nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒02‒29
nine papers chosen by
Marc Klemp
Brown University

  1. Behind the Fertility-Education Nexus: What Triggered the French Development Process? By Claude Diebolt; Audrey-Rose Menard; Faustine Perrin
  2. Does skill-biased technical change diffuse internationally? By Schulte, Patrick
  3. State intervention and economic growth in Southern Italy: the rise and fall of the «Cassa per il Mezzogiorno» (1950-1986) By Felice, Emanuele; Lepore, Amedeo
  4. Regional Growth with Spatial Dependence: a Case Study on Early Italian Industrialization By Carlo Ciccarelli; Stefano Fachin
  5. A semi-endogenous growth model for developing countries with public factors, imported capital goods, and limited export demand By Hallonsten, Jan Simon; Ziesemer, Thomas
  6. Testing the Relationships between Energy Consumption, CO2 emissions and Economic Growth in 24 African Countries: a Panel ARDL Approach By Asongu, Simplice; El Montasser, Ghassen; Toumi, Hassen
  7. Public Expenditure, Demography and Growth: Theory and Evidence from India By Das, Pranab Kumar; Kar, Saibal
  8. Do R&D and ICT Affect Total Factor Productivity Growth Differently? By Edquist, Harald; Henrekson, Magnus
  9. Understanding Economic Growth in the Caribbean Region: A Conceptual and Methodological Study By J. Rodrigo Fuentes; Karl Alexander Melgarejo; Valerie Mercer-Blackman

  1. By: Claude Diebolt; Audrey-Rose Menard; Faustine Perrin
    Abstract: The education-fertility relationship is a central element of the models explaining the transition to sustained economic growth. In this paper, we use a three-stages least squares estimator to disentangle the causality direction of this relationship. Controlling for a wide array of socio-economic, cultural, and geographical determinants, our cliometric contribution on French counties during the nineteenth century corroborates the existence of a single negative causal link from fertility to education. We put forward the hypothesis that in France a decrease in fertility is strongly associated to greater schooling.
    Keywords: Education, Family, Fertility, Growth Theory, Nineteenth-Century, France.
    JEL: N33 O10 I25 J13
    Date: 2016
  2. By: Schulte, Patrick
    Abstract: This paper studies the question whether skill-biased technical change diffuses internationally and that way contributes to the increasing relative skill demand in other countries. So far, the role of skill-biased technology diffusion has hardly been studied empirically. Using new sectoral data for a panel of 40 emerging and developed countries, 30 industries (covering manufacturing and service industries) and 13 years (1995-2007), the analysis shows that skill-biased technology diffusion is statistically and economically important in explaining skill-biased technical change. Countries further away from the skill-specific technological frontier subsequently show higher skill-specific productivity growth. For that, the bilateral distance between two countries proves to be an important mediating factor, whereas intersectoral trade linkages, so far, explain only a small part of it. The main results hold for both, developed and emerging countries.
    Keywords: skill-biased technical change,technology diffusion,distance,inputoutput linkages,industry-level data,emerging and developed countries
    JEL: F16 J24 O14 O33 C67
    Date: 2015
  3. By: Felice, Emanuele; Lepore, Amedeo
    Abstract: In the second half of the twentieth century, the Italian government carried out a massive regional policy in southern Italy, through the State-owned agency «Cassa per il Mezzogiorno» (1950-1986). The article reconstructs the activities of the Cassa, by taking advantage of its yearly reports. The agency was effective in the first two decades, thanks to substantial technical autonomy and, in the 1960s, to a strong focus on industrial development; however, since the 1970s it progressively became an instrument of waste and misallocation. Below this broad picture, we find important differences at the regional level, and significant correspondence between the quality of state intervention and the regional patterns of GDP and productivity.
    Keywords: Southern Italy, regional development, State intervention, industrialization, convergence.
    JEL: H54 N44 N84 N94 R12
    Date: 2016–02–11
  4. By: Carlo Ciccarelli (Department of Economics and Finance, University of Rome Tor Vergata); Stefano Fachin (Department of Statistics, Sapienza University of Rome)
    Abstract: The paper estimates a conditional ß-convergence model of labor productivity growth in Italy’s manufacturing industry during 1871-1911, accounting for spatial dependence. The empirical evidence is based on a recent set of data at provincial (NUTS 3) level on manufacturing value added at 1911 prices, and a new set of data on human and social capital, political participation, and infrastructures. By focusing on a country and a time when the agglomeration forces and spillover effects advocated by the new economic geography were only starting to operate, we can investigate a particularly interesting case study. Our results suggest that human capital, a cooperative culture, and initial productivity in neighboring provinces can explain much of the geographical variability of productivity growth in manufacturing in nineteenth-century Italy.
    Keywords: ß-convergence, manufacturing, nineteenth-century, Italy, spatial dependence, labor productivity, human capital
    JEL: R11 O47 N64
    Date: 2016–02
  5. By: Hallonsten, Jan Simon (University of Uppsala); Ziesemer, Thomas (UNU-MERIT, Maastricht University)
    Abstract: We add non-rivalrous public factors, imported capital goods and an export demand function to a human-capital augmented growth model with individuals differing in their abilities to form human capital. The result is a semi-endogenous growth model for developing countries with no machinery sector and no R&D. Higher exports lead to more private investment, higher terms of trade and more growth and allow for higher investment in public capital. An increase in public investment increases human capital and output, raises demand for imported capital goods and exports. A good balance for public and private investment has to be found in order to justify taxation and avoid terms of trade losses. Our analysis of a vector-error-correction model for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both, temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modelling. Permanent shocks on the growth rate of world income and oil prices increase exports, private and public capital, education and consumption, and demonstrate that the VECM effects are in line with the logic of the theoretical model.
    Keywords: Growth, open economy, public investment, education
    JEL: F43 H54 I25 O41 O54
    Date: 2016–01–15
  6. By: Asongu, Simplice; El Montasser, Ghassen; Toumi, Hassen
    Abstract: This study complements existing literature by examining the nexus between energy consumption (EC), CO2 emissions (CE) and economic growth (GDP) in 24 African countries using a panel ARDL approach. The following findings are established. First, there is a long run relationship between EC, CE and GDP. Second, a long term effect from CE to GDP and EC is apparent, with reciprocal paths. Third, the error correction mechanisms are consistently stable. However, in cases of disequilibrium only EC can be significantly adjusted to its long run relationship. Fourth, there is a long-run causality running from GDP and CE to EC. Fifth, we find causality running from either CE or both CE and EC to GDP and inverse causal paths are observable. Causality from EC to GDP is not strong, which supports the conservative hypothesis. Sixth, the causal direction from EC to GDP remains unobservable in the short term. By contrast, the opposite path is observable. There are also no short-run causalities from GDP, or EC, or EC and GDP to EC. Policy implications are discussed.
    Keywords: Energy consumption; CO2 emissions; Economic growth; Africa
    JEL: C52 O40 O43 O50 O55
    Date: 2015
  7. By: Das, Pranab Kumar (Centre for Studies in Social Sciences, Calcutta); Kar, Saibal (Centre for Studies in Social Sciences, Calcutta)
    Abstract: Many countries in the developed world are ageing in terms of their distribution of population. Conversely, a number of countries in the south have younger population. India for example, has 60% of its population in the age group of 15-59, with the mean age close to 27 years as of present times. The lower share of population in the higher and lower age brackets make the dependency ratio lower than that of the ageing countries. The economic growth such a large share of working age population can usher in lies at the core of the demographic dividends. However, low human capital, poor health and inadequate physical infrastructure seems to create significant hurdles in the potential growth path such countries can achieve. We investigate through an endogenous growth model applied to the Indian macroeconomic data, as to whether public expenditures in education, health and physical infrastructure are conducive to rapid economic growth commensurate with the projected demographic dividends for India. We deploy a Structural Vector Autoregressive Model on data for shares of public expenditure on education and health as the main pillars of growth of human capital in the country, on the per capita GDP growth rate, the working age population, etc. Importantly, we find that a rise in expenditure on health imparts a positive impact on the working age population through greater participation. However, higher allocations for education and training draws workers away from the labor market in a country with large share of unskilled workers and employment opportunities in the large informal sector.
    Keywords: human capital, health, endogenous growth, demographic dividend, public expenditure
    JEL: E24 E6 J2 N3
    Date: 2016–02
  8. By: Edquist, Harald (Erricsson Research); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We analyze the effect of ICT and R&D on total factor productivity (TFP) growth across different industries in Sweden. R&D alone is significantly associated with contemporaneous TFP growth, thus exhibiting spillover effects. Although there is no significant short-run association between ICT and TFP, we find a positive association with a lag of seven to eight years. Thus, spillovers from R&D affect TFP much faster than spillovers from ICT-investments. We also divide ICT capital into hardware and software capital. To our knowledge, this distinction has not been made in any previous study analyzing TFP at the industry level. The results show that lagged hardware capital services growth is significantly associated with TFP growth. Hence, investments complementary to hardware are needed to reap the long-run TFP effects from reorganizing production.
    Keywords: ICT; R&D; Spillovers; Total factor productivity; Panel data analysis
    JEL: L16 O33 O47
    Date: 2016–02–08
  9. By: J. Rodrigo Fuentes; Karl Alexander Melgarejo; Valerie Mercer-Blackman
    Abstract: A renewed interest in explaining growth in the Caribbean countries is motivated by the somewhat slow but uneven performance in the past decade: per capita GDP gaps in Caribbean countries have widened in relation to the United States, whereas standard theories would predict convergence. This study (a) examines the question using methods developed in the recent growth literature on economic growth and (b) characterizes the main elements of growth by estimating empirical models. On the basis of time-series and comparative static estimations, the study finds that the combination of domestic policies, high indebtedness, and outside shocks (e.g., oil price changes or main trading partners' tourism demand) explain well the gap in growth of the six IDB member countries (The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago). Moreover, the study shows evidence that the member countries' small size and their synchronicity with the U.S. business cycle influenced growth performance. In general, the influence of good policies on growth is still evident from the analysis.
    Keywords: Economic Development & Growth, Economic growth, Caribbean, Policies, Small states
    Date: 2015–06

This nep-gro issue is ©2016 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.