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Explaining differences in the productivity of investment across countries in the context of ‘new growth theory’

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  • Kevin S. Nell
  • A. P. Thirlwall

Abstract

The purpose of this paper is to explain differences in the productivity of investment across 84 rich and poor countries over the period 1980–2011, and to test the orthodox neoclassical assumption of diminishing returns to capital. The productivity of investment is measured as the ratio of the long-run growth of GDP to a country’s gross investment ratio. Twenty potential determinants are considered using a general-to-specific model selection algorithm. Education, government consumption, geography, export growth, openness, political rights and macroeconomic instability are the most important variables. The data also suggest constant returns to capital, so investment and the determinants of productivity of investment differences matter for long-run growth.

Suggested Citation

  • Kevin S. Nell & A. P. Thirlwall, 2018. "Explaining differences in the productivity of investment across countries in the context of ‘new growth theory’," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(2), pages 163-194, March.
    • Handle: RePEc:taf:irapec:v:32:y:2018:i:2:p:163-194
    DOI: 10.1080/02692171.2017.1333089
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    Cited by:

    1. A.P. Thirlwall, 2018. "Una vita nell’economia," Moneta e Credito, Economia civile, vol. 71(283), pages 179-210.
    2. A.P. Thirlwall, 2020. "The Age of Fragmentation by Alessandro Roncaglia: A Review Article," PSL Quarterly Review, Economia civile, vol. 73(295), pages 343-365.
    3. Nell, Kevin, 2023. "Inflation and growth in developing economies: A tribute to Professor Thirlwall," MPRA Paper 118757, University Library of Munich, Germany, revised 01 Sep 2023.
    4. Nicholas Apergis & Chi Keung Lau, 2022. "Hotel Revenue Convergence: Evidence Across Star Hotels in Chinese Provinces," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 50(1), pages 37-51, June.
    5. Esteban Pérez Caldentey & Juan Carlos Moreno-Brid, 2023. "Tony Thirlwall (21 April 1941 – 8 November 2023)," PSL Quarterly Review, Economia civile, vol. 76(307), pages 393-396.

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