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A knowledge economy approach in empirical growth models for the Nordic countries

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  • Arusha Cooray

    ()
    (University of Wollongong)

  • Marcella Lucchetta

    ()
    (Ca’ Foscari Univeristy, Venice (Italy), Department of Economics)

  • Antonio Paradiso

    ()

Abstract

We estimate, employing a “knowledge economy” approach, the steady state growth rate for the Nordic countries. An endogenous growth framework is developed, in which total factor productivity is a function of human capital (measured by average years of education), trade openness, research and development, and investment ratio. We identify the key variables having a significant level and growth effects within this framework. We find that education plays an important role on the long-run growth rates of Sweden, Norway, and Denmark; trade openness, instead, has growth effects in Sweden, Finland, and Iceland. The investment ratio is able to explain patterns of growth only in Finland. Surprisingly, research and development has no level or growth effects in any of the Nordic countries. This may be attributable to the fact that research and development are driven by openness and education. Policy measures are identified to improve the long-run growth rates for these countries.

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Bibliographic Info

Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp13-06.

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Length: 36 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:uow:depec1:wp13-06

Contact details of provider:
Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
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Related research

Keywords: Endogenous growth models; Trade openness; human capital; investment ratio; Steady state growth rate; Nordic countries;

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