Catching Up, Social Capability, Government Size and Economic Growth

Bergström, Villy, ed. (1997), Government and Growth. Oxford: Clarendon Press pp. 61–148

63 Pages Posted: 16 Nov 2012

See all articles by Pär Hansson

Pär Hansson

University of Orebro

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Date Written: December 1, 1996

Abstract

We provide a thorough assessment of the importance of catching up for the explanation of growth differences across countries. The results show that when capital accumulation and labor force growth are controlled for there is significant catching up in labor productivity; an effect that is strengthened when social capability is accounted for. In an extension of the basic model it is shown that there is an independent effect of the change in trade intensity and trade regime on productivity growth.

A final aspect covered is the effect of government expenditure on productivity growth, and how it affects the realization of the catching-up potential. The level of total outlays, consumption and transfers invariably have a negative impact on the rate of growth of total factor productivity. Government investment is not found to have any effect on TFP-growth, while educational expenditure exerts a positive influence on TFP-growth.

Keywords: Catching up, Convergence, Government expenditure, Human capital, International trade, Social capability, Technology gap

JEL Classification: H30, O41, O47

Suggested Citation

Hansson, Pär and Henrekson, Magnus, Catching Up, Social Capability, Government Size and Economic Growth (December 1, 1996). Bergström, Villy, ed. (1997), Government and Growth. Oxford: Clarendon Press pp. 61–148, Available at SSRN: https://ssrn.com/abstract=2174632

Pär Hansson

University of Orebro ( email )

Sköldvägen 6 151 53 Södertälje
SE-70182 Orebro
Sweden

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
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Stockholm, SE-10215
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