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Catching Up or Falling Behind? The Effect of Infrastructure Capital on Technology Adoption in Transition Economies

  • Schiffbauer, Marc

    (ESRI)

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    This paper demonstrates that a link between infrastructure capital and productivity growth can lead to multiple balanced growth equilibria if one accounts for the endogenous provision of infrastructure. Starting with the contribution of Barro (1990), the literature on infrastructure and growth mainly focuses on the relation between private and public capital investments. In contrast, we focus on the relationship between the provision of infrastructure capital and a country's innovative capacity. This is consistent with recent empirical evidence that reports a positive link between the two variables. The framework leads to bivariate causality between the rate of technical change and the provision of infrastructure services and generates scope for multiple strictly positive balanced growth equilibria.

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    File URL: http://www.esri.ie/research/research_areas/international_economics/dynreg/papers/WP27.pdf
    File Function: 2008
    Download Restriction: no

    Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG27.

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    Length: 23 pages
    Date of creation: Feb 2008
    Date of revision:
    Handle: RePEc:esr:wpaper:dynreg27
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    1. Ingrid Ott & Stephen J. Turnovsky, 2005. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Working Paper Series in Economics 2, University of Lüneburg, Institute of Economics.
    2. Holtz-Eakin, Douglas & Schwartz, Amy Ellen, 1995. "Infrastructure in a structural model of economic growth," Regional Science and Urban Economics, Elsevier, vol. 25(2), pages 131-151, April.
    3. Hellwig, Martin & Irmen, Andreas, 1999. "Endogenous Technical Change in a Competitive Economy," Sonderforschungsbereich 504 Publications 99-53, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    4. Röller, Lars-Hendrik & Waverman, Leonard, 2000. "Telecommunications Infrastructure And Economic Development: A Simultaneous Approach," CEPR Discussion Papers 2399, C.E.P.R. Discussion Papers.
    5. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
    6. Spiros Bougheas & Panicos O. Demetriades & Theofanis P. Mamuneas, 2000. "Infrastructure, specialization, and economic growth," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 506-522, May.
    7. Boyan Jovanovic & Peter L. Rousseau, 2005. "General Purpose Technologies," NBER Working Papers 11093, National Bureau of Economic Research, Inc.
    8. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
    9. Stephen Turnovsky, 1998. "Fiscal Policy, Elastic Labor Supply, and Endogenous Growth," Working Papers 0068, University of Washington, Department of Economics.
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