nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒07‒17
five papers chosen by
Marc Klemp
University of Copenhagen

  1. Diagnosing Human Capital as a Binding Constraint to Growth: Tests, Symptoms and Prescriptions By Farah Hani; Miguel Angel Santos
  2. Selective Migration and Economic Development: A Generalized Approach By Cha’Ngom, Narcisse; Deuster, Christoph; Docquier, Frédéric; Machado, Joël
  3. Political Conflict and Economic Growth in Post-Independence Venezuela By Dorothy Kronick; Francisco Rodr\'iguez
  4. Structural Change in Production Networks and Economic Growth By Paul Gaggl; Aspen Gorry; Christian vom Lehn
  5. The effects of weather conditions on economic growth: Evidence from global subnational economic output and income By Jinchi Dong; Jinnan Wang; Richard S.J. Tol; Bi Jun

  1. By: Farah Hani (Center for International Development at Harvard University); Miguel Angel Santos (Center for International Development at Harvard University)
    Abstract: The empirical literature on the contributions of human capital investments to economic growth shows mixed results. While evidence from OECD countries demonstrates that human capital accumulation is associated with growth accelerations, the substantial efforts of developing countries to improve access to and quality of education, as a means for skill accumulation, did not translate into higher income per capita. In this paper, we propose a framework, building on the principles of Growth Diagnostics (Hausmann, Rodrik and Velasco, 2008), to enable practitioners to determine whether human capital investments are a priority for a country’s growth strategy. We then discuss and exemplify different tests to diagnose human capital in a place, drawing on the Harvard Growth Lab’s experience in different development context, and discuss various policy options to address skill shortages.
    Keywords: Human capital, skills, economic growth, growth diagnostics, developing countries
    Date: 2021–07
  2. By: Cha’Ngom, Narcisse (LISER); Deuster, Christoph (European Commission Joint Research Centre (JRC)); Docquier, Frédéric (LISER); Machado, Joël (LISER)
    Abstract: International migration is a selective process that induces ambiguous effects on human capital and economic development in countries of origin. We establish the theoretical micro-foundations of the relationship between selective emigration and human capital accumulation in a multi-country context. We then embed this migration-education nexus into a development accounting framework to quantify the effects of migration on development and inequality. We find that selective emigration stimulates human capital accumulation and the income of those remaining behind in a majority of countries, in particular in the least developed ones. The magnitude of the effect varies according to the level of development, the dyadic structure of migration costs, and the education policy. Emigration significantly reduces cross-country income inequality and the proportion of the world population living in extreme poverty.
    Keywords: human capital, migration, selection, brain drain, brain gain, global inequality
    JEL: J61 O15 E24 J24
    Date: 2023–06
  3. By: Dorothy Kronick; Francisco Rodr\'iguez
    Abstract: Venezuela has suffered three economic catastrophes since independence: one each in the nineteenth, twentieth, and twenty-first centuries. Prominent explanations for this trilogy point to the interaction of class conflict and resource dependence. We turn attention to intra-class conflict, arguing that the most destructive policy choices stemmed not from the rich defending themselves against the masses but rather from pitched battles among elites. Others posit that Venezuelan political institutions failed to sustain growth because they were insufficiently inclusive; we suggest in addition that they inadequately mediated intra-elite conflict.
    Date: 2023–05
  4. By: Paul Gaggl; Aspen Gorry; Christian vom Lehn
    Abstract: This paper studies structural change in production networks for intermediate inputs (input-output network) and new capital (investment network). For each network, we document a declining fraction of production by goods sectors and a rising fraction of production by services sectors. We develop a multisector growth model that admits structural change in production networks along the balanced growth path to study these trends. Disaggregated final expenditure data reveal that inputs to investment production are substitutes, rather than strong complements as suggested by existing work. Hence, resources endogenously reallocate toward the fastest growing producers of investment. Growth accounting exercises demonstrate that investment-specific technical change has risen in importance for aggregate U.S. growth over time, with 20-25% of aggregate growth after 2000 stemming from reallocation induced by structural change. At the same time, productivity growth within the input-output network has stagnated, contributing to the recent slowdown in aggregate growth.
    Keywords: structural change, input-output network, investment network, economic growth, technical change, balanced growth
    JEL: E23 O14 O40 O41
    Date: 2023
  5. By: Jinchi Dong (School of the Environment, Nanjing University); Jinnan Wang (School of the Environment, Nanjing University); Richard S.J. Tol (Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom); Bi Jun (School of the Environment, Nanjing University)
    Abstract: The effects of weather on economic growth continue to be debated. Previous studies economic output, but income better reflects living standards; income and output are the same at the national level, but differ at a finer spatial scale. This study assembles a unique database comprising global subnational GDP and GDI per capita data from over 1600 regions across more than 180 countries and analyzes the effects of weather conditions on economic growth. There is a significant negative effect of annual mean temperature on income, while weather conditions do not significantly affect output per capita growth. We also find significant interaction effects between weather and weather variability, as well as different adaptations between rich and poor regions. The omission of data from a large number of poor and hot countries in previous subnational research has led to an underestimation of the economic impact of weather shocks. Focusing on output rather than income, previous studies also appear to have underestimated the impact of climate change.
    Keywords: climate change, climate damages, gross domestic product, gross domestic income, panel regression
    JEL: O44 Q54
    Date: 2023–06

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