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Productivity, Factor Accumulation and Social Networks: Theory and Evidence

  • R. Quentin Grafton


    (Australian National University, Asia Pacific School of Economics and Government)

  • Tom Kompas


    (Australian National University, Asia Pacific School of Economics and Governmen)

  • P. Dorian Owen

    (university of Otago, Department of Economics)

The paper analyzes how social barriers to communication affect economy-wide productivity and factor accumulation. Using a dynamic model of an economy that includes a reproducible capital stock (physical or human) and effective labor, a negative relationship is shown to exist between social barriers to communication and total factor productivity (TFP), per capita consumption and reproducible capital. Robust estimates obtained from cross-country data are consistent with the model’s predictions. The theory and empirical results help explain cross-country differences in TFP, the high productivity performance of leading industrialized countries and how productivity ‘catch up’ may be initiated.

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Paper provided by Australian National University, Economics and Environment Network in its series Economics and Environment Network Working Papers with number 0401.

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Length: 41 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:anu:eenwps:0401
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