nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒09‒24
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. Physiological Constraints and Comparative Economic Development By Dalgaard, Carl-Johan; Strulik, Holger
  2. Agricultural policy and long-run development: evidence from Mussolini's Battle for Grain By Carillo, Mario Francesco
  3. Country of Origin, Earnings Convergence, and Human Capital Investment: A New Method for the Analysis of U.S. Immigrant Economic Assimilation By Duleep, Harriet; Liu, Xingfei; Regets, Mark
  4. A Classical Model of Education, Growth and Distribution By Amitava Krishna Dutt; Roberto Veneziani
  5. Education and 'Human Capitalists' in a Classical-Marxian Model of Growth and Distribution By Amitava Krishna Dutt; Roberto Veneziani
  6. North-South Trade and Uneven Development in a Classical Conventional Wage Share Growth Model By Sasaki, Hiroaki
  7. Quantity Measurement and Balanced Growth in Multi-Sector Growth Models By Akos Valentinyi
  8. The Joint Impact of Infrastructure and Institutions on Economic Growth By Zergawu, Yitagesu Zewdu; Walle, Yabibal M.; Giménez Gómez, José M. (José Manuel)
  9. The Rise of Services and Balanced Growth in Theory and Data By Miguel Leon-Ledesma; Alessio Moro
  10. Impact of Remittances on Economic Growth in Developing Countries: The Role of Openness By Sayantan Ghosh Dastidar

  1. By: Dalgaard, Carl-Johan; Strulik, Holger
    Abstract: It is a well known fact that economic development and distance to the equator are positively correlated variables in the world today. It is perhaps less well known that as recently as 1500 C.E. it was the other way around. The present paper provides a theory of why the "latitude gradient" seemingly changed sign in the course of the last half millennium. In particular, we develop a dynamic model of economic and physiological development in which households decide upon the number and nutrition of their offspring. In this setting we demonstrate that relatively high metabolic costs of fertility, which may have emerged due to positive selection towards greater cold tolerance in locations away from the equator, would work to stifle economic development during pre-industrial times, yet allow for an early onset of sustained growth. As a result, the theory suggests a reversal of fortune whereby economic activity gradually shifts away from the equator in the process of long-term economic development.
    Date: 2018–08
  2. By: Carillo, Mario Francesco
    Abstract: This paper explores the effect of agricultural policies on industrialization and economic development over the long-run. I analyze the differential effect of the \textit{Battle for Grain}, implemented by the Italian Fascist regime to achieve self-sufficiency in wheat production, on the development path across areas of Italy. Employing time variation, along with cross-sectional variation in the suitability of land for the implementation of the advanced wheat production technologies, I find that the policy had unintended positive effects on industrialization and economic prosperity which persisted until the contemporary period. Furthermore, I find that the positive effect of the \textit{Battle for Grain} on human capital accumulation was instrumental in this process, suggesting that the complementarity between human capital and agricultural technology may be a critical mechanism through which agricultural productivity may enhance the development of non-agricultural sectors.
    Keywords: Agricultural Policy; Agricultural Productivity; Industrialization; Human Capital; Long-run Dve
    JEL: F13 J24 N54 O13 O14 O25 O33 Q16 Q17 Q18
    Date: 2018–09–10
  3. By: Duleep, Harriet; Liu, Xingfei; Regets, Mark
    Abstract: The initial earnings of U.S. immigrants vary enormously by country of origin. Via three interrelated analyses, we show earnings convergence across source countries with time in the United States. Human-capital theory plausibly explains the inverse relationship between initial earnings and earnings growth rates: the good fit between data and theory suggests that variation in initial skill transferability—not variation in the “quality” of human capital—underlies variation in initial earnings. A new method of testing for emigration bias confirms that selective emigration does not cause the convergence. Functional form and sample selections embedded in most recent analyses of immigrant economic assimilation bias downwards the earnings growth of post-1965 U.S. immigrants. When both functional-form and sample-selection constraints are lifted, a dramatically different picture of the economic assimilation of U.S. immigrants emerges.
    Keywords: immigrant economic assimilation,human capital investment,country of origin,immigrant earnings convergence,earnings growth,unbiased estimation
    JEL: J1 J2 J3 C1
    Date: 2018
  4. By: Amitava Krishna Dutt (University of Notre Dame, and FLACSO); Roberto Veneziani (Queen Mary University of London)
    Abstract: We develop a classical macroeconomic model to examine the growth and distributional consequences of education. Contrary to the received wisdom, we show that human capital accumulation is not necessarily growth-inducing and inequality-reducing. Expansive education policies may foster growth and reduce earning inequalities between workers, but only by transferring income from workers to capitalists. Further, the overall effect of an increase in education depends on the actual characteristics of the educational system and on the nature of labor market relations. We argue that the model can shed light on some recent stylized facts on growth, distribution and education for the US.
    Keywords: Education, Growth, Distribution
    JEL: O41 I24 E25
    Date: 2017–01–01
  5. By: Amitava Krishna Dutt (University of Notre Dame, and FLACSO); Roberto Veneziani (Queen Mary University of London)
    Abstract: A simple classical-Marxian model of growth and distribution is developed in which education transforms low-skilled workers into high-skilled ones and in which high-skilled workers save and hold capital, therefore receiving both high-skilled wages and profit income. We analyze the implications for class divisions, growth and distribution, of the transformation of the modern capitalist economy from one in which the main class division is between capitalists who own capital and workers who only receive wage income into one in which education and human capital play a major role. We show than an expansion in education can have a positive effect on growth but by altering the distribution of income rather than by fostering technological change, and that it yields some changes in income distribution and the class structure of the capitalist economy, but need not alter its fundamental features.
    Keywords: Education, Human capital, Workers' savings, Growth, Distribution
    JEL: E2 E11 O41 I24
    Date: 2017–01–01
  6. By: Sasaki, Hiroaki
    Abstract: This study presents a model of North-South trade and uneven development, and investigates the growth rates of both countries under the trade pattern such that the North specializes in investment goods while the South specializes in consumption goods. In contrast to existing studies, we close the model by fixing each countries' income distribution, specifically, the ratio of labor share to capital share. Using the model, we conduct the following two analyses. First, assuming that both countries already engage in international trade and that the North specializes in investment goods while the South specializes in consumption goods, we investigate the dynamics of both countries' growth rates and the terms of trade. Second, we investigate the condition under which such a trade pattern holds, and compare equilibrium variables under autarky and equilibrium values under free trade. From the first analysis, it follows that both countries grow at the same rate in the long run. From the second analysis, however, it follows that in the first place, the terms of trade must lie within the interval between the relative prices of both countries and that both countries' growth rates may not equalize as long as both countries engage in trade.
    Keywords: North-South trade; Uneven development; Conventional wage share; Comparative advantage
    JEL: F10 F43 O33 O41
    Date: 2018–08–24
  7. By: Akos Valentinyi (University of Manchester)
    Abstract: Multi-sector models typically rely on a numeraire to aggregate quantities whereas NIPA uses the chain index. For three popular versions of the multi-sector growth model, we provide analytical expressions for the growth of aggregate quantities under both measurement methods and establish that the compound differences are sizeable over long horizons. We show that using the chain index captures more accurately the aggregate effects of secular changes in relative prices. For example, in a standard model of structural transformation, measuring GDP growth with the chain index captures that Baumol's disease reduces welfare growth, which using a numeraire misses.
    Date: 2018
  8. By: Zergawu, Yitagesu Zewdu; Walle, Yabibal M.; Giménez Gómez, José M. (José Manuel)
    Abstract: This paper examines the joint impact of infrastructure capital and institutional quality on economic growth using a large panel data set covering 120 countries and spanning the years 1980-2015. The empirical strategy involves estimating a simple growth model where, in addition to standard controls, infrastructure, institutional quality and their interaction are included as explanatory variables. Potential endogeneity concerns are addressed by means of GMM estimators that utilize internal instruments. We findd that the interaction terms between infrastructure capital and institutional quality have a positive and significant impact on economic growth. These results are robust to a variety of alternative specifications and institutional quality measures. Hence, our results suggest that maximizing returns from infrastructure development requires improving the quality of institutions. Keywords: infrastructure; institutions; growth; dynamic panel JEL classification: H54, F20
    Keywords: Infraestructura (Economia), Economia internacional, 33 - Economia,
    Date: 2018
  9. By: Miguel Leon-Ledesma (University of Kent); Alessio Moro (University of Cagliari)
    Abstract: We investigate the effect of structural transformation on economic growth in the U.S. and in cross-country data. Measuring the outcome of a two-sector growth model by using NIPA conventions, structural transformation in the U.S. induces a decline of 36% in the aggregate marginal product of capital, of 5.4% in the real interest rate, and of 16% in the growth rate of per-capita GDP between 1950 and 2015. By retaining the U.S. calibration, the process of structural transformation can also account, per-se, for cross-country differences in real investment/GDP ratios, which are comparable to those displayed by the U.S. along its growth path.
    Date: 2018
  10. By: Sayantan Ghosh Dastidar (University of Derby)
    Abstract: The paper examines the empirical relationship between remittances and economic growth for a sample of 62 developing countries over the time period 1990-2014. Remittances seem to promote growth only in the ?more open? countries. The study uses a variety of indicators of ?openness? to test the hypothesis that openness of a country increases the growth effects of remittances. The finding, remittances lead to higher growth in open countries, is robust regardless of how ?openness? is defined. Conversely, no significant effect of remittances on growth could be detected in the case of ?less open? countries. That is because remittances are in themselves not sufficient for growth. The extent of the benefit depends on domestic institutions and macroeconomic environment in the receiving country. Unlike the ?less open? countries, ?more open? countries have better institutions and better financial markets to take advantage of the remittances income and channelise them into profitable investments which, in turn, accelerates the rate of economic growth in these countries.
    Keywords: Remittances; Economic Growth; Openness; Developing Countries; Panel Data
    JEL: F24 F41 F43
    Date: 2018–06

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