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Telecommunications, Factor Substitution And Economic Growth

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  • FRANCIS J. CRONIN
  • ELISABETH COLLERAN
  • MARK GOLD

Abstract

De La Grandville (1989) suggests that large elasticities of substitution between factor inputs and a change in relative prices might (i) explain historical economic growth in developing countries and (ii) account for the varying growth among sectors within economies undergoing technological change. Yuhn (1991) supports de La Grandvilles first hypothesis in his finding that Korea's economic growth relative to the United States, over a given interval, could be explained by the higher elasticities of substitution between labor and capital in Korea relative to those of the United States. This paper explores de La Grandville's second hypothesis with respect to telecommunications.

Suggested Citation

  • Francis J. Cronin & Elisabeth Colleran & Mark Gold, 1997. "Telecommunications, Factor Substitution And Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 21-31, July.
    • Handle: RePEc:bla:coecpo:v:15:y:1997:i:3:p:21-31
    DOI: 10.1111/j.1465-7287.1997.tb00474.x
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    1. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, vol. 64(6), pages 964-976, December.
    2. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-268, August.
    3. Panik, Michael J, 1976. "Factor Learning and Biased Factor-Efficiency Growth in the United States, 1929-1966," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(3), pages 733-739, October.
    4. Chung, Jae Wan, 1987. "On the Estimation of Factor Substitution in the Translog Model," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 409-417, August.
    5. Cronin, Francis J. & Gold, Mark A. & Hebert, Paul L. & Lewitzky, Steven, 1993. "Factor prices, factor substitution, and the relative demand for telecommunications across US industries," Information Economics and Policy, Elsevier, vol. 5(1), pages 73-85, January.
    6. Berndt, Ernst R & Wood, David O, 1979. "Engineering and Econometric Interpretations of Energy-Capital Complementarity," American Economic Review, American Economic Association, vol. 69(3), pages 342-354, June.
    7. Yuhn, Ky-hyang, 1991. "Economic Growth, Technical Change Biases, and the Elasticity of Substitution: A Test of the De La Grandville Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 340-346, May.
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    Cited by:

    1. Nicolaus Tideman & Ebere Akobundu & Andrew Johns & Prapaiporn Wutthicharoen, 2002. "The Avoidable Excess Burden of Broad-Based U.S. Taxes," Public Finance Review, , vol. 30(5), pages 416-441, September.
    2. André Mollick, 2011. "The world elasticity of labor substitution across education levels," Empirical Economics, Springer, vol. 41(3), pages 769-785, December.
    3. Gómez-Barroso, José Luis & Marbán-Flores, Raquel, 2020. "Telecommunications and economic development – The 20th century: The building of an evidence base," Telecommunications Policy, Elsevier, vol. 44(2).
    4. Enrico Saltari & Clifford Wymer & Daniela Federici & Marilena Giannetti, 2011. "The impact of ICT on the Italian productivity dynamics," Working Papers in Public Economics 149, University of Rome La Sapienza, Department of Economics and Law.
    5. Nguyen Ngoc Thach, 2020. "How to Explain When the ES Is Lower Than One? A Bayesian Nonlinear Mixed-Effects Approach," JRFM, MDPI, vol. 13(2), pages 1-17, February.
    6. Saltari Enrico & Wymer Clifford R. & Federici Daniela & Giannetti Marilena, 2012. "Technological Adoption with Imperfect Markets in the Italian Economy," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(2), pages 1-30, April.
    7. Olivier de La Grandville & Rainer Klump, 2000. "Economic Growth and the Elasticity of Substitution: Two Theorems and Some Suggestions," American Economic Review, American Economic Association, vol. 90(1), pages 282-291, March.
    8. Mulder, Kenneth, 2007. "Modeling the dynamics of nutrient limited consumer populations using constant elasticity production functions," Ecological Modelling, Elsevier, vol. 207(2), pages 319-326.
    9. Francisco Garcia-Blanch, 2001. "An Empirical Inquiry into the Nature of South Korean Economic Growth," CID Working Papers 74A, Center for International Development at Harvard University.
    10. Serdar Yilmaz & Mustafa Dinc, 2002. "Telecommunications and Regional Development: Evidence from the U.S. States," Economic Development Quarterly, , vol. 16(3), pages 211-228, August.

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