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Ideas and Education: Level or Growth Effects?

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  • Steve Dowrick

Abstract

This paper examines theory and evidence from recent studies into the contributions to economic growth of expenditure on education and on research and development. Investment in human capital has fundamentally different economic attributes to physical investment - exhibiting complementarity, positive feedback and non-rivalry - implying the potential to enhance economic growth over a long time period. In the case of education, there are debates over whether changes in educational attainment ultimately affect the long-run growth rate of the economy, or only the long-run level of output. The macroeconomic evidence on level effects is consistent with microeconomic estimates of private rates of return to schooling. It appears, however, that there are also significant long-term growth effects the more educated is the workforce, the better is it able to implement technological advances. There is consistent evidence of high social rates of return on research and development in both commercial areas of research and in more fundamental research, implying that R&D is under-resourced. A number of studies have emphasised the importance of international technology spillovers, particularly for smaller economies such as Australia.

Suggested Citation

  • Steve Dowrick, 2003. "Ideas and Education: Level or Growth Effects?," NBER Working Papers 9709, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9709
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    Cited by:

    1. Mariya Neycheva, 2016. "Secondary versus higher education for growth: the case of three countries with different human capital’s structure and quality," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(6), pages 2367-2393, November.
    2. Eliana Baici & Giorgia Casalone, 2005. "Has human capital accounted for regional economic growth in italy? a panel analysis on the 1980-2001 period," Working Papers 101, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    3. Vladimir Teles, 2005. "The role of human capital in economic growth," Applied Economics Letters, Taylor & Francis Journals, vol. 12(9), pages 583-587.
    4. Gene Tunny, 2006. "Educational attainment in Australia," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-9, May.
    5. Tani, Massimiliano, 2006. "Head-content or Headcount? Short-term Skilled Labour Movements as a Source of Growth," IZA Discussion Papers 1934, Institute for the Study of Labor (IZA).
    6. Edwin Garces & Tugrul Daim, 2012. "Impact of Renewable Energy Technology on the Economic Growth of the USA," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(3), pages 233-249, September.
    7. repec:agh:journl:v:18:y:2017:i:2:p:247-264 is not listed on IDEAS
    8. David C. Maré, 2003. "Ideas for Growth?," Working Papers 03_19, Motu Economic and Public Policy Research.
    9. Sid Durbin, 2004. "Review of Workplace Skills, Technology Adoption and Firm Productivity: A Review," Treasury Working Paper Series 04/16, New Zealand Treasury.
    10. Bergheim, Stefan, 2007. "Pair-wise cointegration in long-run growth models," Research Notes 24, Deutsche Bank Research.
    11. Verbic, Miroslav & Majcen, Boris & Cok, Mitja, 2009. "Education and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth," MPRA Paper 17817, University Library of Munich, Germany.

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    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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