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Barriers and the Transition to Modern Growth

  • Liwa Rachel Ngai

    (University of Pennsylvania)

This paper attempts to account for current huge international income disparities by considering the fact that countries enter into modern growth at different points in time. The mechanism for the transition from stagnation to modern growth is taken from Hansen and Prescott (1999). Countries in the model are indexed by levels of barriers to capital accumulation, which is modeled as influencing the relative price of capital goods. The model implies that countries with larger barriers leave the state of stagnation later. In contrast to a current line of research which focuses on steady state income differences, this paper argues that the current income differences are not just steady state consequences of policy distortion, but more importantly that they are due to a delay in the transition to modern growth caused by the policy distortion.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1578.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1578
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  1. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  2. William J. Collins & Jeffrey G. Williamson, 1999. "Capital Goods Prices, Global Capital Markets and Accumulation, 1870-1950," NBER Historical Working Papers 0116, National Bureau of Economic Research, Inc.
  3. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
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  8. Gary D. Hansen & Edward C. Prescott, 2002. "Malthus to Solow," American Economic Review, American Economic Association, vol. 92(4), pages 1205-1217, September.
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  13. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "The Poverty of Nations: A Quantitative Exploration," NBER Working Papers 5414, National Bureau of Economic Research, Inc.
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  16. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
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  18. Pritchett, Lant, 1995. "Divergence, big time," Policy Research Working Paper Series 1522, The World Bank.
  19. Marvin Goodfriend & John McDermott, 1994. "Early development," Working Paper 94-02, Federal Reserve Bank of Richmond.
  20. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August.
  21. L. Rachel Ngai, 2003. "Barriers and the transition to modern growth," LSE Research Online Documents on Economics 3530, London School of Economics and Political Science, LSE Library.
  22. Gary S. Becker & Kevin M. Murphy & Robert F. Tamura, 1990. "Human Capital, Fertility, and Economic Growth," NBER Working Papers 3414, National Bureau of Economic Research, Inc.
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  25. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
  26. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
  27. Tamura, Robert, 1996. "From decay to growth: A demographic transition to economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1237-1261.
  28. Galor, Oded & Weil, David, 1998. "Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition," CEPR Discussion Papers 1981, C.E.P.R. Discussion Papers.
  29. Scott L. Baier & Gerald P. Dwyer, Jr. & Robert Tamura, 2002. "How important are capital and total factor productivity for economic growth?," Working Paper 2002-2, Federal Reserve Bank of Atlanta.
  30. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  31. Yamamura, Kozo, 1977. "Success Illgotten? The Role of Meiji Militarism in Japan's Technological Progress," The Journal of Economic History, Cambridge University Press, vol. 37(01), pages 113-135, March.
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  33. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  34. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December.
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