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Economic Growth And Transition: A Stochastic Technological Diffusion Model

Author

Listed:
  • Hui Ying SNG

    () (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University)

  • Shahidur RAHMAN

    (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University)

  • Wai Mun CHIA

    () (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University)

Abstract

This paper constructs a stochastic growth model that anchors on technology diffusion and improvement in social infrastructure to explain the growth of developing countries. The model is based on the technological diffusion model by Barro and Sala-i-Martin (1997) with two significant extensions: the (productivity) parameter in the model which represents social infrastructure is being endogenized and probability of adverse shocks is being incorporated. The stochastic technological diffusion model is able to explain the various economic growth and transition phases of developing economies. Technology diffusion is modeled as the determinant of conditional convergence, while technological progress and economic openness further strengthen the social infrastructure bringing about absolute convergence. The model is also able to explain why some developing economies experience economic take-off while others do not.

Suggested Citation

  • Hui Ying SNG & Shahidur RAHMAN & Wai Mun CHIA, 2009. "Economic Growth And Transition: A Stochastic Technological Diffusion Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(2), pages 1-25, December.
  • Handle: RePEc:jed:journl:v:34:y:2009:i:2:p:1-25
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    More about this item

    Keywords

    Growth; Technology Diffusion; Social Infrastructure; Convergence; S-Curve Hypothesis;

    JEL classification:

    • 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
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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