Why Do Growth Rates Differ? Evidence from Cross-Country Data on Private Sector Production

32 Pages Posted: 20 May 2008

See all articles by Juha Kilponen

Juha Kilponen

Bank of Finland - Research

Matti Viren

Bank of Finland - Research

Date Written: 2008

Abstract

We estimate a standard production function with a new cross-country data set on business sector production, wages and R&D investment for a selection of 14 OECD countries including the United States. The data sample covers the years 1960-2004. The data suggest that growth differences can largely be explained by capital deepening and an ability to produce new technology in the form of new patents. The importance of patents is magnified by the openness of the economy. We find some evidence of increasing elasticity of substitution over time, all though the results are sensitive to assumptions on the nature of technological progress.

Keywords: growth, R&D, production function, patents

JEL Classification: O40, E10, O43

Suggested Citation

Kilponen, Juha and Viren, Matti, Why Do Growth Rates Differ? Evidence from Cross-Country Data on Private Sector Production (2008). Bank of Finland Research Discussion Paper No. 13/2008. Available at SSRN: https://ssrn.com/abstract=1135113 or http://dx.doi.org/10.2139/ssrn.1135113

Juha Kilponen (Contact Author)

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland
+358 10 831 2847 (Phone)
+358 10 831 2294 (Fax)

HOME PAGE: http://www.bof.fi/en/suomen_pankki/organisaatio/asiantuntijoita/kilponen_juha/

Matti Viren

Bank of Finland - Research ( email )

P.O Box 160
FIN-00101 Helsinki
Finland
+358 10 831 2563 (Phone)
+358 10 831 2294 (Fax)

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