nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒09‒05
fifteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Export-Led Takeoff in a Schumpeterian Economy By Chu, Angus C.; Peretto, Pietro; Xu, Rongxin
  2. Growth with Automation Capital and Declining Population By Sasaki, Hiroaki
  3. Catching-up and falling behind : Russian economic growth,1690s-1880s By Broadberry, Stephen; Korchmina, Elena
  4. A Kaleckian growth model of secular stagnation with induced innovation By Stamegna, Marco
  5. Inequality and Growth: A Review on a Great Open Debate in Economics By Foellmi, Reto; Baselgia, Enea
  6. Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis By Hu, Mei-Ying; Lu, You-Xun; Lai, Ching-Chong
  7. Growth, economic structure and informality By Chacaltana Janampa, Juan,; Bonnet, Florence.; Garcia, Juan Manuel.
  8. Exploring the Impact of Agricultural Investment on Economic Growth in France By Bakari, Sayef; El Weriemmi, Malek
  9. Wage inequality and induced innovation in a classical-Marxian growth model By Stamegna, Marco
  10. The Size of Polities in Historical Political Economy By Moriguchi, Chiaki; Sng, Tuan-Hwee
  11. Persecution, Pogroms and Genocide: A Conceptual Framework and New Evidence By Sascha O. Becker; Sharun Mukand; Ivan Yotzov
  12. The Impact of Digitalization and Patent on Economic Growth in Romania By Bakari, Sayef
  13. A meta-analysis of the total economic impact of climate change By Richard S. J. Tol
  14. Agglomeration, Innovation, and Spatial Reallocation: The Aggregate Effects of R&D Tax Credits By Alexandre Sollaci
  15. Exchange arrangements and economic growth. What relationship is there? By Cruz-Rodríguez, Alexis

  1. By: Chu, Angus C.; Peretto, Pietro; Xu, Rongxin
    Abstract: This study develops an open-economy Schumpeterian growth model with endogenous takeoff to explore the effects of exports on the transition of an economy from stagnation to innovation-driven growth. We find that a higher export demand raises the level of employment, which causes a larger market size and an earlier takeoff along with a higher transitional growth rate of domestic output per capita but has no effect on long-run economic growth. These theoretical results are consistent with empirical evidence that we document using cross-country panel data in which the positive effect of exports on economic growth becomes smaller, as countries become more developed, and eventually disappears. We also calibrate the model to data in China and find that its export share increasing from 4.6% in 1978 to 36% in 2006 causes a rapid growth acceleration, but the fall in exports after 2007 causes a growth deceleration that continues until recent times.
    Keywords: international trade; innovation; endogenous takeoff
    JEL: F43 O3 O4
    Date: 2022–07
  2. By: Sasaki, Hiroaki
    Abstract: This study investigates how the long-run growth rate of per capita output is determined when automation capital is introduced in final goods production and when the population is declining. The results indicate that even though the population is declining, per capita output can continue to grow at a positive rate depending on condition.
    Keywords: growth; automation technology; declining population
    JEL: J11 O33 O41
    Date: 2022–08–03
  3. By: Broadberry, Stephen (Nuffield College, Oxford); Korchmina, Elena (University of Southern Denmark)
    Abstract: This paper provides decadal estimates of GDP per capita for the Russian Empire from the 1690s to the 1880s. GDP per capita in the 1880s was barely 3 per cent higher than in the 1690s, but this was not the result of continuous stagnation. Rather, positive growth during the first half of the eighteenth century was followed by negative growth between the 1760s and 1800s and stagnation from the 1800s to the 1880s. The main driver of this variation in GDP per capita was the relationship between population and land, with land per capita increasing to the 1760s, then declining to the 1800s and staying stable during the nineteenth century. This suggests that serfdom may not have been as strong a barrier to eighteenth century growth as has often been suggested, nor its abolition in 1861 as significant for subsequent growth. Although large-scale industry grew more rapidly than the rest of the economy, particularly after Peter the Great’s reforms in the early eighteenth century, this had only a minor effect on the economy as a whole, as it was starting from a very low base and still only accounted for 10 per cent of GDP by the 1880s. Russian economic growth before the 1760s resulted in catching-up on northwest Europe, but this was followed by a period of relative decline, leaving mid-nineteenth century Russia further behind than at the beginning of the eighteenth century. Key words: Great Divergence ; China ; regional variation ; GDP per head
    Date: 2022
  4. By: Stamegna, Marco
    Abstract: The present paper works out a demand-led growth model of a labour-constrained economy with an endogenous direction of technical change. It draws on the Kaleckian-Steindlian tradition to examine the short-run relation between income distribution, capacity utilization, and capital accumulation; on Goodwin-type growth cycle models to investigate the dynamic interaction between labour market and distributive conflict; on the induced innovation literature to link labour productivity growth to income distribution. The model defines a two-dimensional system of differential equations in the wage share and the employment rate at full capacity to investigate the properties of the long-run equilibrium. In a Kaleckian fashion, an endogenous rate of capacity utilization allows effective demand and income distribution to affect the long-run equilibrium. We find that: i) an exogenous increase in workers’ bargaining power raises the long-run labour share, capital accumulation, labour productivity growth, and real wage growth, regardless of the short-run demand and growth regime of the economy; ii) a positive institutional shock to the labour share may cause the long-run employment rate to fall even in a wage-led demand regime; conversely, iii) positive technology shocks reduce the long-run rate of growth of the economy in a wage-led growth regime; thus, strengthening labour market regulation emerges as an unambiguously better strategy to raise the long-run labour share, capital accumulation, and labour productivity growth.
    Keywords: Functional income distribution; effective demand; growth regimes; endogenous technical change
    JEL: E12 E24 E25 O40
    Date: 2022–07–12
  5. By: Foellmi, Reto; Baselgia, Enea
    Abstract: What is the relationship between inequality and growth? This question has occupied and fascinated social scientists for more than a century. This chapter critically reviews the recent empirical and theoretical literature on the complex interplay between inequality and economic growth. Inequality might come in many forms: (top) incomes, wages, wealth, land or opportunities. At the same time, growth performance could be measured as average growth rates, variability of growth or the potential for growth to "take off". This survey considers causality running from inequality to growth; hence, the Kuznets hypothesis is only touched on in passing. The empirical literature estimating the effect of inequality on growth has produced a wide range of results, precluding clear-cut conclusions on the inequality-growth relationship. Consequently, it remains central to understand the underlying economic causes and channels through which (different aspects of) inequality can promote or hamper economic growth. This chapter aims to provide a broad overview of the contemporary results and an outline for prospective empirical and theoretical work.
    Keywords: Economic Growth, Inequality, Redistribution, Theory and Evidence
    JEL: D30 O10 O31 O40
    Date: 2022–07
  6. By: Hu, Mei-Ying; Lu, You-Xun; Lai, Ching-Chong
    Abstract: Due to the lags in commercialization, the effective life of a patent is generally less than its statutory term. We introduce commercialization lags into the Schumpeterian growth model and explore the effects of patent term extensions on pharmaceutical R&D and social welfare. Our results show that extending patent terms stimulates the consumption of homogeneous goods but generates an ambiguous effect on the consumption of pharmaceuticals. When patent extensions have an inverted-U effect on social welfare, the optimal patent extension increases with the length of commercialization lags but decreases with the input intensity of commercialization lags. Finally, we calibrate the model and find that increasing patent breadth reduces the optimal patent extension.
    Keywords: commercialization lags; patent term extensions; pharmaceutical R&D; economic growth; social welfare
    JEL: I11 L65 O31 O34
    Date: 2022–07–28
  7. By: Chacaltana Janampa, Juan,; Bonnet, Florence.; Garcia, Juan Manuel.
    Abstract: This paper explores the relationship between economic growth and informality and highlights the role of GDP growth and its composition in the level and evolution of informality, using country data from 1991 to 2019. The analysis reveals a weak relationship, although with important differences across regions and income levels. Coefficients are higher in middle-income countries. This means that the same growth rate generates different impacts on informality depending on the country, probably due to pre-existing levels of informality, the economic structure or institutional and other variables. Economic structure appears to be the key determinant of informality, even after controlling for endogeneity, using different proxies of informality or including institutional variables. These results confirm that the economic structure and pattern of growth matters for formalization. This calls for policies that promote changes in the productive structure, including a broader, more diversified base and more economic complexity and technological sophistication, to ensure inclusive growth.
    Keywords: economic growth, informal economy, gross domestic product, economic structure
    Date: 2022
  8. By: Bakari, Sayef; El Weriemmi, Malek
    Abstract: According to the World Bank (2021), agriculture is the main source of income for 80% of the world's poor. This sector therefore plays a key role in reducing poverty, increasing incomes, and improving food security. The aim of this paper is to study the impact of agricultural investment on economic growth in France. To attempt our goal, annual data was collected during the period 1978 – 2020 and was estimated by ARDL model. Empirical results indicate that in the long run and in the short run agricultural investment has a positive impact on France’s economic growth. These results argue that investments in the agricultural sector are an essential determinant of economic growth in France and motivate the need to adopt sound policies to further strengthen this sector.
    Keywords: Agricultural Investment, Economic Growth, Cointegration, ARDL Model, France.
    JEL: O47 O52 Q10 Q18
    Date: 2022
  9. By: Stamegna, Marco
    Abstract: The present paper works out a classical-Marxian growth model with an endogenous direction of technical change and a heterogeneous labour force, made up of high-skilled and low-skilled workers. It draws on the Kaleckian mark-up pricing to link wage inequality to the relative unit labour cost at a firm level; on growth cycle models à la Goodwin to formalize the dynamic interaction between labour market and distributive shares of income; on the induced innovation literature to link the bias of technical change to the firm’s choice of the optimal combination of factor-augmenting technologies. We assume that economic growth is constrained by the growth rate of the high-skilled effective labour supply, whereas the low-skilled labour supply is perfectly elastic. Thus, we develop a three-dimensional system of differential equations for the output-capital ratio, the relative unit labour cost and the employment rate of the high-skilled workers, and investigate the stability and the main properties of the steady-state equilibrium. We find that, in contrast to the neoclassical literature on skill-biased technical change, the institutional framework governing the conflict over income distribution is the ultimate determinant of both wage inequality and the direction of technical change. A decline in low-skilled workers’ bargaining strength or a rise in product market concentration lead to both an increase in wage inequality and a bias of technical change favouring high-skilled over low-skilled labour productivity growth. As opposed to the Goodwin model with induced technical change and homogeneous labour force, labour market institutions thus affect steady-state income distribution, capital accumulation and labour productivity growth, and no necessary trade-off arises between labour market regulation and employment. Finally, if the steady-state value of wage inequality exceeds a critical value, an exogenous increase in the mark-up or in the high-skilled workers’ bargaining power allow both capitalists and high-skilled workers to increase their income shares at the expense of the low-skilled workers.
    Keywords: Wage inequality; growth; distribution; endogenous technical change
    JEL: D33 E11 E24 O33
    Date: 2022–07–16
  10. By: Moriguchi, Chiaki; Sng, Tuan-Hwee
    Abstract: This paper is organized into four themes. We first appraise the views of historical thinkers in the East and West on the consequences of the size of polities. Next, we survey modern historical studies on the relationship between polity size and governance. We then discuss attempts to provide a unified framework on the causes and consequences of polity size. Finally, we explore how history can illuminate our understanding of the size of polities.
    Keywords: Size of Nations, Country Size and Governance, Institutions and Growth, Comparative Institutional Analysis
    JEL: H1 N0 N4 N90 P48 P5
    Date: 2022–08
  11. By: Sascha O. Becker; Sharun Mukand; Ivan Yotzov
    Abstract: Persecution, pogroms, and genocide have plagued humanity for centuries, costing millions of lives and haunting survivors. Economists and economic historians have recently made new contributions to the understanding of these phenomena. We provide a novel conceptual framework which highlights the inter-relationship between the intensity of persecution and migration patterns across dozens of historical episodes. Using this framework as a lens, we survey the growing literature on the causes and consequences of persecution, pogroms, and genocide. Finally, we discuss gaps in the literature and take several tentative steps towards explaining the differences in survival rates of European Jews in the 20th century.
    Keywords: Innovation System; Genocide, Persecution, Migration, Immigration restrictions, Exit or Voice
    JEL: D74 F22 F51 N4 O15 R23
    Date: 2022–08
  12. By: Bakari, Sayef
    Abstract: The study aims to investigate the impact of patent and digitalization on economic growth in Romania. Our data was retrieved from the World Development Indicators database (World Bank 2021) from the period 1990-2020. Empirical fundings indicated that digitalization and patent have a positive effect on economic growth. From these perspectives, the Romanian authorities should take seriously the patent and the potential of digitalization which can help the economy to be modernized, diversified, and robust to create new jobs and to find new markets and new strategic partners, and new opportunities.
    Keywords: Digitalization; Patent; Economic Growth; Romania.
    JEL: O31 O32 O34 O38 O47
    Date: 2022
  13. By: Richard S. J. Tol
    Abstract: Earlier meta-analyses of the economic impact of climate change are updated with more data, with three new results: (1) The central estimate of the economic impact of global warming is always negative. (2) The confidence interval about the estimates is much wider. (3) Elicitation methods are most pessimistic, econometric studies most optimistic. Two previous results remain: (4) The uncertainty about the impact is skewed towards negative surprises. (5) Poorer countries are much more vulnerable than richer ones. A meta-analysis of the impact of weather shocks reveals that studies, which relate economic growth to temperature levels, cannot agree on the sign of the impact whereas studies, which make economic growth a function of temperature change, differ an order of magnitude in effect size, but do agree on the sign. The former studies posit that climate change has a permanent effect on economic growth, the latter that the impact is transient. The impact on economic growth implied by studies of the impact of climate change is close to the growth impact estimated as a function of weather shocks.
    Date: 2022–07
  14. By: Alexandre Sollaci
    Abstract: I investigate the aggregate effects of R&D tax credits in the US. Because it subsidizes R&D activity and because credit rates vary between states, this policy has both spatial and dynamic effects on the economy. To address this issue, I construct an endogenous growth model with spatial heterogeneity and agglomeration spillovers in innovation. Aggregate outcomes in this model are thus affected by the spatial distribution of the population in the economy, which is itself endogenous and reacts to policy. I use this framework to identify a set of local R&D subsidies that maximize aggregate welfare.
    Keywords: agglomeration; innovation; R&D tax credits
    Date: 2022–07–01
  15. By: Cruz-Rodríguez, Alexis
    Abstract: This article provides empirical support for the hypothesis that different exchange rate regimes have an impact on economic growth in advanced, emerging and developing countries. The effects of different exchange rate arrangements on economic growth are examined through least squares dummy variable regressions using panel data on 125 countries during the post-Bretton Woods period (1974-1999). Also, this article addresses the issue of measurement errors in the classification of exchange rate regimes by using four different classification schemes. Three de facto and one de jure classifications are used. Consequently, the sensitivity of these results to alternative exchange rate classifications is also tested. The empirical findings indicate that developing countries with fixed regimes tend to have a higher economic growth.
    Keywords: Exchange rate regimes, economic growth
    JEL: F31 F33 O47
    Date: 2022–07–25

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