Institutions-augmented solow model and income clubs

2011 ◽  
Vol 17 (2) ◽  
pp. 5
Author(s):  
Edinaldo Tebaldi ◽  
Ramesh Mohan
Keyword(s):  
Growth Model ◽  
Poverty Traps ◽  
Income Convergence ◽  
Factor Productivity ◽  
Solow Model ◽  
Poor Countries ◽  
Solow Growth Model ◽  
Income Gap ◽  
Quality Of Institutions

Growth economists still face major challenges and limitations to incorporate institutions into the standard growth framework. This article develops a simple institutions-augmented Solow growth model --that can be used in the classroom and for policy discussions --that accounts for the interactions between institutions and factor-productivity and examine the impacts of the quality of institutions on levels and growth rates of output. The institutions-augmented growth model shows that differences in the quality of institutions preclude income convergence and determine both the level and the growth rate of output per worker. The model also shows that poor institutions induce poverty traps. Furthermore, the income gap between rich and poor countries will not disappear if poor countries’ institutions do not improve relative to their rich counterpart.  

scholarly journals INTRA ASEAN-5 CAPITAL FLOWS: DO THEY REPRESENT NEOCLASSICAL BELIEF OR LUCAS PARADOX?

2015 ◽  
Vol 18 (2) ◽  
pp. 157-182
Author(s):  
Nurul Qolbi ◽  
Akhmad Syakir Kurnia
Keyword(s):  
Human Capital ◽  
Capital Flows ◽  
Capital Flow ◽  
Marginal Product ◽  
Host Countries ◽  
Poor Countries ◽  
Quality Of Institutions ◽  
Marginal Product Of Capital ◽  
Asean Countries

In the neoclassical belief, capital flows downhill from rich to poor countries as a consequence of capital endowment variation. In contrast to the neoclassical belief, Lucas found evidence that capital tends to flow uphill. This paper investigates the intra ASEAN-5 capital flows. Using panel estimation, we found that marginal product of capital, human capital, total factor productivity growth, and the quality of institutions appear as determinants for the capital flow from Indonesia, Malaysia, Philippines, and Thailand to Singapore as a host country. On the contrary, the capital flow from Singapore to other ASEAN countries as host countries is encouraged only by the quality of institutions, human capital as well as per capita GDP. The result shows that Lucas variables emerge as determinants for the uphill and downhill capital flow in ASEAN-5. In the meantime, marginal product of capital that represents neoclassical variable appears as the determinant for uphill capital flow from other ASEAN countries to Singapore. This gives significant insight that Lucas variables emerge as companion to the neoclassical variables in explaining intra ASEAN capital flow

scholarly journals The Drivers of the Total Factor Productivity

2019 ◽  
Vol 85 (2) ◽  
pp. 12-20
Author(s):  
T. K. Kvasha
Keyword(s):  
Economic Growth ◽  
Total Factor Productivity ◽  
Intangible Assets ◽  
Significant Proportion ◽  
High Tech ◽  
Factor Productivity ◽  
Patent Activity ◽  
Solow Model

The Total Factor Productivity (TFP) is now widely recognized as an important factor in both long-term economic growth and short-term growth fluctuations. Researchers of the International Monetary Fund came to the conclusion that the growth of the TFP was the most important long-term factor in raising the living standards. Therefore, the IMF and academics from different countries has been scrutinizing the reasons for the slowdown in TFP and investigating the underlying factors. The low rates of GDP grow in Ukraine call for finding the drivers, one of which is TFP growth. It raises the importance of analysis of the factors promoting this growth in Ukraine.  The purpose of this work is to define TFP drivers, which would be most effective for Ukraine. TFP drivers in foreign countries are analyzed, TFP dynamics for Ukraine is calculated by use of Solow model, and TFP drivers over 2000–2017 are determined.         The analysis of publications about TFP drivers at global level shows that they include: international transfer of knowledge and technologies, activities of small innovative fast-growing firms, the enhanced quality of quality of education, the increased expenditures on R&D and innovations, especially by business sector, the increased investments in intangible assets, the intensified patent activity, access of enterprises to lending. The TFP dynamics in Ukraine, calculated by the Solow model, is characterized by high growth rates by 2012, a sharp fall in 2013-2015, and a return to the growth path in 2016-2017, but, as in the whole world, by very moderate pace. The factors contributing to this return are capital investment in intangible assets, the increasing patent activity of Ukrainian researchers, the intensified innovation in the high-tech sector. Factors constraining the TFP and the contribution of innovation to economic growth are a significant proportion of technology transfer in the form of “know-how, agreements for the acquisition (transfer) of technologies”, which holds back the widespread introduction of cutting-edge technologies, and the reduction of funding for R&D and innovation. Further studies should be focused on searching for political decisions promoting implementation of structural reforms aimed to solve the existing problems and eliminate their consequences, especially in of the innovation and education field.

Kaldor's Growth Theory

1992 ◽  
Vol 14 (1) ◽  
pp. 36-54 ◽  
Author(s):  
Nancy J. Wulwick
Keyword(s):  
Growth Model ◽  
Technical Progress ◽  
Growth Models ◽  
Increasing Returns ◽  
Growth Theory ◽  
Solow Model ◽  
Solow Growth Model ◽  
Policy Interventions ◽  
Long Run ◽  
Endogenous Technical Progress

The last decade has seen an outburst of growth models designed to replace the conventional Solow growth model, with its exogenous trend of technical progress, by more realistic models that generate increasing returns (to labor, capital and/or scale) as a result of endogenous technical progress. In contrast to the Solow model, the new models suggest that policy interventions can affect the long-run rate of economic growth. Nicholas Kaldor's growth model, designed in the late 1950s and early 1960s to replace the Solow growth model, is a precursor of the new growth models.

scholarly journals Spatial Dynamics for a Generalized Solow Growth Model

2018 ◽  
Vol 2018 ◽  
pp. 1-8 ◽  
Author(s):  
Yue Zhong ◽  
Wenyi Huang
Keyword(s):  
Differential Equation ◽  
Theoretical Analysis ◽  
Boundary Conditions ◽  
Growth Model ◽  
Spatial Dynamics ◽  
Production Functions ◽  
Poverty Traps ◽  
Explicit Solutions ◽  
Solow Growth Model ◽  
Economic Regions

The existence of nontrivial equilibrium and poverty traps for a generalized Solow growth model with concave and nonconcave production functions is investigated. The explicit solutions of the growth model, which is expressed by a differential equation with corresponding boundary conditions, are employed to illustrate the spatial dynamics of the model in different economic regions. Numerical method is used to justify the validity of the theoretical analysis.

Testing the Validity of the Solow Growth Model: Empirical Evidence from Cross-Country Panel Data

2018 ◽  
Vol 3 (1) ◽  
pp. 18-22
Author(s):  
Chigozie Nelson Nkalu ◽  
Richardson Kojo Edeme ◽  
Queen O. Chukwuma
Keyword(s):  
Panel Data ◽  
Growth Model ◽  
Capital Stock ◽  
Important Variable ◽  
Solow Model ◽  
Related Literature ◽  
Solow Growth Model ◽  
Real Gdp ◽  
Output Side ◽  
Cross Country

This study seeks to test for the validity of the Solow growth model using cross-country panel data. Panel OLS analysis was adopted following an extensive review of recent and related literature with output-side of the real GDP as the dependent variable with other variables like population, capital stock and employment as the independent. However, population and capital stock are positively impacting the output with statistically significant value, while employment is not an important variable in the model even though it exhibits a negative and statistically significant effect to the output. In conclusion, the estimation result conforms the postulations of the basic Solow and augmented Solow growth model thereby validating the Solow model across-countries.

scholarly journals Relationship between Health Expenditure and GDP in an Augmented Solow Growth Model for Pakistan: An Application of Co-integration and Error-Correction Modeling

2003 ◽  
Vol 8 (2) ◽  
pp. 1-16 ◽  
Author(s):  
Aurangzeb Aurangzeb
Keyword(s):  
Growth Model ◽  
Health Expenditure ◽  
Technological Changes ◽  
Solow Model ◽  
Health Capital ◽  
Specification Tests ◽  
Solow Growth Model ◽  
Short Run ◽  
Per Capita ◽  
Error Correction Modeling

This paper examines the temporal interdependence between gross domestic product and health expenditure per capita for Pakistan in an augmented Solow growth model suggested by Mankiw, Romer and Weil (1992) for the period of 1973-2001. This paper is an extension of the MRW model by incorporating health capital proxied by health expenditure to the augmented Solow model. Moreover, an openness variable is also included in the model in order to capture the effect of technological changes on growth. The paper employs co-integration, ECM methodology and several diagnostic and specification tests. The empirical findings show a significant and positive relationship between GDP and Health Expenditure, both in the long- and short-run.

Engineers or Lawyers? Institutions and Demand for Higher Education

2012 ◽  
pp. 30-51 ◽  
Author(s):  
T. Natkhov ◽  
L. Polishchuk
Keyword(s):  
Higher Education ◽  
Public Administration ◽  
Rule Of Law ◽  
Transmission Channel ◽  
Demand For Education ◽  
Fields Of Study ◽  
Quality Of Institutions ◽  
Cross Country ◽  
Rules Of The Game

Law and public administration schools in Russia vastly exceed in their popularity sciences and engineering. We relate such lopsided demand for higher education to the quality of institutions setting “rules of the game” in economy and society. Cross-country and Russian interregional data indicate the quality of institutions (rule of law, protection of property rights etc.) is negatively associated with the demand for education in law, and positively — in sciences and engineering. More gifted younger people are particularly sensitive to the quality of institutions in choosing their fields of study, and such selection is an important transmission channel between institutions and economic growth.

Poverty-Reducing Growth Strategy in Poor Countries

2005 ◽  
pp. 103-134
Author(s):  
Rodney Schmidt
Keyword(s):  
Low Income ◽  
Poverty Reduction ◽  
Growth Strategy ◽  
Poverty Traps ◽  
Income Poverty ◽  
Poor Countries ◽  
Land Redistribution ◽  
Policy Choices ◽  
The North ◽  
Urban Rural

This paper synthesizes and develops research undertaken by participants in The North-South Institute project, "Macroeconomic policy choices for growth and poverty reduction" in low- income developing countries.1 The project analysed the features of poverty and growth in seven poor countries of varying circumstances and proposed macroeconomic and growth policies for poverty reduction for them. The research was guided by the question: "How does poverty inform growth strategy?" Our research provides evidence of the channels through which growth and distribution or poverty processes depend on each other and respond to policy together. We encapsulate the messages of these case studies in the following six propositions, discussed at length in the paper: i) macroeconomic stability reduces poverty; ii) land redistribution enhances growth; iii) income poverty traps constrain growth; iv) urban-rural growth disparities drive income inequality; v) regional poverty traps resist growth, and vi) ley growth policies can aggravate poverty gaps.  The propositions suggest growth policies that may be either of two types in terms of impact on growth and distribution. They have the potential to enhance both growth and distribution (win-win) or to enhance growth while aggravating income gaps or vice versa (win-lose).

EVALUATING THE CONTRIBUTION OF TOTAL FACTOR PRODUCTIVITY ON AGRICULTURAL GROWTH IN AN GIANG PROVINCE

2018 ◽  
Vol 1 (29) ◽  
pp. 29-37
Author(s):  
Tan Van Truong
Keyword(s):  
Total Factor Productivity ◽  
Agricultural Production ◽  
Science And Technology ◽  
Agricultural Labor ◽  
Factor Productivity ◽  
Agricultural Growth ◽  
Regression Approach ◽  
Investment Capital ◽  
Agricultural Demand

By the growth regression approach, the research has identified that the investment capital contributed 1,939 and agricultural labor contributed 1,291 to the agricultural growth of An Giang province. More specifically, the contribution of TFP (Total Factor Productivity) to the agricultural growth in the period 2000 - 2004 was averagely 0,11%, in 2005 - 2010 was -5,03%, and in period 2011 - 2016 was 0,81%. The total factor productivity contributed to the agricultural growth slowly. In order to raise the contribution of TFP, the research represents 05 solutions including the increase of the effectiveness of using the investment capital, the increase of the quality of labor, the application of the science and technology into agricultural production, agriculturalrestructuring, and the increase of  agricultural demand.

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