nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒04‒17
seven papers chosen by
Marc Klemp
University of Copenhagen

  1. Technology gaps, trade and income By Sampson, Thomas
  2. British Economic Growth and Development By Stephen Broadberry
  3. The Effects of Startup Acquisitions on Innovation and Economic Growth By Christian Fons-Rosen; Pau Roldan-Blanco; Tom Schmitz
  4. Informal Sector, Innovation and Growth By Chandril Bhattacharyya; Dibyendu Maiti
  5. Foreign Aid Effectiveness: The Relationship Between Aid Inflows and Economic Growth By Abbas Moosvi
  6. The long-run effects of war on health: Evidence from World War II in France By Olivier Allais; Guy Fagherazzi; Julia Mink
  7. Economic History and Cliometrics: the Stand of the last Samurai By Claude Diebolt

  1. By: Sampson, Thomas
    Abstract: This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innovation and adoption opportunities together determine equilibrium technology gaps, trade patterns and income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries. I calibrate R&D efficiency by country and innovation-dependence by industry using R&D, patent and bilateral trade data. Counterfactual analysis implies technology gaps account for one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps; development accounting; comparative advantage; innovation; technology diffusion; endogenous growth
    JEL: D21 D24 D31 F14 O31 O33 O47
    Date: 2023–02–01
  2. By: Stephen Broadberry (Nuffield College Oxford, CAGE and CEPR)
    Abstract: British per capita GDP grew at an average annual rate of 0.13 per cent between 1086 and 1700. Although the annual growth rate increased to 0.48 per cent between 1700 and 1870, the period covering the Industrial Revolution, this was still not particularly fast. What mattered for Britain’s catching-up and forging ahead of other economies was its resilience, with few episodes of negative growth. By the late nineteenth century, other countries had begun to emulate Britain’s Industrial Revolution and by the beginning of the twentieth century, the United States had emerged as the new per capita income leader. However, the process by which the United States and Germany overtook Britain owed more to a later structural shift out of agriculture and developments within services than to any change in the comparative productivity position within manufacturing. After 1870, other countries were bound to grow faster than Britain while catching-up, and once Britain had fallen behind, it too could benefit from borrowing technology and institutions from abroad. TFP growth has been an important proximate source of Britain’s rise to GDP per capita leadership and also of Britain’s relative economic decline since 1870. However, the ultimate source of these developments in technology lies in the institutional framework. Britain’s rise to GDP per capita leadership occurred as innovators responded to the factor price combination that they faced within an environment shaped by the Enlightenment. After 1870, British relative decline occurred as barriers to competition arose and slowed the response to technological change.
    Keywords: JEL Classification:
    Date: 2023
  3. By: Christian Fons-Rosen (University of California in Merced); Pau Roldan-Blanco (Bank of Spain); Tom Schmitz (Queen Mary University of London and CEPR)
    Abstract: Innovative startups are frequently acquired by large incumbent firms. On the one hand, these acquisitions provide an incentive for startup creation and may transfer ideas to more efficient users. On the other hand, incumbents might acquire startups just to “kill” their ideas, and acquisitions can erode incumbents’ own innovation incentives. Our paper aims to assess the net effect of these forces. To do so, we build an endogenous growth model with heterogeneous firms and acquisitions, and calibrate its parameters by matching micro-level evidence on startup acquisitions and patenting in the United States. Our calibrated model implies that acquisitions raise the startup rate, but lower incumbents’ own innovation as well as the percentage of implemented startup ideas. The negative forces are slightly stronger. Therefore, a ban on startup acquisitions would increase growth by 0.03 percentage points per year, and raise welfare by 1.8%.
    Keywords: Keywords: Acquisitions, Innovation, Productivity growth, Firm dynamics.
    JEL: O30 O41 E22
    Date: 2022–12–09
  4. By: Chandril Bhattacharyya (Centre for Development Studies Kerala); Dibyendu Maiti (Department of Economics, Delhi School of Economics)
    Abstract: This paper applies the endogenous growth model with R&D in the presence of the informal sector. It establishes the existence of formal and informal sectors at the steady state, where the formal sector only can buy patented intermediate varieties. The patent for a finite period reduces the incentive to invest in R&D, thereby reducing growth. It further shows that the steady-state growth rate depends on the share of formal employment and vice versa. However, the extent to which the economy would grow depends on various country-specific factors, production-related characteristics and the cost of accessing production activities in the informal sector. As a country develops, we found that a drop in substitutability between formal and informal goods and a rise in formal wage rent with the development reduce the share of formal employment and growth rate. In contrast, improved formal productivity increases them. They together may produce a non-monotonic shape of growth and formal employment share with the level of development. JEL Codes: E26, O11 Key words: Informal Sector, R&D, Patent length, growth
    Date: 2023–03
  5. By: Abbas Moosvi (Pakistan Institute of Development Economics)
    Abstract: Has the process of foreign-led assistance/development fostered economic growth and development around the globe? Reviewing the literature, this paper charts out the foreign aid landscape, in terms of its salient stakeholders, operational dynamics, and historical evolution, following which an attempt is made to offer a comprehensive summary and analysis of the academic literature on the phenomenon.
    Date: 2022
  6. By: Olivier Allais (ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Guy Fagherazzi (LIH - Luxembourg Institute of Health); Julia Mink (ALISS - Alimentation et sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Sciences Po - Sciences Po)
    Abstract: We investigate the effects of early-life exposure to war on adult health outcomes including cancer, hypertension, angina, infarction, diabetes and obesity. We combine data from the French prospective cohort study E3N on women employed in the French National Education with historical data on World War II. To identify causal effects, we exploit exogenous spatial and temporal variation in war exposure related to the German invasion of France during the Battle of France. The number of French military casualties at the level of the postcode area serves as main measure of exposure. Our results suggest that exposure to the war during the first 5 years of life has significant adverse effects on health in adulthood. A 10 percent increase in the number of deaths per inhabitants in the individual's postcode area of birth increases the probability of suffering from any of the health conditions considered in this study by 0.08 percentage points. This is relative to a mean of 49 percent for the sample as a whole.
    Keywords: Early-life exposure, Developmental origins, World war II, Human capital development
    Date: 2021–05
  7. By: Claude Diebolt (BETA/CNRS & University of StrasbourgAuthor-Name: Nadir Altinok; University of Wisconsin-La Crosse)
    Date: 2023

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