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Dynamical analysis of the R&D-based growth model with a regime switch

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  • Shiro Kuwahara

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    Abstract

    Several empirical studies suggest that advanced economies experience a growth regime switch from factor accumulation to knowledge accumulation. To investigate the mechanism of such a regime switch, this study develops a concise and flexible dynamic model based on Romer (J Polit Econ 98:S71–S102, 1990 ) by introducing two types of endogenously supplied R&D input capital. The model replicates the growth patterns of developed and underdeveloped nations, clarifies the important role that capital plays in the difference between them, and presents several implications for interest-rate subsidies and official development assistance. Further, it shows that if a country enjoying long-run growth has little initial capital, its initial economic development will be based on capital accumulation. When the capital stock becomes sufficient for supporting R&D, the economy will achieve long-run growth through R&D. Copyright Springer-Verlag Wien 2013

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Economics.

    Volume (Year): 108 (2013)
    Issue (Month): 1 (January)
    Pages: 35-57

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    Handle: RePEc:kap:jeczfn:v:108:y:2013:i:1:p:35-57

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    Web page: http://www.springerlink.com/link.asp?id=108909

    Related research

    Keywords: Dynamics of regime switch; Capital-accumulation-based growth; R&D-based growth; Effectiveness of economic policies; E00; O00; O41;

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