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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. 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.
  2. Gary S. Becker & Kevin M. Murphy & Robert Tamura, . "Human Capital, Fertility, and Economic Growth," University of Chicago - Population Research Center 90-5a, Chicago - Population Research Center.
  3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  4. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
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  7. 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.
  8. Stephen Redding & Peter K Schott, 2003. "Distance, skill deepening and development : will peripheral countries ever get rich?," LSE Research Online Documents on Economics 207, London School of Economics and Political Science, LSE Library.
  9. Peter Howitt & David Mayer-Foulkes, 2002. "R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence Clubs," NBER Working Papers 9104, National Bureau of Economic Research, Inc.
  10. 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.
  11. Nancy L. Stokey, 1991. "The Volume and Composition of Trade Between Rich and Poor Countries," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 63-80.
  12. 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.
  13. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
  14. Larry E. Jones & Rodolfo E. Manuelli, 1990. "Finite Lifetimes and Growth," NBER Working Papers 3469, National Bureau of Economic Research, Inc.
  15. 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.
  16. Ben-David, Dan & Loewy, Michael B, 1998. " Free Trade, Growth, and Convergence," Journal of Economic Growth, Springer, vol. 3(2), pages 143-70, June.
  17. Kim, Jinyoung, 1998. "Economic analysis of foreign education and students abroad," Journal of Development Economics, Elsevier, vol. 56(2), pages 337-365, August.
  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. 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.
  20. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
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