nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒07‒16
eleven papers chosen by
Marc Klemp
Brown University

  1. Industrialization as a Deskilling Process? Steam Engines and Human Capital in XIXth Century France By Claude Diebolt; Charlotte Le Chapelain; Audrey-Rose Menard
  2. Some notes on population history, the demographic transition and the demographic future of the world By Michele Bruni
  3. A note on automation, stagnation, and the implications of a robot tax By Gasteiger, Emanuel; Prettner, Klaus
  4. A Note on the Solow Growth Model with a CES Production Function and Declining Population By Sasaki, Hiroaki
  5. Industrial Policy and the Timing of Trade Liberalization By Till F. Hollstein; Kristian Estévez
  6. The Sinuous Dragon: Economic Freedom and Economic Growth in China By Joshua Hall; Yang Zhou
  7. Ethnic Capital and Intergenerational Transmission of Educational Attainment By Postepska, Agnieszka
  8. The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change By Kim, Nam-Seok; Heshmati, Almas
  9. Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa By Enowbi Batuo; Simplice Asongu
  10. On the Growth of Korean Technoparks By Albert, Link; U Yeong, Yang
  11. The Goose that laid the golden eggs? Agricultural development in Latin America in the 20yh century By Miguel Martín-Retortillo; Vicente Pinilla; Jackeline Velazco; Henry Willebald

  1. By: Claude Diebolt; Charlotte Le Chapelain; Audrey-Rose Menard
    Abstract: Was technological progress conducive to human capital accumulation or was industrialization a deskilling process? Our paper investigates the effect of the French industrialization process on human capital accumulation throughout the nineteenth century. The novelty of the research is twofold: (i) we explore the deskilling hypothesis for the whole process of industrialization by implementing a panel analysis; (ii) we introduce a disaggregated human capital perspective to examine changes in skills demand at different stages of the process. Our analysis builds upon a new comprehensive dataset providing an exhaustive assessment of the diffusion of the steam technology in France at the county (Département) level over the 1839-1900 period. We use exogenous geographic variations as an instrument for the number of steam engines erected in each French department. We perform panel and cross-section regression analyses to compare the effect of technological change on basic vs. intermediate human capital accumulation. Our contribution reveals that French industrialization was not deskilling but that a shift in the type of the skills demanded occurred in the second half on the nineteenth century.
    Keywords: Technological change, steam engines, industrialization, human capital, education.
    JEL: N33
    Date: 2017
  2. By: Michele Bruni
    Abstract: A short summary of human population history, a critical analysis of available empirical evidence and an interpretation of data free of reverence toward the dominant theories bring to the conclusion that up to now the human population has experienced only two demographic regimes. The first was characterized by high rates of mortality and fertility. Its main characteristic was that man did not have the capability to control fertility and intervene on mortality so that periods of high demographic growth were followed by periods of pronounced demographic decline. In spite of this, at the end, the demographic history of men has been a success story. It is then argued that around 1850 an unprecedented demographic revolution was ignited by extraordinary advancements in medicine, chemistry and biology, as well as the development of new laboratory tools and techniques that opened the way to the introduction of powerful vaccines. This allowed defeating the most dangerous infectious diseases and waging a successful war against premature death. The final result was that the economically more advanced countries reached a new demographic regime, the modern regime, characterized by low fertility and low mortality rates. The fundamental characteristic of the modern regime is the capability of men to choose and determine his reproductive behavior and to control more and more the causes of death. According to present empirical evidence, the modern regime is not characterized by a demographic equilibrium, but by vastly spread situations of negative natural growth. Finally the paper argues that, in spite of the fact that deaths take place in the natural and chronological order, the modern regime is not necessarily more efficient than the natural regime. The main reason is that in this new demographic situation economic growth brings to demographic disequilibrium and the different historical moments in which the demographic “transition” has started in different countries is creating the preconditions for migration flows of unprecedented size. A paragraph of the paper is also devoted to a revisit and formalization of Carlo Cipolla hypothesis on energy and demographic growth and to the analysis of its validity both in the past and today.
    JEL: J10 J11
    Date: 2017–07
  3. By: Gasteiger, Emanuel; Prettner, Klaus
    Abstract: We analyze the long-run growth effects of automation in the canonical overlapping generations framework. While automation implies constant returns to capital within this model class (even in the absence of technological progress), we show that it does not have the potential to lead to positive long-growth. The reason is that automation suppresses wages, which are the only source of investment because of the demographic structure of the overlapping generations model. This result stands in sharp contrast to the effects of automation in the representative agent setting, where positive long-run growth is feasible because agents can invest out of their wage income and out of their asset income. We also analyze the effects of a robot tax that has featured prominently in the policy debate on automation and show that it could raise the capital stock and per capita output at the steady state. However, the robot tax cannot induce a takeoff toward positive long-run growth.
    Keywords: automation,robots,robot taxes,investment,stagnation,economic growth,canonical overlapping generations model,fiscal policy
    JEL: J10 J20 O14 O33 O41 E62
    Date: 2017
  4. By: Sasaki, Hiroaki
    Abstract: This study investigates the relationship between per capita output growth and population growth using the Solow growth model when population growth is negative. When the Cobb-Douglas production function is used, the per capita output growth rate is positive even if the technological progress rate is zero. In contrast, when the CES production function is used, the per capita output growth rate is zero if the technological progress rate is zero.
    Keywords: Solow growth model; negative population growth; CES production function
    JEL: E13 E23 O41
    Date: 2017–07–07
  5. By: Till F. Hollstein (Universitat de Barcelona); Kristian Estévez (Universitat de Barcelona)
    Abstract: In a closed (open) economy with a learning-by-doing externality in the manufacturing sector, Matsuyama (1992) found a positive (negative) link between the level of agricultural productivity and economic growth. We extend that framework by introducing a labor subsidy to induce industrialization. We make three contributions to the existing literature. First, we show that a comparative advantage in manufacturing is not a necessary condition for a small open economy to industrialize. Relative sectoral TFP growth determines whether the fraction of labor in manufacturing increases over time. Second, the timing of trade liberalization determines structural development and the use of a labor subsidy can allow a small open economy to industrialize early. Third, we analyze the labor subsidy when there is trade among two open economies. We find that there exists a unique subsidy which enables both economies to industrialize. Therefore, a country with a comparative advantage in producing the manufactured good could benefit from their trading partner using labor subsidies compared to not trading with them at all.
    Keywords: Labor Subsidy, Production Externality, Industrialization, International Trade.
    JEL: O13 O14 O41 F43
    Date: 2017
  6. By: Joshua Hall (West Virginia University, Department of Economics); Yang Zhou (West Virginia University, Department of Economics)
    Abstract: With sinuous reforms and economic openness over the last four decades, China has enjoyed substantial economic development. Though still a developing country, its GDP per capita has grown over 10% annually, from $183(US) in 1977 to $7,590 (US) in 2014. This miracle in economic growth is attributed by some to a series of pro-market policies and reforms. Although the general trend is greater economic freedom, China has experienced brief periods of decreasing or stagnant economic freedom that correspond with slowdowns in the growth rate. In this paper we trace these changes in economic freedom in China and discuss prospects for future improvement.
    Keywords: China, economic freedom, economic growth
    Date: 2017–07
  7. By: Postepska, Agnieszka (Georgetown University)
    Abstract: This paper studies the role of ethnicity in the intergenerational transmission of educational attainment. Relying on heteroskedasticity to identify parameters in the presence of endogenous regressors, I revisit Borjas ethnic capital hypothesis. I find evidence that the OLS estimates of the effect of ethnic capital on intergenerational transmission of education are biased upwards due to the transfer of unobserved ability. I find that while the role of parental capital has declined over time, ethnic capital has a relatively constant effect on intergenerational transmission of educational attainment. I also find that only women benefit from the quality of the ethnic environment and that the intergenerational transfer of ethnic capital is most prevalent in communities with strong ties measured with endogamy rates.
    Keywords: ethnic capital, human capital formation, intergenerational transmission
    JEL: J15 J62 D1 Z1
    Date: 2017–06
  8. By: Kim, Nam-Seok; Heshmati, Almas
    Abstract: This study investigates the relationship between economic growth and democracy by estimating a nation’s production function specified as static and dynamic models using panel data. In estimating the production function, it applies a single time trend, multiple time trends and the general index formulations to the translog production function to capture time effects representing technological changes of unknown forms. In addition to the unknown forms, implementing the technology shifters model enabled this study to find possible known channels between economic growth and democracy. Empirical results based on a panel data of 144 countries observed for 1980-2014 show that democracy had a robust positive impact on economic growth. Credit guarantee is one of the most significant positive links between economic growth and democracy. The marginal effects of credit guarantee and foreign direct investment inflows are stronger in democratic countries than they are in non-democratic ones. In order to check the robustness of these results, a dynamic model constructed with a flexible adjustment speed and a target level of GDP is also tested. The results of this dynamic model also support the positive impacts of democracy on economic growth.
    Keywords: Economic growth,democracy,production function,single time trend,multiple time trends,general index,technology shifters,flexible adjustment speed,target level of GDP
    JEL: D24 O43 O47 P16
    Date: 2017
  9. By: Enowbi Batuo (University of Westminster, UK); Simplice Asongu (Yaoundé, Cameroon)
    Abstract: In the aftermath of the 2008 global financial crisis, the implications of financial liberalisation for stability and economic growth has come under increased scrutiny. One strand of literature posits a positive relationship between financial liberalisation and economic growth and development. However, others emphasise the link between financial liberalisation is intrinsically associated with financial instability which may be harmful to economic growth and development. This study assesses linkages between financial instability, financial liberalisation, financial development and economic growth in 41 African countries for the period 1985-2010. The results suggest that financial development and financial liberalisation have positive effects on financial instability. The findings also reveal that economic growth reduces financial instability and the magnitude of reduction is higher in the pre-liberalisation period compared to post-liberalisation period.
    Keywords: Economic Growth , Financial Development, Financial instability and Africa
    JEL: O16 O47 G23 O55
    Date: 2017–01
  10. By: Albert, Link (University of North Carolina at Greensboro, Department of Economics); U Yeong, Yang (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The Republic of Korea undertook a major initiative in the early 1970s to integrate high-technology industry with its regional development strategy. This effort involved three phrases: the development of science towns in the 1970s, the initiation of a technopolis program in the 1980s, and the establishment of science parks or technoparks in the 1990s. We focus on the third phase in this paper, and we identify empirically covariates with the employment growth of Korean technoparks. We find faster employment growth in parks established after the ICT revolution in 2000, in parks with tenants involved in more complex technology development, and in parks with more research-intensive tenants.
    Keywords: science park; technopark; Korea; entrepreneurship; technology; innovation
    JEL: O21 O31 R11
    Date: 2017–06–26
  11. By: Miguel Martín-Retortillo; Vicente Pinilla; Jackeline Velazco; Henry Willebald
    Abstract: In the last third of the nineteenth century, a large majority of Latin America adopted export-led models of growth, mostly based on agricultural exports. In some countries, this strategy produced significant results in terms of economic development but in most of the countries, the strategy was not successful, either because of too slow growth in exports or because linkages with the rest of the economy were very weak and there was no significant growth-spreading effect. After WWII, Latin America turned to a new model of economic development: the import substitution industrialisation (ISI). The ISI policies penalised export-led agriculture. The 1980s and 1990s were characterised by an expansion of adjustment policies and structural reforms. The new strategy consisted of mobilising resources in competitive export sectors, including agriculture.
    Keywords: Latin American agriculture, agricultural development, export-led growth model, import substitution industrialization, agricultural growth, Latin American economic history
    JEL: N16 N56 Q10 Q17
    Date: 2017–07

This nep-gro issue is ©2017 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.