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Relative human capital endowments: estimates for selected countries and implications for international capital flows

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  • Gundlach, Erich

Abstract

Despite large rate of return differentials implied by persistent income differentials, relatively little capital flows to poor countries. The rate of return differentials are substantially reduced, however, if different human capital endowments are taken into account, as is shown for a limited sample of countries. Additionally accounting for human capital externalities based on independent empirical evidence turns around the predicted rate of return differentials in favor of the rich countries. Hence, the world economy may converge to a rather unequal distribution of incomes as long as human capital accumulation is neglected as the key variable limiting economic development.

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  • Gundlach, Erich, 1992. "Relative human capital endowments: estimates for selected countries and implications for international capital flows," Kiel Working Papers 545, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:545
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    Cited by:

    1. Alessandro Pio, 1994. "New Growth Theory and Old Development Problems: How Recent Developments in Endogenous Growth Theory Apply to Developing Countries," Development Policy Review, Overseas Development Institute, vol. 12(3), pages 277-300, September.

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