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Ramsey model of barriers to growth and skill-biased income distribution in South Africa

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  • Hildegunn Ekroll Stokke

    ()
    (Department of Economics, Norwegian University of Science and Technology)

  • Jørn Rattsø

    ()
    (Department of Economics, Norwegian University of Science and Technology)

Abstract

The paper integrates two mechanisms of economic growth, barriers to international spillovers and skill-biased effects on the income distribution. South Africa is an interesting case study because of dramatic changes in international barriers over time and policy focus to productivity and distribution. Barriers affect the balance between innovation and adoption in the productivity growth and thereby the skill-bias. The productivity dynamics and the distributional implications are investigated in an intertemporal Ramsey growth model. The model offers a calibrated tariff-equivalence measure of the sanction effect and allows for counterfactual analysis of no-sanctions. Increased openness is shown to reduce barriers to technology adoption leading to skill-biased economic growth and worsened income distribution. The result is consistent with the observation that economic growth under sanctions has been slow and with an increase in the relative wage of unskilled labor. The tradeoff between barriers and skill-bias, foreign spillover driven productivity growth and income distribution, obviously is a challenge for growth policy.

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File URL: http://www.svt.ntnu.no/iso/WP/2004/11jrhsSA050205.pdf
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Bibliographic Info

Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 4604.

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Date of creation: 14 Dec 2004
Date of revision: 07 Feb 2005
Handle: RePEc:nst:samfok:4604

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References

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Citations

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Cited by:
  1. Stokke, Hildegunn E., 2008. "Resource boom, productivity growth and real exchange rate dynamics -- A dynamic general equilibrium analysis of South Africa," Economic Modelling, Elsevier, vol. 25(1), pages 148-160, January.
  2. Michael Hübler, 2009. "Energy Saving Technology Diffusion via FDI and Trade: A CGE Model of China," Kiel Working Papers 1479, Kiel Institute for the World Economy.
  3. 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.
  4. Nadia Belhaj Hassine & Véronique Robichaud & Bernard Decaluwe, 2010. "Agricultural Trade, Liberalization, Productivity Gain, and Poverty Alleviation: a General Equilibrium Analysis," Working Papers MPIA 2010-09, PEP-MPIA.

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