Human capital, equipment investment, and industrialization
AbstractThis paper constructs simple models in which industrialization is driven by human capital accumulation. Industrialization can explain the robust correlation between equipment investment and growth in developing countries. We show that government intervention is justified within our stylized model, and indicate that a subsidy to equipment investment is likely to be dominated by other policies. In the final section of the paper, we examine the correlation between equipment investment and growth, and find that it is strongest in economies on the brink of industrialization. We also show that this result is not easily explained by diminishing returns.
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Bibliographic InfoPaper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 22 & 116.
Date of creation: Jul 1996
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Web page: http://www.nuff.ox.ac.uk/economics/
Other versions of this item:
- Temple, Jonathan & Voth, Hans-Joachim, 1998. "Human capital, equipment investment, and industrialization," European Economic Review, Elsevier, vol. 42(7), pages 1343-1362, July.
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