Human Capital, Equipment Investment, and Industrialization

Posted: 20 Dec 1998

See all articles by Hans-Joachim Voth

Hans-Joachim Voth

University of Zurich - UBS International Center of Economics in Society; Centre for Economic Policy Research (CEPR)

Jonathan R.W. Temple

University of Bristol - Department of Economics; Centre for Structural Econometrics; Centre for Economic Policy Research (CEPR)

Date Written: Undated

Abstract

This paper constructs simple models in which industrialization is driven by human capital accumulation. Industrialization can explain the robust correlation between equipment investment and growth in developing countries. We show that government intervention is justified within our stylized model, and indicate that a subsidy to equipment investment is likely to be dominated by other policies. In the final section of the paper, we examine the correlation between equipment investment and growth, and find that it is strongest in economies on the brink of industrialization. We also show that this result is not easily explained by diminishing returns.

JEL Classification: O14, O40, O57

Suggested Citation

Voth, Hans-Joachim and Temple, Jonathan R.W., Human Capital, Equipment Investment, and Industrialization (Undated ). Available at SSRN: https://ssrn.com/abstract=5000

Hans-Joachim Voth

University of Zurich - UBS International Center of Economics in Society ( email )

Raemistrasse 71
Zuerich, 8006
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jonathan R.W. Temple (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom
+44 117 928 8430 (Phone)
+44 117 928 8577 (Fax)

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/Growth/

Centre for Structural Econometrics ( email )

United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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