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Does Low Education Delay Structural Transformation?

  • Parantap Basu

    ()

    (Department of Economics and Finance, Durham University, 23-26 Old Elvet, Durham DH1 3HY, United Kingdom)

  • Alessandra Guariglia

    ()

    (School of Economics, University of Nottingham, University Park, Nottingham, NG7 2RD, United Kingdom)

Why do some countries industrialize later than others? Recent literature suggests that the prime reason is low agricultural productivity. This paper argues that the initial level of human capital could also be a contributing factor. We construct a neoclassical growth model, which predicts that countries with a greater initial knowledge gap industrialize later. We use this model as a baseline and calibrate it to historical data for the United Kingdom. We find that our baseline model performs well in replicating actual historical U.K. gross domestic product series during the postindustrialization era. The same model also explains a significant fraction of past and recent cross-country variations in per capita income levels.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 75 (2008)
Issue (Month): 1 (July)
Pages: 104-127

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Handle: RePEc:sej:ancoec:v:75:1:y:2008:p:104-127
Contact details of provider: Web page: http://www.southerneconomic.org/

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  1. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," Review of Economic Studies, Wiley Blackwell, vol. 71(4), pages 1001-1026, October.
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  11. Basu, Parantap & Guariglia, Alessandra, 2007. "Foreign Direct Investment, inequality, and growth," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 824-839, December.
  12. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
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