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Early progress on the "problem of economic development"

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  • James A. Schmitz
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    Abstract

    This study describes recent attempts to solve what Lucas has called the "problem of economic development"—the problem of accounting for the great disparity in per-capita output across countries. The study examines a number of economic development theories, including the neoclassical theory of growth, which relies on cross-country differences in physical capital per person to explain the disparity, and newer theories, which stress cross-country differences in human capital, or education. It is argued that these models cannot account for observed per-capita output diversity. More promising theories are those that stress differences in incentives for entrepreneurs to create businesses (i.e., business capital) and adopt new technologies.

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    Article provided by Federal Reserve Bank of Minneapolis in its journal Quarterly Review.

    Volume (Year): (1993)
    Issue (Month): Spr ()
    Pages: 17-35

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    Handle: RePEc:fip:fedmqr:y:1993:i:spr:p:17-35:n:v.17no.2
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    Keywords: Economic development;

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    1. Alwyn Young, 1992. "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 13-64 National Bureau of Economic Research, Inc.
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    6. Stephen L. Parente & Edward C. Prescott, 1991. "Technology adoption and growth," Staff Report 136, Federal Reserve Bank of Minneapolis.
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    8. Jess Benhabib & Boyan Jovanovic, 1989. "Externalities and Growth Accounting," NBER Working Papers 3190, National Bureau of Economic Research, Inc.
    9. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    10. Lawrence J. Christiano, 1989. "Understanding Japan's saving rate: the reconstruction hypothesis," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 10-25.
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    16. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
    17. Holmes, T.J. & Schmitz, J.A., 1988. "A Theory Of Enterpreneurship And Its Application To The Study Of Business Transfers," Working papers 8827, Wisconsin Madison - Social Systems.
    18. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
    19. David Cass, 1964. "Optimum Economic Growth in an Aggregative Model of Capital Accumulation: A Turnpike Theorem," Cowles Foundation Discussion Papers 178, Cowles Foundation for Research in Economics, Yale University.
    20. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-17, August.
    21. Theodore W. Schultz, 1974. "The High Value of Human Time: Population Equilibrium," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 1-10 National Bureau of Economic Research, Inc.
    22. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
    23. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Staff Report 102, Federal Reserve Bank of Minneapolis.
    24. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    25. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
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    27. Anne O. Krueger, 1987. "The Importance of Economic Policy in Development: Contrasts Between Korea and Turkey," NBER Working Papers 2195, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
    2. José Ramón Ruiz-Tamarit, . "Multiplicity, Overtaking and Convergence in the Lucas Two-Sector Growth Model," Working Papers 2002-17, FEDEA.
    3. Ruttan, Vernon W., 1998. "Growth Economics And Development Economics: What Should Development Economists Learn (If Anything) From The New Growth Theory?," Bulletins 12972, University of Minnesota, Economic Development Center.

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