IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Human capital, mechanisms of technological diffusion and the role of technological shocks in the speed of diffusion: Evidence from a panel of Mediterranean countries

Listed author(s):
  • Marta Simões


    (GEMF and Faculdade de Economia, Universidade de Coimbra)

  • Adelaide Duarte


    (GEMF and Faculdade de Economia, Universidade de Coimbra)

Our main goal is to ascertain the importance of human capital as a facilitator of technological diffusion in a sample of seven Mediterranean countries (Algeria, Cyprus, Israel, Egypt, Syria, Tunisia, and Turkey) for the period 1960-2000. First, we estimate the technological progress growth rate and the technological gap between each country in our sample and the technological leader (the USA), following the methodology of Benhabib and Spiegel (2002). We then address the issue of the importance of technology diffusion for the TFP growth rate through the Nelson and Phelps (1966) hypothesis - the potential speed of technology diffusion is inversely related to the degree of technological backwardness of the follower country and its ability to absorb new technologies will depend positively on its human capital level. The non-linear specification of the TFP growth rate proposed by Benhabib and Spiegel (2002) is estimated to control for the type of technological diffusion: logistic or exponential. The empirical analysis is applied to two samples: a smaller one consisting of the above-mentioned countries, and a larger one that includes some European countries. First, we studied the unit root characteristic of the TFP growth rate series using unit root panel tests. The results obtained allowed the use of traditional econometric methods for both equations. For the first equation estimations were performed using the NLLS estimation procedure, as it is a non-linear equation. The second equation, was estimated using OLS with robust errors, the fixed effects model and the random effects model, as it is a linear equation. The empirical importance of human capital in fostering technological diffusion is also addressed through the FDI channel, by which technology is transferred from the leader to the followers. The host economy needs a sufficient level of human capital in order to apply the technology of the leader, i.e., the stock of human capital of the follower country limits its absorptive capability. We also analyse the role of human capital as a facilitator of the diffusion of a particular type of technology, ICT, where there is a role for different educational levels. In both cases we take Lee (2000) as the basic framework for our estimations. Finally, the last part of the paper discusses the importance of technological shocks to the process of technological diffusion. The speed of technological diffusion, and consequently the evolution of cross-country differences in GDP growth rates and levels, depend, to a large extent, on exogenous shocks. We propose to model technological shocks for each of the seven countries in our sample in a simple VAR model with four variables: their TFP growth rate, the logarithm of GDP per capita, the logarithm of investment per capita, and the logarithm of the stock of human capital.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by GEMF, Faculty of Economics, University of Coimbra in its series GEMF Working Papers with number 2004-03.

in new window

Length: 42 pages
Date of creation: 2004
Publication status: Published in Notas Económicas, 20:102-134, 2004.
Handle: RePEc:gmf:wpaper:2004-03
Contact details of provider: Postal:
Av. Dias da Silva 165; 3004-512 Coimbra

Phone: +351239790599
Fax: + 351 239 40 35 11
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
  2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  3. Benhabib, Jess & Spiegel, Mark M., 2005. "Human Capital and Technology Diffusion," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 13, pages 935-966 Elsevier.
  4. Jong-Wha Lee, 2001. "Education for Technology Readiness: Prospects for Developing Countries," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 2(1), pages 115-151.
  5. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
  6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  7. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
  8. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
  9. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
  10. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  11. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
  12. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  13. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  14. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:gmf:wpaper:2004-03. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ana Seiça)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.