Capital Goods Imports and Long-Run Growth

30 Pages Posted: 1 Sep 2000 Last revised: 20 Apr 2009

Date Written: April 1994

Abstract

This paper presents an endogenous growth model of an open economy in which the growth rate of income is higher if foreign capital goods are used relatively more than domestic capital goods for the production of capital stock. Empirical results, using cross country data for the period 1960-85, confirm that the ratio of imported to domestically produced capital goods in the composition of investment has a significant positive effect on per capita income growth rates across countries, in particular, in developing countries. Hence, the composition of investment in addition to the volume of total capital accumulation is highlighted as an important determinant of economic growth.

Suggested Citation

Lee, Jong-Wha, Capital Goods Imports and Long-Run Growth (April 1994). NBER Working Paper No. w4725. Available at SSRN: https://ssrn.com/abstract=240790

Jong-Wha Lee (Contact Author)

Korea University ( email )

Anam-dong, Sungbuk-Ku
Dept. of Economics
Seoul, 136-701
82-2-3290-2216 (Phone)
82-2-928-4948 (Fax)

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