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Public Education and Growth in Developing Countries

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  • Christiane Schuppert

    (University of Dortmund)

  • Nadja Wirz

    (University of St. Gallen)

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    Abstract

    Human capital plays a key role in fostering technology adoption, the major source of economic growth in developing countries. Consequently, enhancing the level of human capital should be a matter of public concern. The present paper studies public education incentives in an environment in which governments can invest in human capital to facilitate the adoption of new technologies invented abroad or, instead, focus on consumptive public spending. Although human capital is pivotal for growth, the model reveals that incentives to invest in public education vanish if a country is poorly endowed with human capital. Rather, governments of these poorly-endowed countries focus on consumptive public spending. As a result, while their better-endowed counterparts build up human capital thereby promoting technology adoption and growth, the growth process in poorly-endowed countries stagnates.

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    File URL: http://www.econ.ku.dk/eprn_epru/Workings_Papers/wp-08-04.pdf
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    Bibliographic Info

    Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 08-04.

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    Length: 18 pages
    Date of creation: Oct 2008
    Date of revision:
    Handle: RePEc:kud:epruwp:08-04

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    Related research

    Keywords: growth; public education; human capital; technology adoption;

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    1. Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
    2. Philippe Aghion & Diego Comin & Peter Howitt, 2006. "When Does Domestic Saving Matter for Economic Growth?," DEGIT Conference Papers c011_030, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Sadik, Jacques, 2008. "Technology adoption, convergence, and divergence," European Economic Review, Elsevier, vol. 52(2), pages 338-355, February.
    4. Edwards, Jeremy & Keen, Michael, 1996. "Tax competition and Leviathan," European Economic Review, Elsevier, vol. 40(1), pages 113-134, January.
    5. Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
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