Topic
Capital deepening
About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.
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TL;DR: In this article, the authors used a two-country intertemporal equilibrium model in which imperfectly elastic investment captures the notion of imperfectly mobile physical capital and found that if home goods and foreign goods are perfect substitutes and investment is inelastic, the tax effects in open and closed economies are similar.
54 citations
TL;DR: In this article, the authors integrate an adverse selection model into a general equilibrium framework, and introduce Informational Gains From Trade (IGT) to explain why FDI is more likely to occur among countries that are similar in terms of human capital and technology.
Abstract: While the theoretical literature on Foreign Direct Investment (FDI) focuses largely on movements in capital and firm specific technology, recent empirical evidence emphasizes primarily the local human capital necessary to absorb FDI technology. We examine how human capital affects FDI and add a new dimension to the trade and FDI literature: informational asymmetries. Multinationals (MNCs) must train labor to work with firm specific technology, but employers possess incomplete information about workers' abilities. We integrate an adverse selection model into a general equilibrium framework, and introduce Informational Gains From Trade. Examining the incentives for firm location, we can explain why FDI is more likely to occur among countries that are similar in terms of human capital and technology, and why there is little investment from developing countries in advanced economies. Informational asymmetries coupled with human capital differences give rise to empirical observed multiple wage equilibria, where MNCs pay the highest wage in advanced countries, but higher wages than domestic firms in developing countries. The dynamic analysis highlights the absence of scale effects in the model, driven by the fact that the costs of training workers with fixed human capital will eventually outweigh any benefits from productivity increases generated by research expenditures.
54 citations
Posted Content•
TL;DR: In this paper, the Harrod-Domar model has been used to test the relationship between capital formation and economic growth and showed that there is a significant relationship between the two variables.
Abstract: Our focus in this study is capital formation and growth The study applied Harrod –Domar model to Nigerian growth model and tested if it can work in Nigeria The ordinary least square multiple regression analytical method was used to examine the relationship between capital formation and economic growth The study tested the stationarity and co integration of Nigeria’s time series data and used an error correction mechanism to determine the long-run relationship among the variables examined The paper reviewed the literature and found that Harrod-Domar model has scarcely been used to test the relationship between capital formation and economic growth The empirical study found that the data were stationary and co integrated and showed that there is a significant relationship between capital formation and economic growth in Nigeria The results supported the Harrod-Domar model which proved that the growth rate of national income will directly or positively be related to saving ratio and capital formation (ie the more an economy is able to save-and invest-out of given GNP, the greater will be the growth of that GDP) The econometric results suggested the need for the government to continue to encourage savings, create conducive investment climate and improve the infrastructural base of the economy to boost capital formation and promote sustainable growth
54 citations
Journal Article•
TL;DR: In this paper, the authors argue that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows and that empirical analysis has failed to yield conclusive results.
Abstract: Capital account liberalization, it is fair to say, remains one of the most controversial and least understood policies of our day. One reason is that different theoretical perspectives have very different implications for the desirability of liberalizing capital flows. Another is that empirical analysis has failed to yield conclusive results.
54 citations
Posted Content•
TL;DR: In this paper, the authors focused on the linkage between ICT and output growth and summarized the findings in the literature on the contribution of ICT to economic growth arising from capital deepening and increases in total factor productivity.
Abstract: Thee worldwide development of information and communication technology (ICT) has accelerated dramatically over the past decade. Increased ICT production and use has the potential to influence economic growth positively. This paper focuses on the linkage between ICT and output growth and summarizes the findings in the literature on the contribution of ICT to economic growth arising from capital deepening and increases in total factor productivity. It looks at the methodologies used to assess the magnitude of the different channels through which ICT influences productivity growth, summarizes the key factors that increase and obstruct ICT expansion, and outlines the challenges developing countries face in maximizing ICT's contribution to growth. Strengthening institutions to create an environment that attracts ICT investment and promotes ICT use; exploiting network and spillover effects by creating domestic demand; and promoting "adaptation close to use" to match local capacity and local needs have been identified as policies to surmount these challenges.
54 citations