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Economic Growth and the High Skilled: the Role of Scale Effects and of Barriers to Entry into the High Tech

Author

Listed:
  • Pedro Mazeda Gil

    (University of Porto, Faculty of Economics, and CEF.UP - Center for Economics and Finance at University of Porto)

  • Oscar Afonso

    (University of Porto, Faculty of Economics, and CEF.UP - Center for Economics and Finance at University of Porto)

  • Paulo Brito

    (ISEG (School of Economics and Management) and UECE (Research Unit on Complexity and Economics), Universidade de Lisboa)

Abstract

Empirical evidence on the relationship between economic growth, the technology structure and the skill structure seems to be inconsistent: the weak relationship between economic growth and the skill structure is conventionally interpreted as pointing to the non-existence of scale elects, while the technology structure-skill structure relationship indicates that there are. We show that there is no inconsistency between the two facts, if we consider a further dynamic effect associated to directed technical change: the existence of differential barriers to entry in high-tech and low-tech sectors. To prove this, we extend a benchmark directed technical change model by incorporating both horizontal and vertical R&D and estimate and calibrate it with cross-country European data. This framework allows us to derive interesting policy implications, namely that the effects of education policy on economic growth may be electively leveraged by industrial policy aiming to reduce barriers to entry into the high-tech sectors.

Suggested Citation

  • Pedro Mazeda Gil & Oscar Afonso & Paulo Brito, 2014. "Economic Growth and the High Skilled: the Role of Scale Effects and of Barriers to Entry into the High Tech," GEE Papers 0055, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Sep 2014.
  • Handle: RePEc:mde:wpaper:0055
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    File URL: http://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_55.pdf
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    More about this item

    Keywords

    growth; high skilled; high tech; scale eects; directed technical change.;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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