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Barriers and the Transition to Modern Growth

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L. Rachel Ngai

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Abstract

This paper studies how differences in the size of barriers to capital accumulation can account for differences in long run economic development paths. In this model barriers affect both the beginning date and the pace of the modern economic growth. A fundamental property of the model is that cross country income differences matches the inverted U-shape pattern over time as observed in the data, hence implies a substantial fraction of existing income differences is really a transitional phenomenon. Relative to papers that model this as steady state phenomenon, my model requires a smaller size of barriers to account for current disparities. Another important finding is that this transitional effect increases significantly when I include the fact that today's low-income countries have had higher population growth rates during their early development stage than did the currently rich countries. In a quantitative exercise I find that given the beginning dates of modern growth, the model accounts for a significant portion of current income differences.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0561.

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Date of creation: Jan 2003
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Handle: RePEc:cep:cepdps:dp0561

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Related research
Keywords: Industrialization; income disparity; distortion;

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Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  3. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16. [Downloadable!]
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  5. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April. [Downloadable!] (restricted)
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  8. Jones, Charles I., 1994. "Economic growth and the relative price of capital," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 359-382, December. [Downloadable!] (restricted)
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  12. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1997. "The poverty of nations: a quantitative exploration," Staff Report 204, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  14. Gary S. Becker & Kevin M. Murphy & Robert F. Tamura, 1990. "Human Capital, Fertility, and Economic Growth," NBER Working Papers 3414, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Goodfriend, Marvin & McDermott, John, 1995. "Early Development," American Economic Review, American Economic Association, vol. 85(1), pages 116-33, March. [Downloadable!] (restricted)
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  17. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August. [Downloadable!] (restricted)
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  20. Oded Galor & David N. Weil, 1998. "Population, Technology, and Growth: From the Malthusian Regime to the Demographic Transition," Working Papers 98-1, Brown University, Department of Economics, revised 19 Aug 1998. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stephen L Parente & Edward C Prescott, 2004. "A Unified Theory of the Evolution of International Income Levels," Levine's Bibliography 122247000000000300, UCLA Department of Economics. [Downloadable!]
    Other versions:
  2. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  3. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2003. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers diegor-03-01, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  4. Matthias Doepke, . "Growth Takeoffs," UCLA Economics Online Papers 409, UCLA Department of Economics. [Downloadable!]
    Other versions:
  5. Satya Das & Rajat Deb, 2006. "A Dynamic Analysis of Child Labor with a Variable Rate of Discount: Some Policy Implications," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 5(1), pages 1562-1562. [Downloadable!] (restricted)
  6. Nils-Petter Lagerloef, 2005. "The Galor-Weil Model Revisited: A Quantitative Exercise," Macroeconomics 0507025, EconWPA. [Downloadable!]
  7. Motamed, Mesbah & Florax, Raymond J.G.M. & Masters, Will, 2009. "Geography and Economic Transition: Global Spatial Analysis at the Grid Cell Level," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49589, Agricultural and Applied Economics Association. [Downloadable!]
  8. Douglas Gollin & Stephen L. Parente & Richard Rogerson, 2004. "The Food Problem and the Evolution of International Income Levels," Working Papers 899, Economic Growth Center, Yale University. [Downloadable!]
    Other versions:
  9. Hildegunn Ekroll Stokke, 2005. "Productivity Growth in Backward Economies and the Role of Barriers to Technology Adoption," Working Paper Series 4905, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
  10. Nils-Petter Lagerlöf, 2006. "The Galor-Weil Model Revisited: A Quantitative Exercise," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 116-142, January. [Downloadable!] (restricted)
  11. Torfinn Harding & Jørn Rattsø, 2005. "The Barrier Model of Productivity Growth: South Africa," Working Paper Series 4805, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
    Other versions:
  12. Tiago Cavalcanti & Stephen Parente & Rui Zhao, 2007. "Religion in macroeconomics: a quantitative analysis of Weber’s thesis," Economic Theory, Springer, vol. 32(1), pages 105-123, July. [Downloadable!] (restricted)
  13. Holger Strulik, 2005. "Geography, Health, and Demo-Economic Development," Discussion Papers 05-15, University of Copenhagen. Department of Economics. [Downloadable!]
  14. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May. [Downloadable!]
  15. Marco Espinosa-Vega & Richard C. Barnett, 2005. "Barriers to Capital Accumulation and the Incidence of Child Labor," IMF Working Papers 05/220, International Monetary Fund. [Downloadable!]
  16. Douglas Gollin & Steven Parente & Richard Rogerson, 2003. "Structural Transformation and Cross-Country Income Differences," Levine's Bibliography 506439000000000259, UCLA Department of Economics. [Downloadable!]
  17. Hyeok Jeong & Yong Kim, 2006. "S-shaped Transition and Catapult Effects," IEPR Working Papers 06.53, Institute of Economic Policy Research (IEPR). [Downloadable!]
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  18. Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April. [Downloadable!] (restricted)
  19. Diego Restuccia, 2002. "Barriers to Capital Accumulation and Aggregate Total Factor Productivity," Working Papers diegor-02-01, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
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