A theory of development and long run growth

Abstract

This paper presents a synthesized theory of development and long run growth. The theory that is presented combines two engines of growth which have been emphasized in the literature: technological progress and human capital accumulation. In the model, the growth rate of per capita output depends in part on the interaction between these two types of economic forces.

Human capital: the history, measurement and impact on nations from an economic perspective

“…This result casts doubt on assigning HC as a separate factor of production. Furthermore, they claim that it is the stock of education that matters for growth of total factor productivity due to its ability to adopt and innovate technology quickly (Krueger and Lindhal, 2001) agreeing with Kosempel (2004). Topel (1999) however, argues that Benhabib and Spiegel's findings result from their log specification of education, while Krueger and Lindhal (2001) found that cross-country regressions indicate that the change in education is positively associated with economic growth once measurement error in education is accounted for.…”

Innovation, growth and financial markets

“…To simplify the characterization of the dynamics, Funke and Strulik (2000) and Iacopetta (2011) assumed that both the innovation and the human capital sector depend only on the stock of human capital. Kosempel (2004) introduced cross-externalities in the education and innovation sector, but assumed that the saving rate was exogenous and firms allocated a fixed fraction of output to research and development. In Iacopetta (2011), as much as in Kosempel, innovation and education mutually reinforce one another, and the innovation and saving choices are endogenous, although the dynamical system becomes more complex and it can be solved only numerically.…”

An analysis on economic opportunity

“…In addition to endogenous growth studies, growth and development studies have focused on regional differences, influence of socio-economic variables, and distinctions between domestic and external variables in globalization. Other literatures on growth and development have touched on financial liberalization, capital flow, trade, regional features, human capital, business cycles development, fiscal policy and income distribution, development through stages and institutional advancement (Miller and Blair, 2009;Solow, 1957;Douglas, 1976;Li and Liu, 2011;Aghion and Howitt, 1998;Barro, 1999;Deininger and Squire, 1996;Bhagwati, 2004;Tamura, 2006;Li and Zhou, 2010;Zhou and Li, 2011;Li, 2012;Panzironi and Gelber, 2012;Bekaert, et al, 2005;Grossman and Helpman, 1990;Lucas, 1988Lucas, , 1990Kenny and Williams, 2001;Acemoglu and Robinson, 2012;Galor, 2000;Easterly and Rebelo, 1993;King, et al, 1988;Young, 1994;Kejak, 2003;Kosempel, 2004).…”