the long-term effects of economic slowdowns. We construct a discrete-time endogenous growth model, in which a recession, defined as a reduction in resource utilization for a limited number of periods, may have long-lasting detrimental effects on the growth path of the economy. We study the long-term consequences of recessions of various durations and intensities by comparing an economy that grows at steady state rates to one that experiences a recession. The long-run effects of a recession are estimated as the discounted present value of the output differences of the two economies. Our results show that even mild recessions, such as those observed in the last 50 years in the U.S., can have long-lasting adverse level effects on output. A typical recession that causes a 1% reduction in GDP for one year, after which the economy returns to its steady-state 3% growth rate, may result in output losses whose present value is equivalent to 6.5% of the pre-recession output.

By constructing a panel dataset from nine OECD countries for the period 1971-1999 and adopting up-to-date panel cointegration estimation methods, the paper shows the robustness of long run positive relationship between inward foreign direct investment and productivities of host countries. Especially, with group mean fully modified OLS, the estimation model allows common time dummies to control possible cross-sectional dependence and also allows heterogeneous cointegrating vectors for the members of cross section. The paper also confirms the long run equilibrium relationship between domestic knowledge stocks and productivities in G7 countries.

This paper incorporates data on efficiency and output per worker for 1965 and 1990 for 57 countries divided into four groups to seek an understanding of similarities and differences among them. Tools employed were testing for equality of means and testing for convergence. The findings indicate that the gaps between the groups were widened during the period studied for both efficiency and output per worker. While divergence was observed when all countries were grouped in one set, there were indications of convergence when the groups were treated separately.

This paper shows that consideration of the role of direct spillovers through information networks is crucial in empirical studies of international R&D spillovers. Data on line penetration rates are used to construct foreign R&D capitals that directly spill over across borders. The conspicuous indirect effects through imports of intermediate goods shown in previous studies diminish considerably when the estimation controls for direct effects. Instead, direct spillovers are strong and significant. In the 1980s, direct effects were stronger than in the 1970s, especially among G7 countries. Indirect effects were insignificant in the 1970s and were significantly negative in the 1980s.

This paper analyses the consequences for growth during the transitional period of considering the learning-by-doing process proposed by Arrow (1962) as internal, instead of as an externality. To do this, it develops a simple endogenous growth model with human capital accumulation through external and internal learning processes. The calibrated model delivers two features of the Japanese growth experience: slow convergence, and negative correlation between the growth rate of per capita GDP and investment share. The crucial implication of internal learning-by-doing is the double role of physical investment that operates reducing diminishing returns to physical capital.

This paper attempts to answer the question: How does the income gap between workers and capitalists evolve over time in the period of ITC and globalization increasing international technology creation and transfers? The model bases on a Romer¡¯s type of variety expansion of intermediate goods. We assume that there are two types of agents supplying two different types of factors. Workers supply specific skill weighted labor by accumulating their specific skills that depreciate with an introduction of new intermediate goods. The other type of agents, R&D agents, produce and sell new varieties of intermediate goods monopolistically after inventing them. The model yields: Depending on the elasticity of substitution between the two factors and on the value of the factor share, an increase in the efficiency of technology creation (or lowering the barriers on the imports of intermediate goods) affects the growth rates of workers¡¯ and R&D agents¡¯ average income differently. First, if the elasticity of substitution is greater than one, in a certain stage of development, an advance in ITC or ¡®globalization¡¯ increases the growth rate of R&D agents¡¯ average income, while it decreases that of workers¡¯. Thus, the ¡®Digital Divide¡¯ happens. Conversely, if the elasticity of substitution is less than one, the result will be reversed. These results are intuitively obvious. Second, if an economy develops from a higher factor share of the workers to a sufficiently lower one, the growth rates of GNP, and the average incomes of both workers and R&D agents increase over time.