nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒04‒16
twelve papers chosen by
Marc Klemp
University of Copenhagen

  1. Regional Economic Development in Europe, 1900-2010: A Description of the Patterns By Joan R. Rosés; Nikolaus Wolf
  2. The Geography of Talent: Development Implications and Long-Run Prospects By Michal BURZYŃSKI; Christoph DEUSTER; Frédéric DOCQUIER
  3. Demographics and Automation By Daron Acemoglu; Pascual Restrepo
  4. The Farmer, the Blue-collar, and the Monk: Understanding economic development through saturations of demands and non-homothetic productivity gains By Gray, Elie; Grimaud, André; Le Bris, David
  5. The Long-Term Effects of African Resistance to European Domination: Institutional Mechanism By Kodila-Tedika, Oasis; Asongu, Simplice
  6. The Digital Era, Viewed From a Perspective of Millennia of Economic Growth By Jakub Growiec
  7. Birthplace Diversity and Economic Growth: Evidence from the US States in the Post-World War II Period By Frédéric DOCQUIER; Riccardo TURATI; Jérôme VALETTE; Chrysovalantis VASILAKIS
  8. Periodic Solutions of the One-sector Growth Model: The Role of Income Effects By Kazumichi Iwasa; Gerhard Sorger
  9. The causal linkage between trade openness and economic growth in Argentina: Evidence from the ARDL and VECM techniques. By Hlalefang Khobai; Nomahlubi Mavikela
  10. The effect of unemployment on economic growth in South Africa (1994-2016) By Sibusiso Clement Makaringe; Hlalefang Khobai
  11. Social capital, human capital and fertility By Coppier, Raffaella; Sabatini, Fabio; Sodini, Mauro
  12. The relationship between trade openness and economic growth: The case of Ghana and Nigeria By Hlalefang Khobai; Nwabisa Kolisi; Clement Moyo

  1. By: Joan R. Rosés; Nikolaus Wolf
    Abstract: We provide the first long-run dataset of regional employment structures and regional GDP and GDP per capita in 1990 international dollars, stretching over more than 100 years. These data allow us to compare regions over time, among each other, and to other parts of the world. After some brief notes on methodology we describe the basic patterns in the data in terms of some key dimensions: variation in the density of population and economic activity, the spread of industry and services and the declining role of agriculture, and changes in the levels of GDP and GDP per capita. We next discuss patterns of convergence and divergence over time and their explanations in terms of short-run adjustment and long-run fundamentals. Also, we document for the first time a secular decrease in spatial coherence from 1900 to 2010. We find a U-shaped development in geographic concentration and regional income inequality, similar to the finding of a U-shaped pattern of personal income inequality.
    Keywords: regional inequality, Europe, long-run
    JEL: D31 N10 N90 R10
    Date: 2018
  2. By: Michal BURZYŃSKI (CREA - University of Luxembourg); Christoph DEUSTER (IRES - Université Catholique de Louvain); Frédéric DOCQUIER (Université Catholique de Louvain)
    Abstract: This paper characterizes the recent evolution of the geographic distribution of talent, and studies its implications for development inequality. Assuming the continuation of recent educational and immigration policies, it produces integrated projections of income, population, urbanization and human capital for the 21st century. To do so, we develop and parameterize a two-sector, two-class, world economy model that endogenizes education decisions, population growth, labor mobility, and income disparities across countries and across regions/sectors (agriculture vs. nonagriculture). We find that the geography of talent matters for global inequality, whatever the size of technological externalities. Low access to education and the sectoral allocation of talent have substantial impacts on inequality, while the effect of international migration is small. We conclude that policies targeting access to all levels of education and sustainable urban development are vitalto reduce demographic pressures and global inequality in the long term.
    Keywords: human capital, migration, Urbanization, growth, inequality.
    JEL: E24 J24 O15
    Date: 2018–03
  3. By: Daron Acemoglu; Pascual Restrepo
    Abstract: We argue theoretically and document empirically that aging leads to greater (industrial) automation, and in particular, to more intensive use and development of robots. Using US data, we document that robots substitute for middle-aged workers (those between the ages of 36 and 55). We then show that demographic change—corresponding to an increasing ratio of older to middle-aged workers—is associated with greater adoption of robots and other automation technologies across countries and with more robotics-related activities across US commuting zones. We also provide evidence of more rapid development of automation technologies in countries undergoing greater demographic change. Our directed technological change model further predicts that the induced adoption of automation technology should be more pronounced in industries that rely more on middle-aged workers and those that present greater opportunities for automation. Both of these predictions receive support from country-industry variation in the adoption of robots. Our model also implies that the productivity implications of aging are ambiguous when technology responds to demographic change, but we should expect productivity to increase and labor share to decline relatively in industries that are most amenable to automation, and this is indeed the pattern we find in the data.
    JEL: J11 J23 J24 O33 O47 O57
    Date: 2018–03
  4. By: Gray, Elie; Grimaud, André; Le Bris, David
    Abstract: To explain the process of development historically documented, we consider a model with three economic sectors (agriculture, manufacturing and services) characterized by different productivity gains and by saturation levels in the demands of agricultural and manufactured goods. Our parsimonious model captures within a single framework the process of development which is characterized by the structural changes in the workforce across sectors, variable growth rates (an initial “Malthusian regime” exhibiting slow growth, a fast growth regime after a takeoff, and a gradual slow down leading to a possible new stagnation) and the relative evolutions of prices across sectors. Reasonable calibration generates results quantitatively close to the observed empirical facts.
    Keywords: Growth model ; Structural change ; Unified growth; Economic development ; Saturation of demands
    JEL: N1 O1 O4
    Date: 2018–03
  5. By: Kodila-Tedika, Oasis; Asongu, Simplice
    Abstract: In this study, we show that historic events have a long term incidence on institutional development. Within the framework of the paper, we attempt to provide insights into a historical dimension that has not received the scholarly attention it deserves in empirical literature, notably: African resistance in the face of colonization. The main finding suggests that contemporary institutions in Africa are endogenous to historical trajectories adopted by countries in the continent. Countries that experienced high resistance to colonial domination are associated with better contemporary governance standards. The findings are robust to a multitude of tests, notably: changes in estimation techniques, accounting for outliers, transformation of the outcome variable, control for endogeneity and changes of the outcome variable.
    Keywords: Colonialism; Resistance; Domination; Africa, Institution
    JEL: N17 O55 P48
    Date: 2018–03–16
  6. By: Jakub Growiec
    Abstract: I propose a synthetic theory of economic growth and technological progress over the entire human history. Based on this theory as well as on the analogies with three previous eras (the hunter-gatherer era, the agricultural era and the industrial era) and the technological revolutions which initiated them, I draw conclusions for the contemporary digital era. I argue that each opening of a new era adds a new, previously inactive dimension of economic development, and redefines the key inputs and output of the production process. Economic growth accelerates across the consecutive eras, but there are also big shifts in factor shares and inequality. The two key inputs to the digital-era production process are hardware and software. Human skilled labor is complementary to hardware and substitutable with software, which increasingly includes sophisticated artificial intelligence (AI) technologies. I also argue that economists have not yet designed sufficient measurement tools, economic policies and institutions appropriate for the digital-era economy
    Keywords: economic growth, technological progress, unified growth theory, digital economy, artificial intelligence.
    JEL: O10 O30 O40
    Date: 2018–04
  7. By: Frédéric DOCQUIER (Université Catholique de Louvain); Riccardo TURATI (IRES - Université Catholique de Louvain); Jérôme VALETTE (CERDI Université Clermont Auvergne - CNRS); Chrysovalantis VASILAKIS (FERDI)
    Abstract: This paper empirically revisits the impact of birthplace diversity on economic growth. We use panel data on US states over the 1960-2010 period. This rich data set allows us to better deal with endogeneity issues and to conduct a large set of robustness checks. Our results suggest that diversity among college-educated immigrants positively affects economic growth. We provide converging evidence pointing at the existence of skill complementarities between workers trained in different countries. These synergies result in better labor market outcomes for native workers and in higher productivity in the R&D sector. The gains from diversity are maximized when immigrants originate from economically or culturally distant countries (but not both), and when they acquired part of their secondary education abroad and their college education in the US. Overall, a 10% increase in high-skilled diversity raises GDP per capita by about 6%. On the contrary, low-skilled diversity has insignificant effects.
    Keywords: Immigration, Culture, Birthplace Diversity, growth
    JEL: F22 J61
    Date: 2018–03
  8. By: Kazumichi Iwasa (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Gerhard Sorger (Department of Economics, University of Vienna, Austria)
    Abstract: The discrete-time version of the neoclassical one-sector growth model with elastic labor supply is considered. It is shown that this model can have periodic solutions only if leisure is an inferior good.
    Keywords: Optimal growth, Elastic labor supply, Periodic solutions, Inferiority of leisure
    JEL: C61 O41
    Date: 2018–03
  9. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nomahlubi Mavikela (Department of Economics, Nelson Mandela University)
    Abstract: The Ricardian-Heckscher-Ohlin trade model drawn from Solow's (1957) model points out that since the country allocates its resources more efficiently after opening up based on its comparative advantages that openness to international trade will bring only a one-time increase in output, therefore having no implications for long-run growth. This led to this study investigating the causal relationship between economic growth and trade openness in Argentina covering the period between 1970 and 2016. Foreign direct investments and capital are incorporated as additional variables to form a multivariate framework. The findings from the ARDL bounds test validated the existence of a long run relationship between economic growth, trade openness, foreign direct investment and capital in Argentina. The results further indicated that there is a long run causality flowing from trade openness, foreign direct investment and capital to economic growth. These results presents a fresh perspective to trade policy makers in Argentina.
    Keywords: Trade Openness, Economic growth, ARDL, VECM, Argentina
    JEL: C1 F14 F41 F43
    Date: 2017–10
  10. By: Sibusiso Clement Makaringe (Department of Economics, Nelson Mandela University); Hlalefang Khobai (Department of Economics, Nelson Mandela University)
    Abstract: This study sought to investigate the trends and impact of unemployment on economic growth in South Africa using quarterly data over the period 1994Q1 to 2016Q4. The Auto Regressive Distribution Lag (ARDL) bounds test approach is applied to determine the existence of the long run linkage among the variables. The results from the ARDL model suggest that there is a long run relationship between unemployment and economic growth. The empirical results obtained confirmed that there is a negative relationship between unemployment and economic growth both in the long and short run.
    Keywords: Unemployment, Labour Force, Economic Growth, Co-integration, South Africa, Autoregressive Distribution Lag Model (ARDL).
    JEL: A13 B22 C30 H30
    Date: 2018–03
  11. By: Coppier, Raffaella; Sabatini, Fabio; Sodini, Mauro
    Abstract: Abstract We develop an overlapping generations model to study how the interplay between social and human capital affects fertility. In a framework where families face a trade-off between the quantity and quality of children, we incorporate the assumption that social capital plays a key role in the accumulation of human capital. We show how the erosion of social capital can trigger a chain of reactions leading households to base their childbearing decisions on quantity, instead of quality, resulting in higher fertility.
    Keywords: fertility, quantity-quality trade-off, human capital, education, social capital, trust
    JEL: I25 J13 Z0 Z13
    Date: 2018–03–11
  12. By: Hlalefang Khobai (Department of Economics, Nelson Mandela University); Nwabisa Kolisi (Department of Economics, Nelson Mandela University); Clement Moyo (Department of Economics, Nelson Mandela University)
    Abstract: This study purposed to determine the long run relationship between trade openness and economic growth in Ghana and Nigeria covering the period between 1980 and 2016. It incorporated investment, exchange rates and inflation as the additional variables. To test for stationarity of the data, the augments Dickey-Fuller (ADF) (Dickey and Fuller, 1981), the Phillips and Perron (1988) and the DF-GLS test proposed by Elliot, Rothenberg and Stock (1996) were sued. The Autoregressive distributed lag (ARDL) model was employed in this study to examine the long run relationship between the variables. The findings of the study suggested existence of a long run relationship among the variables for both countries. The results further showed that trade openness has a positive impact on economic growth and significant at the 1% level in Ghana while in Nigeria trade openness has a negative but insignificant effect on economic growth. These results imply that different policy measures should be put into place for each of these two countries.
    Keywords: Trade Openness, Economic growth, Nigeria, Ghana.
    JEL: C10 F14 F41
    Date: 2017–09

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