R&D-Based Long-Run Growth in a Cross-Section of Countries
University of Florida WP 96-97-11
Posted: 21 Jul 1997
Date Written: February 1997
We develop and estimate the steady-state growth equation of an augmented version of Romer's model of endogenous technical change that allows for population growth, human capital accumulation, diminishing returns to R&D, and technology diffusion. Estimates from international cross-section data yield parameter values that are, on the whole, consistent with prior information. An important exception is the parameter measuring the productivity of human capital. We trace the human capital problem to a poor proxy that overstates the variability of human capital stocks across countries, and we employ three distinct methods to treat the problem. However, our treatments of the human capital measurement problem cause the model to underpredict growth in successful countries and overpredict growth in unsuccessful countries. Some simple experiments suggest that a likely explanation of this phenomenon is that a parameter governing, in a broad sense, the importance of international technology transfer varies across countries.
JEL Classification: O3, O4
Suggested Citation: Suggested Citation