Industrialization versus Education: Optimal Investment Choices and Growth in a Developing Economy
Peter E. Robertson
University of New South Wales
Review of Development Economics, Vol. 4, Issue 2, June 2000
Recent growth theory has focused on the role of human capital as a source of welfare gains in developing economies, rather than traditional sources such as improving resource allocation and physical capital accumulation. This paper examines traditional developing-country labor market problems in a Uzawa-Lucas endogenous growth model. Numerical solutions show that policies which promote human capital accumulation can have significant short-term costs, and lower overall welfare improvements, than policies that give similar productivity improvements in the physical-capital or final-goods sector.
JEL Classification: O14, O15Accepted Paper Series
Date posted: August 21, 2000
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