Capital deepening

About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.

Institutions, Human Capital and Development

Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.

The determinants of agricultural production : a cross-country analysis

Abstract: In this analysis of capital's role in agricultural production, a new construction of data on capital allowed the authors to advance the cross-country study of production functions. The model reveals the relative importance of capital, a finding quite robust to modifications of the model and the disaggregation of capital to its two components. The model is also consistent with the view that lack of physical capital serves as a constraint on agricultural growth. The shift to more productive techniques is associated with a decline in labor, reflecting labor-saving technical changes. This is not news, but it is emphasized here because it comes out an integral view of the process which distinguishes between the core technology and the changes that took place over time and between countries. Not only is capital important to agricultural production, and agricultural development dependent on the economic environment, but agriculture is more cost-capital-intensive than nonagriculture. Capital is all the more important as a factor of production in that land (also important) varies little over time. The availability of agricultural capital determines whether the gap between available and applied technologies can be closed. Prices have little direct, immediate impact on agricultural growth, beyond their impact through inputs and choice of technology. The legacy of past policies that distorted the relative returns to economic activity is enshrined in current stocks, which may respond slowly to policy reform. The analysis assumes that the production technology is heterogeneous and the implemented technology is endogenous and determined jointly with the level of unconstrained inputs. Thus, a change in the state variables affects both the technology and the inputs, so the production function is not identified. To overcome that problem, changes in productivity are decomposed to three orthogonal components caused by the fundamentally different processes underlying panel data. The statistical framework explains the unstable results observed in production functions derived from panel data. Statistically, the results depend on how the data are projected. Comparisons between units over time or of deviations from unit-means or time-means all describe different processes. This is based on theory but has an intuitive appeal as well. In this case, the spread in productivity among countries is different from the spread in productivity for a country through time. The factors explaining the spread will differ. The modeling approach should explicitly recognize the fact that panel data measure a combination of economic phenomena.

Structural Change, Capital Investment and Productivity in the Food Processing Industry

Abstract: Investment in new technology affects structural change and economic performance through its effect on capital and input composition. This is particularly important for capital-intensive industries such as food processing, which lack short-run flexibility due to adjustment costs. This study considers the impacts of capital quasi-fixity on capital and noncapital input decisions made in the U.S. Food and Kindred Products industry from 1965 to 1991. A cost-based production theory model is used to evaluate investment motivations for three capital components. Productivity growth accompanying changing input patterns is then discussed, focusing on capital and farm input demand.

Capital Flow Reversals, the Exchange Rate Debate, and Dollarization

Abstract: More frequent and increasingly severe crises are encouraging emerging market economies to seek means to make themselves less vulnerable to sudden stops in capital flows. Capital controls have been widely discussed, but dollarization may offer a longer-term and more market-friendly solution.

General Equilibrium, Capital and Macroeconomics: A Key to Recent Controversies in Equilibrium Theory

Abstract: Preface 1. The Long-Period Method 2. The Problematic Relationship Between Neo-Walrasian Equilibrium Analyses and Real Economies 3. Long-Period Equilibria 4. Must Long-Period Equilibria Be Stationary? With Initial Observations on Investment 5. Walras, the Shift to Neo-Walrasian Equilibria, and Some Confusions 6. Reswitching and Reverse Capital Deepening 7. Capital Theory and Macroeconomics: The Theory of Aggregate Investment 8. Capital Theory and Macroeconomics: The Labour Demand Curve 9. Summary of the Critical Argument, and Sketch of an Alternative Approach References