nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒01‒06
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Does Birthplace Diversity Affect Economic Complexity ? Cross-Country Evidence By Dany Bahar; Hillel Rapoport; Riccardo Turati
  2. Driven by Institutions, Shaped by Culture: Human Capital and the Secularization of Marriage in Italy By David de la Croix; Fabio Mariani; Marion Mercier
  3. Directed technical change as a response to natural-resource scarcity By Hassler, John; Krusell, Per; Olovsson, Conny
  4. American Precious Metals and their Consequences for Early Modern Europe By Nuno Palma
  5. Technology gaps, trade and income By Sampson, Thomas
  6. The Gender Gap in Education Investment and the Demographic Transition in Developing Countries: Theory and Evidence By Nguyen Thang DAO; Julio Dávila; Angela Greulich
  7. Between communism and capitalism: long-term inequality in Poland, 1892-2015 By Bukowski, Pawel; Novokmet, Filip
  8. The relationship between institutions and economic development By Samarasinghe, Tharanga
  9. Economic development in Sardinia: overcoming the insularity gap By B. Biagi; B. Dettori; S. Usai; R. Paci
  10. Reconsidering the Market Size Effect in Innovation and Growth By Hélène Latzer; Kiminori Matsuyama; Mathieu Parenti
  11. Total factor productivity and the terms of trade By Teresiński, Jan
  12. Commercialization of High-Tech Innovations and Economic Growth in The Worldwide Most Innovative Countries By Rahman, Sarli; Suwitho, Suwitho; Oh, Andi; Purwati, Astri Ayu
  13. Determinants of Economic Growth in Bolivia By Julio Humérez Quiroz

  1. By: Dany Bahar (The Brookings Institution, Harvard CID, CESifo and IZA); Hillel Rapoport (Paris School of Economics, Université Paris 1 Panthéon-Sorbonne and CEPII); Riccardo Turati (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We empirically investigate the relationship between a country's economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country's export basket.
    Keywords: economic complexity, birthplace diversity, immigration, growth
    JEL: F22 O31 O33
    Date: 2019–11–30
  2. By: David de la Croix (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Fabio Mariani (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Marion Mercier (CNRS, Université Paris-Dauphine)
    Abstract: We study the mechanisms behind the process of secularization and how they relate to human capital accumulation. We fist analyze empirically the spread of civil (vs religious) marriages in Italy. Successively using a panel of municipality-level census data and a sample of individuals from a household survey, we document a robust, positive correlation between human capital and secularization in marriage. Moreover, secularization is found to be more responsive to education (i) in the presence of high levels of social capital and/or weak family ties, and (ii) after the legalization of divorce in 1971. To understand the mechanisms behind these results, we develop a theory of religiosity, education, and marriage choices, in which individuals who divorce face a relatively higher return to human capital compared to religious capital. Our theory suggests that a positive association between human capital and secularization can emerge across individuals (and localities) even in the absence of a direct effect of education on religiosity. Consistent with our empirical findings, the legalization of divorce plays a central role in unleashing the forces of secularization in marriage, and different patterns in the education - secularization nexus can be traced back to different systems of incentives, as shaped by civic capital and family ties.
    Keywords: Secularization; Human capital; Marriage; Divorce
    JEL: Z12 J12 I25 N34 O4
    Date: 2019–12–12
  3. By: Hassler, John (IIES, University of Gothenburg and CEPR); Krusell, Per (IIES, CEPR and NBER); Olovsson, Conny (Research Department, Central Bank of Sweden)
    Abstract: How do markets economize on scarce natural resources? With an applica-tion to fossil energy, we emphasize technological change aimed at saving on the scarce resource. We develop quantitative macroeconomic theory as a tool for interpreting the past and thinking about the future. We argue, first, that aggre-gate U.S. data calls for a short-run substitution elasticity between energy and the capital/labor inputs that is near Leontief. Given this fact and an aggregate CES function, we note that energy-saving technical change took o right as the oil shocks hit in the 1970s. We rationalize this observation using a theory that views technical change as directed: it can be used to save on different inputs and, hence, the long-run substitutability between inputs becomes higher than Leontief. For our application, we estimate long-run dependence on fossil energy - measured by its factor share - to climb to a little below 10%; absent endogenous technical change directed toward energy-saving, it would go to 100%.
    Keywords: Sustainability; Natural resource scarcity; technological change; economic growth; energy
    JEL: E13 E20 Q30 Q43
    Date: 2019–07–01
  4. By: Nuno Palma (Department of Economics, University of Manchester; Instituto de Ciências Sociais, Universidade de Lisboa; CEPR)
    Abstract: Over the early modern period and beyond, massive amounts of silver and gold were found and mined in the Americas. In this paper, I review the consequences for the European economies. Some second-order receiver countries such as England benefited in both the short and long run. First-order receivers such as Spain and Portugal also benefited in the short-run, but their continued exposure to the arrival of massive quantities of precious metals eventually led to loss of competitiveness and an institutional resource curse.
    Keywords: American Precious Metals, Early Modern Period, Dutch Disease, Political Institutions, Economic growth, comparative development
    JEL: E02 E4 N14 O11
    Date: 2019–12
  5. By: Sampson, Thomas
    Abstract: This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level technology investments. The theory characterizes how innovation and learning determine technology gaps, trade and global income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries where the advantage of backwardness is lower and knowledge spillovers are more localized. I estimate R&D efficiency by country and innovation-dependence by industry from R&D and bilateral trade data. Calibrating the model implies technology gaps, due to cross-country differences in R&D efficiency, account for around one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps; trade; technology investment; Ricardian comparative advantage; international income inequality
    JEL: F11 F43 O14 O41
    Date: 2019–06
  6. By: Nguyen Thang DAO; Julio Dávila; Angela Greulich
    Abstract: We propose a unified growth model linking technology, education investment across genders, and fertility to explain, for 20th century developing countries: (i) the demographic transition, (ii) the improvement in gender equality in education, and (iii) the transition to sustained growth. The mechanism comprises three components. First, technological progress reduces housework time through the creation and diffusion of labor-saving home appliances freeing women's time for childrearing and labor-force participation. Second, as housework time decreases, households invest relatively more in their daughters' education given its higher return due to the initial imbalance thus improving gender equality in education and increasing the opportunity cost of childrearing. Third, the narrowing of the education gender gap increases average human capital, accelerating technological progress. This reinforcing loop results in the transition to a new fertility regime and accelerated economic growth. We provide the empirical confirmation of the model's predictions using data from developing countries in the late 20th and early 21st centuries.
    Date: 2019–12
  7. By: Bukowski, Pawel; Novokmet, Filip
    Abstract: How has Polish inequality evolved between communism and capitalism to reach one of the highest levels in Europe today? To address this question, we construct the first series on the long-term distribution of income in Poland by combining tax, household survey and national accounts data. We document a U-shaped evolution of inequalities from the end of the 19th century until today: (i) inequality was high before WWII; (ii) abruptly fell after the introduction of communism in 1947 and stagnated at low levels during the whole communist period; (iii) experienced a sharp rise with the return to capitalism in 1989. Between 1989 and 2015 the top 10% income share increased from 23% to 35% and the top 1% income share from 4% to 13%. Frequently quoted Poland’s transition success has largely benefited top income groups. We find that inequality was high in the first half of the 20th century due to strong concentration of capital income at the top of the distribution. The secular fall after WW2 was largely to a combination of capital income shocks from war destructions with communist policies both eliminating private ownership and forcing wage compression. The rise of inequality after the return to capitalism in the early 1990s was induced both by the rise of top labour and capital incomes. We attribute this to labour market liberalisation and privatisation. However, the strong rise in inequality in the 2000s was driven solely by the increase in top capital incomes, which is likely related to current globalization forces. Yet overall, the unique Polish inequality history speaks about the central role of policies and institutions in shaping inequality in the long run.
    Keywords: income inequality; transformation; Poland
    JEL: D31 E01 J30 N34
    Date: 2019
  8. By: Samarasinghe, Tharanga
    Abstract: Development is a continuous process which increase choices available for human beings. However, there is a huge disparity throughout the world in relation to economic development. Differences in the institutions show a direct relationship with difference in the economic development. Established political and economic institutions affects the level of investments for human capital, physical capital and technology formation which decide the capacity of good and service production in a particular country. Through that, established institutions of a country influences directly on the level of development in a particular country. This article discusses the institutions, evolution and types of institutions, relationship between institutions and markets, and functions of institutions for economic development. Further this article discusses the way that trust and anti-corruption affects the economic development and link between political power and institutions. Finally, some evidences to show the impacts of institutions on economic development are discussed.
    Keywords: development, institutions, political institutions, economic institutions, inclusive institutions, extractive institutions
    JEL: D02 E02 O1 O10 O43
    Date: 2019–12–22
  9. By: B. Biagi; B. Dettori; S. Usai; R. Paci
    Abstract: Under which conditions Sardinia - a peripheral island with a small population – can proceed along a steady path of economic development? This is the crucial question addressed in this paper which examines the economic and social situation of Sardinia within the national and the European scenario characterized by a strong polarization process fueled by agglomeration forces. The analysis suggests facing the demographic turndown by investing in education, innovation and local institutions in order to provide a better environment to citizens and firms and to exploit regional comparative advantages.
    Keywords: tourism;sardinia;regional growth;Insularity
    Date: 2019
  10. By: Hélène Latzer; Kiminori Matsuyama; Mathieu Parenti
    Abstract: In the standard horizontal innovation model of endogenous growth, larger economies innovate more and grow faster. Due to the homotheticity of preferences, however, it does not matter whether the large market size comes from a large population or a high per capita expenditure. In this paper, we extend the standard model to allow for nonhomothetic preferences. Among others, we show that, holding the size fixed, economies with higher per capita expenditure and smaller populations innovate more and grow faster for the empirically relevant case of incomplete pass-through, strategic complementarity in pricing, and procompetitive entry.
    Keywords: Endogenous growth; Balanced growth; Horizontal innovation; Nonhomothetic preferences; Directly explicitly additive (DEA) preferences; Demand composition; Incomplete pass-through; Strategic complementarity in pricing; Procompetitive entry; Competition and growth
    JEL: O11 O31 O33
    Date: 2019–12
  11. By: Teresiński, Jan
    Abstract: In this paper we analyse how the terms of trade (TOT) - the ratio of export prices to import prices - affect total factor productivity (TFP). We provide empirical macroeconomic evidence for the European Union countries based on the times series SVAR analysis and microeconomic evidence based on industry level data from the Competitiveness Research Network (CompNet) database which shows that the terms of trade improvements are associated with a slowdown in the total factor productivity growth. Next, we build a theoretical model which combines open economy framework with the endogenous growth theory. In the model the terms of trade improvements increase demand for labour employed in exportable goods production at the expense of technology production (research and development - R&D) which leads to a shift of resources from knowledge development towards physical exportable goods. This reallocation has a negative impact on the TFP growth. Under a plausible calibration the model is able to replicate the observed empirical pattern.
    Keywords: total factor productivity,terms of trade,R&D
    JEL: F41 O32 O41 O47
    Date: 2019
  12. By: Rahman, Sarli; Suwitho, Suwitho; Oh, Andi; Purwati, Astri Ayu
    Abstract: This study aimed to reconfirm the factors that caused the differences from the results of previous studies related to the relationship of R&D expenditures, the number of patent applications high-tech exports and economic growth (GDP). Cause of these differences related to the research objects, observation time and the data choice used. Therefore in this study, the research objects were selected 51 countries listed in the 2018 global innovation index, which are then grouped into high-income countries, upper-middle-income, and lower-middle-income. In addition, there are also three alternative choices of data that are used to represent high-tech export variables and economic growth variables. From the analysis conducted it is found that innovation activities could affect the economic growth of high-income countries in the long term and the short term.
    Keywords: Innovation, Economic Growth, FDI Inflows, High-tech Export
    JEL: O1 O3 O5
    Date: 2019–07–10
  13. By: Julio Humérez Quiroz (Universidad Mayor de San Andrés)
    Abstract: The Bolivian economy has recorded an important rhythm of economic growth in recent years, particularly between 2006 and 2014. The challenge facing the country is to enhance and sustain the growth rate of the economy in order to improve the living conditions of the population. In this paper an approximation of the determinants of economic growth is made using estimates of growth regressions based on the Barro (1991) methodology with regional panel data (departmental level) for years 1993-2014. According to the results, the basic factors explaining Bolivia's economic growth are physical and human capital, macroeconomic stability, the country's institutionality and income redistribution. In this regard, policies aimed at strengthening education, with emphasis on quality, a greater provision of productive infrastructure, macroeconomic stability with an annual inflation below 6%, sustainable public spending, legal security and efficient administration of justice, and deepening the income redistribution are key factors in boosting and sustaining economic growth.
    Keywords: Economic Growth, Determinants, Panel Data
    Date: 2018–12

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