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Economic Growth and the Return to Capital in Developing Economies

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  • Robertson, Peter E

Abstract

An important stylized fact of economic growth is that the rate of return to capital is relatively constant across countries and over time. This paper provides an explanation using a model of growth for a developing economy that has a dualistic structure. Three conditions are derived, each of which may account for the observed stability of the return to capital. The results address Lucas' criticism of conventional growth models and support recent growth accounting studies of East Asian economies, which emphasize the role of increased factor inputs. Copyright 1999 by Royal Economic Society.

Suggested Citation

  • Robertson, Peter E, 1999. "Economic Growth and the Return to Capital in Developing Economies," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 577-594, October.
    • Handle: RePEc:oup:oxecpp:v:51:y:1999:i:4:p:577-94
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    Cited by:

    1. William Oliver Coleman, 2010. "The Political Economy of Wages and Unemployment," Books, Edward Elgar Publishing, number 13636.
    2. John S. Landon‐Lane & Peter E. Robertson, 2009. "Factor Accumulation And Growth Miracles In A Two‐Sector Neoclassical Growth Model," Manchester School, University of Manchester, vol. 77(2), pages 153-170, March.
    3. Jonathan Temple & Huikang Ying & Patrick Carter, 2014. "Transfers and Transformations: Remittances, Foreign Aid, and Growth," Bristol Economics Discussion Papers 14/649, School of Economics, University of Bristol, UK, revised 02 Dec 2014.
    4. Longfeng Ye & Peter E. Robertson, 2017. "Migration and Growth in China: A Sceptical Assessment of the Evidence," Economics Discussion / Working Papers 17-03, The University of Western Australia, Department of Economics.
    5. Huikang Ying, 2014. "Growth and Structural Change in a Dynamic Lagakos-Waugh Model," Bristol Economics Discussion Papers 14/639, School of Economics, University of Bristol, UK.
    6. Jaime Alonso-Carrera & Xavier Raurich, 2006. "Growth, Sectoral Composition, and the Wealth of Nations," Working Papers 278, Barcelona School of Economics.
    7. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, July.
    8. Jonathan Temple, 2006. "Aggregate Production Functions and Growth Economics," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 301-317.
    9. Areendam Chanda & Carl-Johan Dalgaard, 2003. "Dual Economies and International Total Factor Productivity Differences," Macroeconomics 0305002, University Library of Munich, Germany.
    10. Fabio Monteforte & Mathan Satchi & Jonathan R. W. Temple, 2021. "Development priorities: the relative benefits of agricultural growth," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1122-1152.
    11. Jonathan Temple & Ludger Wößmann, 2006. "Dualism and cross-country growth regressions," Journal of Economic Growth, Springer, vol. 11(3), pages 187-228, September.
    12. John Landon-Lane & Peter Robertson, 2005. "A Note on Barriers to Capital Accumulation and Income," Departmental Working Papers 200509, Rutgers University, Department of Economics.
    13. Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, August.
    14. Ayse Imrohoroglu & Krishna B. Kumar, 2003. "Entry Costs, Intermediation, and Capital Flows," Macroeconomics 0304001, University Library of Munich, Germany.
    15. Esteban-Pretel, Julen & Sawada, Yasuyuki, 2014. "On the role of policy interventions in structural change and economic development: The case of postwar Japan," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 67-83.
    16. Jonathan Temple, 2010. "Aggregate production functions, growth economics, and the part-time tyranny of the identity: a reply to Felipe and McCombie," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(6), pages 685-692.
    17. Ye, Longfeng & Robertson, Peter E., 2019. "Hitting the Great Wall: Structural change and China's growth slowdown," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    18. Benešová, Irena & Novotná, Zuzana & Šánová, Petra & Laputková, A., 2016. "Economic Comparison of Agricultural Sector of Eurasian Countries – Is There Any Potential for Development Through Economic Cooperation?," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(2), pages 1-13, June.
    19. Peter E. Robertson, 2000. "Diminished Returns? Growth and Investment in East Asia," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 343-353, December.

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