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Output Convergence and the Role of Research and Development

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  • Mohammad Ashraf

    (Department of Economics, Finance, and Decision Sciences School of Business, The University of North Carolina)

  • Khan A. Mohabbat

    (Department of Economics Northern Illinois University DeKalb, IL)

Abstract

We ask whether failure to control for research and development (R&D) activity in an output convergence regression affects the coefficient estimates of initial output. We focus on output convergence to an economy¡¯s own steady-state growth path using time series regression framework and convergence across economies using panel estimation. We use data for the 30 member countries of the Organization for Economic Co-operation and Development (OECD) and US state-level real per capita output and per capita patents. The results indicate that after controlling for R&D activity the coefficient estimates increase in magnitude (in absolute terms) and in significance levels. Furthermore, the results are not sensitive to the dataset used or the estimation procedure.

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Bibliographic Info

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 11 (2010)
Issue (Month): 1 (May)
Pages: 35-71

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Handle: RePEc:cuf:journl:y:2010:v:11:i:1:p:35-71

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Related research

Keywords: Output convergence; R&D; Omitted variable bias; Panel estimation; Panel unit root tests;

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References

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Cited by:
  1. Wang, Chan, 2012. "A very preliminary survey on growth and development," MPRA Paper 39037, University Library of Munich, Germany.
  2. Kunting Chen, 2012. "Analysis of the Great Divergence under a Unified Endogenous Growth Model," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 317-353, November.

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