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What Determines the Rate of Growth and Technological Change?

50 Pages Posted: 20 Apr 2016  

Yuko Kinoshita

International Monetary Fund (IMF); University of Michigan, William Davidson Institute; Centre for Economic Policy Research (CEPR)

Ashoka Mody

International Monetary Fund (IMF) - Research Department

Date Written: September 30, 1989

Abstract

There is substantial research about cross section and time series correlations between economic growth and various economic, social, demographic and political variables. After analyzing these correlations, the paper makes the following conclusions. Exogenous increases do not seem to cause increases in the rate of technological change, but instead seem to be associated with lower rates of return to capital. Increased openness to international trade speeds up growth and technological change as do an increase in scientists and engineers. Countries more open to trade have a higher level of investment and capital growth - which is not associated with a fall in the marginal product of capital. Countries that become more integrated with world markets seem to have a higher marginal product of capital. Increases in capital investment associated with a higher per capita GDP are associated with a fall in the marginal product of capital. Increases in capital investment associated with increases in trade are not. This suggests that policies to encourage more open trading may be as important to growth as additional foreign lending - especially in their cumulative effects - and at the same time enhance the efficient use of foreign loans.

Keywords: Economic Growth, Achieving Shared Growth, Environmental Economics & Policies, Economic Theory & Research, Banks & Banking Reform

Suggested Citation

Kinoshita, Yuko and Mody, Ashoka, What Determines the Rate of Growth and Technological Change? (September 30, 1989). World Bank Policy Research Working Paper No. 279. Available at SSRN: https://ssrn.com/abstract=569222

Yuko Kinoshita (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States
202-623-5442 (Phone)
202-623-6069 (Fax)

University of Michigan, William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Ashoka Mody

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-9617 (Phone)
202-589-9617 (Fax)

HOME PAGE: http://www.amody.com

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