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Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence*

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  • Subodh Kumar
  • R. Robert Russell

Abstract

We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), and (3) capital accumulation (movement along the frontier). The world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections. We analyze the evolution of the cross-country distribution of labor productivity in terms of the tripartite decomposition, finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening. (JEL O30, O47, D24)

Suggested Citation

  • Subodh Kumar & R. Robert Russell, 2002. "Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence," American Economic Review, American Economic Association, vol. 92(3), pages 527-548, June.
  • Handle: RePEc:aea:aecrev:v:92:y:2002:i:3:p:527-548
    Note: DOI: 10.1257/00028280260136381
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    References listed on IDEAS

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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Technological Change, Technological Catch-up, and Capital Deepening: Relative Contribution to Growth and Convergence (AER 2002) in ReplicationWiki

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