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A Nonscale Growth Model with R&D and Human Capital Accumulation

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    Abstract

    This paper presents an endogenous growth model that includes research and development and human capital accumulation. The model’s specification builds on the R&D-based structure of Romer’s [1990] model and introduces two functions: (1) A specification for the production of new designs that assumes no externalities and no inventions before time zero; and (2) A specification for the accumulation of human capital technically similar to that in Lucas [1988]. The model displays two main results. The first is that it eliminates the scale-effects prediction which is common to most R&D-based growth models, but which is not empirically supported. Secondly, the model offers a new prediction that growth depends positively on the ratio of final-good workers to researchers. Thus the model provides a theoretical explanation as to why developed countries have had rising numbers of researchers but not rising growth rates in the twentieth century.

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    File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2003/NIPE_WP_5_2003.PDF
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    Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 5/2003.

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    Date of creation: 2003
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    Handle: RePEc:nip:nipewp:5/2003

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    Keywords: endogenous growth; research and development; human capital accumulation; scale-effects prediction; final-good workers to researchers ratio.;

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    1. Mills, Terence C & Crafts, N F R, 2000. "After the Golden Age: A Long-Run Perspective on Growth Rates That Speeded Up, Slowed Down and Still Differ," Manchester School, University of Manchester, vol. 68(1), pages 68-91, January.
    2. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March.
    4. Helpman, E., 1991. "Endogenous Macroeconomic Growth Theory," Harvard Institute of Economic Research Working Papers 1570, Harvard - Institute of Economic Research.
    5. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
    6. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    7. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
    8. Peretto, Pietro F., 1996. "Technological Change and Population Growth," Working Papers 96-28, Duke University, Department of Economics.
    9. Charles I. Jones, 1999. "Growth: With or Without Scale Effects?," American Economic Review, American Economic Association, vol. 89(2), pages 139-144, May.
    10. Paul Romer, 1991. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
    11. Richard N. Langlois, 2000. "Knowledge, Consumption, and Endogenous Growth," Working papers 2000-02, University of Connecticut, Department of Economics.
    12. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    13. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    14. Arnold, Lutz G., 2000. "Stability of the Market Equilibrium in Romer's Model of Endogenous Technological Change: A Complete Characterization," Journal of Macroeconomics, Elsevier, vol. 22(1), pages 69-84, January.
    15. Blackburn, Keith & Hung, Victor T. Y. & Pozzolo, Alberto F., 2000. "Research, Development and Human Capital Accumulation," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 189-206, April.
    16. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    17. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
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