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Output Convergence and the Role of Research and Development

Author

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  • Mohammad Ashraf

    (Department of Economics, Finance, and Decision Sciences School of Business, The University of North Carolina)

  • Khan A. Mohabbat

    (Department of Economics Northern Illinois University DeKalb, IL)

Abstract

We ask whether failure to control for research and development (R&D) activity in an output convergence regression affects the coefficient estimates of initial output. We focus on output convergence to an economy¡¯s own steady-state growth path using time series regression framework and convergence across economies using panel estimation. We use data for the 30 member countries of the Organization for Economic Co-operation and Development (OECD) and US state-level real per capita output and per capita patents. The results indicate that after controlling for R&D activity the coefficient estimates increase in magnitude (in absolute terms) and in significance levels. Furthermore, the results are not sensitive to the dataset used or the estimation procedure.

Suggested Citation

  • Mohammad Ashraf & Khan A. Mohabbat, 2010. "Output Convergence and the Role of Research and Development," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 35-71, May.
  • Handle: RePEc:cuf:journl:y:2010:v:11:i:1:p:35-71
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wang, Chan, 2012. "A very preliminary survey on growth and development," MPRA Paper 39037, University Library of Munich, Germany.
    2. Felipa de Mello-Sampayo & Sofia de Sousa-Vale & Francisco Camoes, 2015. "Substitutability Between Drugs, Innovation, and Fiscal Policy in the Pharmaceutical Industry," Annals of Economics and Finance, Society for AEF, pages 273-289.
    3. Kunting Chen, 2012. "Analysis of the Great Divergence under a Unified Endogenous Growth Model," Annals of Economics and Finance, Society for AEF, pages 317-353.

    More about this item

    Keywords

    Output convergence; R&D; Omitted variable bias; Panel estimation; Panel unit root tests;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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