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Catching-up and Falling-behind in Economic Development: A Human Capital Approach

  • Jinyoung Kim

    ()

    (Department of Economics, Korea University)

This paper proposes an endogenous growth model where human capital is the engine of growth and can be transferred across countries via costly foreign education. Importing advanced knowledge by students abroad can improve a developing country¡¯s chance of catching up with a developed host country. An excessively wide difference in knowledge level between the two countries, however, can hamper the chance of catching-up because few students can afford foreign education. Taking these two counteracting forces into account, our model predicts that the relationship between income growth in a developing country and income gap will assume the form of an inverted-U schedule. The model also produces an endogenous threshold level of income gap which separates catching-up and falling-behind. We test the model¡¯s propositions and estimate the threshold using international panel data, which lends support to our theory.

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File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w0707.pdf
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Paper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number 0707.

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Date of creation: 2007
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Handle: RePEc:iek:wpaper:0707
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  1. Stokey, Nancy L, 1991. "The Volume and Composition of Trade between Rich and Poor Countries," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 63-80, January.
  2. Kim, Jinyoung, 1998. "Economic analysis of foreign education and students abroad," Journal of Development Economics, Elsevier, vol. 56(2), pages 337-365, August.
  3. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  4. 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.
  5. Jones, Larry E. & Manuelli, Rodolfo E., 1992. "Finite lifetimes and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 171-197, December.
  6. Ben-David, Dan & Loewy, Michael B, 1998. " Free Trade, Growth, and Convergence," Journal of Economic Growth, Springer, vol. 3(2), pages 143-70, June.
  7. 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.
  8. Stephen Redding & Peter K. Schott, 2003. "Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?," NBER Working Papers 9447, National Bureau of Economic Research, Inc.
  9. Easterlin, Richard A., 1981. "Why Isn't the Whole World Developed?," The Journal of Economic History, Cambridge University Press, vol. 41(01), pages 1-17, March.
  10. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, 03.
  11. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  12. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  14. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
  15. Quah, Danny T, 1997. " Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
  16. Howitt, Peter & Mayer-Foulkes, David, 2005. "R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 147-77, February.
  17. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
  18. 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.
  19. 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.
  20. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
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