Why Growth Rates Differ.
About: This article is published in Journal of the American Statistical Association.The article was published on 1970-03-01. It has received 185 citations till now.
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TL;DR: In this paper, a simple framework for explaining the growth of national capabilities is set out, based on the interplay of incentives, capabilities and institutions, and the experience of some industrializing countries is described to assess the validity of this framework.
2,121 citations
Cites background from "Why Growth Rates Differ."
...There is little by way of theory which brings together all the factors that may influence these variables (see OECD, 1987; Ergas, 1984, 1986; OTA, 1990; and Fagerberg, 1987, 1988)....
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...These three are strongly interlinked in ways that make it difficult to identify their separate contributions to national performance (Nelson, 1981), but they do not always go together....
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TL;DR: Pritchett et al. as discussed by the authors found that education did not lead to faster economic growth and pointed out that increasing educational capital resulting from improvements in the educational attainment of the labor force has no positive impact on the growth rate of output per worker.
Abstract: How to explain the surprising finding that more education did not lead to faster economic growth? Cross-national data on economic growth rates show that increases in educational capital resulting from improvements in the educational attainment of the labor force have had no positive impact on the growth rate of output per worker. In fact, contends Pritchett, the estimated impact of growth of human capital on conventional nonregression growth accounting measures of total factor productivity is large, strongly significant, and negative. Needless to say, this at least appears to contradict the current conventional wisdom in development circles about education's importance for growth. After establishing that this negative result about the education-growth linkage is robust, credible, and consistent with previous literature, Pritchett explores three possible explanations that reconcile the abundant evidence about wage gains from schooling for individuals with the lack of schooling impact on aggregate growth: - That schooling creates no human capital. Schooling may not actually raise cognitive skills or productivity but schooling may nevertheless raise the private wage because to employers it signals a positive characteristic like ambition or innate ability. - That the marginal returns to education are falling rapidly where demand for educated labor is stagnant. Expanding the supply of educated labor where there is stagnant demand for it causes the rate of return to education to fall rapidly, particularly where the sluggish demand is due to limited adoption of innovations. - That the institutional environments in many countries have been sufficiently perverse that the human capital accumulated has been applied to activities that served to reduce economic growth. In other words, possibly education does raise productivity, and there is demand for this more productive educated labor, but demand for educated labor comes from individually remunerative but socially wasteful or counterproductive activities - a bloated bureaucracy, for example, or overmanned state enterprises in countries where the government is the employer of last resort - so that while individuals' wages go up with education, output stagnates, or even falls. This paper - a product of the Poverty and Human Resources Division, Policy Research Department - is part of a larger effort in the department to investigate the determinants of economic growth.
1,736 citations
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TL;DR: In this article, a multiple regression analysis is conducted for all regions of the group of 25 European Union countries (EU-25), including measures of R&D investment, proxies for regional innovation systems, and knowledge and socioeconomic spillovers.
Abstract: Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: (1) the analysis of the link between investment in research and development (RD (2) the study of the existence and efficiency of regional innovation systems; and (3) the examination of the geographical diffusion of regional knowledge spillovers. These complementary approaches have, however, rarely been combined. Important operational and methodological barriers have thwarted any potential cross-fertilization. This paper tries to fill this gap in the literature by combining in one model R&D, spillovers, and innovation systems approaches. A multiple regression analysis is conducted for all regions of the group of 25 European Union countries (EU-25), including measures of R&D investment, proxies for regional innovation systems, and knowledge and socio-economic spillovers. This approach allows the discrimination between the influence of internal factors and external knowledge and institutional flows on regional economic growth. The empirical results highlight how the complex interaction between local and external research, on the one hand, with local and external socio-economic and institutional conditions, on the other, shapes the innovation capacity of every region. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers are affected by strong distance decay effects.
480 citations
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366 citations
Cites background from "Why Growth Rates Differ."
...Original applications of (5), such as Solow (1957) and Denison (1962, 1967) treated raw labor as the human capital input, and did not account for changes in the quality of capital, so that a large portion of growth was attributed to TFP....
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01 Jan 2001
360 citations