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A Romerian Contribution to the Empirics of Economic Growth

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  • Bahar Bayraktar Saðlam

    (Department of Economics, Hacettepe University)

  • Ý. Hakan Yetkiner

    (Department of Economics, Izmir University of Economics)

Abstract

Mankiw Romer and Weil (1992) made the Solovian set up widely-used to test the determinants of economic growth and the speed of convergence. Subsequently, in almost all convergence studies, an exogenously growing technology is assumed and this component is treated as part of the constant term. In this study, we expand the Mankiw Romer and Weil (1992) set-up through a Solovianized Romer (1990) framework, which allows us to decompose the exogenously growing technological progress. Within this framework, the growth rate of technology depends on the characteristics of the R&D sector, including the share of labor devoted to R&D activities. We estimate the convergence equation derived from Solovianized Romer model for 31 OECD countries for the period 1980-2008 by applying the system GMM approach. The empirical findings of the model supports the conditional convergence hypothesis, but predicts a much lower convergence rate (0.01) than that predicted by the existing empirical growth literature (0.02). The model supports the positive and significant role of R&D on economic growth. Another contribution of the model is the elegant introduction of human capital to the convergence equation.

Suggested Citation

  • Bahar Bayraktar Saðlam & Ý. Hakan Yetkiner, 2012. "A Romerian Contribution to the Empirics of Economic Growth," Working Papers 1201, Izmir University of Economics.
  • Handle: RePEc:izm:wpaper:1201
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    Cited by:

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    2. Hosoya, Kei, 2016. "Recovery from natural disaster: A numerical investigation based on the convergence approach," Economic Modelling, Elsevier, vol. 55(C), pages 410-420.
    3. Das, Gouranga Gopal, 2015. "Why some countries are slow in acquiring new technologies? A model of trade-led diffusion and absorption," Journal of Policy Modeling, Elsevier, vol. 37(1), pages 65-91.
    4. Aamer S. Abu-Qarn, 2019. "Reassessment of the Proximate Determinants of Income Levels and Growth of Nations," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(4), pages 463-483, December.
    5. Fırat GÜNDEM, 2017. "Türkiye’de İBBS 2 Bölgeleri Arasında Gelir Yakınsaması Var mıdır? Mekânsal Ekonometrik Bir Katkı," Sosyoekonomi Journal, Sosyoekonomi Society, issue 25(34).

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    More about this item

    Keywords

    Convergence; Economic Growth; Exogenous Technological Change;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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