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Converging Wages, Diverging GRP: Directed Technical Change and Endogenous Growth. Empirical Analysis of Growth Patterns across Kazakh regions

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  • Alisher Aldashev

    (Osteuropa-Institut, Regensburg (Institut for East European Studies))

Abstract

The paper analyzes unequal regional development in Kazakhstan. Applying the nonlinear least squares method in presence of spatial correlation we estimate the convergence rate of wages across Kazakh regions for the period 2003–2009. The estimated convergence rate is about 3% which is somewhat higher than estimates obtained for the USA and Europe. At the same time there is slight divergence in the GRP per capita. It is argued that convergence in wages which coincides with divergence in the per capita GRP is consistent with the endogenous growth model where profit maximizing firms choose the capital intensity of the technology. This implies that the inequality between regions will only exacerbate and the central government may wish to invest more in low-growth regions to alleviate disproportional development.

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Bibliographic Info

Paper provided by Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) in its series Working Papers with number 307.

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Length: 20
Date of creation: Dec 2011
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Handle: RePEc:ost:wpaper:307

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Related research

Keywords: convergence; endogenous growth; Kazakhstan; capital intensive technology; nonlinear least squares; spatial correlation;

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  1. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
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  3. Solanko, Laura, 2003. "An empirical note on growth and convergence across Russian regions," BOFIT Discussion Papers 9/2003, Bank of Finland, Institute for Economies in Transition.
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  7. Enrico Marelli & Marcello Signorelli, 2010. "Transition, Regional Features, Growth and Labour Market Dynamics," AIEL Series in Labour Economics, in: Floro Ernesto Caroleo & Francesco Pastore (ed.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, edition 1, chapter 5, pages 99-147 AIEL - Associazione Italiana Economisti del Lavoro.
  8. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
  9. Pietro Peretto & John J. Seater, 2006. "Augmentation or Elimination?," DEGIT Conference Papers c011_060, DEGIT, Dynamics, Economic Growth, and International Trade.
  10. Hernando Zuleta, 2008. "Factor Saving Innovations and Factor Income Shares," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
  11. Peter Huber, 2007. "Regional Labour Market Developments in Transition: A Survey of the Empirical Literature," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 4(2), pages 263-298, September.
  12. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
  13. Miriam Frey & Carmen Wieslhuber, 2011. "Do Kazakh Regions Converge?," Memoranda - Policy Papers 52, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
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