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Institutions, Innovation and Economic Growth

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  • Tebaldi, Edinaldo
  • Elmslie, Bruce

Abstract

This article contributes to the growth literature by developing a formal growth model that provides the basis for studying institutions and technological innovation and examining how human capital and institutional constraints affect the transitional and steady state growth rates of output. The model developed in this article shows that the reason that growth models a-la-Romer (1990) generate endogenous growth is the use of a set of restrictive and unrealistic assumptions regarding the role of institutions in the economy. The baseline model developed in this article shows that the long-run growth of the economy is intrinsically linked to institutions and suggests that an economy with institutions that retard or prevent the utilization of newly invented inputs will experience low levels and low growth rates of output. The model also predicts that countries with institutional barriers that prevent or restrict the adoption of newly invented technologies will allocate a relative small share of human capital in the R&D sector. Moreover, both the baseline and the extended version of the model suggest that sustainable growth in human capital, not an increase in the stock of human capital, generates a growth effect.

Suggested Citation

  • Tebaldi, Edinaldo & Elmslie, Bruce, 2008. "Institutions, Innovation and Economic Growth," MPRA Paper 9683, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9683
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    References listed on IDEAS

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    Cited by:

    1. Garcia-Murillo, Martha & Velez-Ospina, Jorge Andres & Vargas-Leon, Patricia, 2012. "Where should governments invest? The impact of economic, political, social and technological factors on the formation of new firms," 23rd European Regional ITS Conference, Vienna 2012 60400, International Telecommunications Society (ITS).
    2. Vito Pipitone & Luciano Seta, 2012. "The Conditional Convergence in TFP Levels. On the Relationship between TFP, Processes of Accumulation and Institutions," Working Papers - Economics wp2012_09.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    3. Ugur, Mehmet & Dasgupta, Nandini, 2011. "Corruption and economic growth: A meta-analysis of the evidence on low-income countries and beyond," MPRA Paper 31226, University Library of Munich, Germany, revised 31 May 2011.
    4. Dasgupta, Shouro & De Cian, Enrica, 2016. "Institutions and the Environment: Existing Evidence and Future Directions," MITP: Mitigation, Innovation,and Transformation Pathways 240747, Fondazione Eni Enrico Mattei (FEEM).
    5. Paul, Bénédique, 2012. "Technology and institutions: Theoretical aspects of institutional innovation and its deficiency in Haiti," MPRA Paper 39140, University Library of Munich, Germany.
    6. Anselm Komla Abots, 2015. "Foreign Ownership of Firms and Corruption in Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 647-655.
    7. Michael Lobsiger & Marc Zahner, 2012. "Institutions And Economic Development: Disentangling The Role Of Contracting And Property Rights Institutions," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(2), pages 1-34, June.
    8. Dias, Joilson & Tebaldi, Edinaldo, 2012. "Institutions, human capital, and growth: The institutional mechanism," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 300-312.
    9. Karol, Rodriguez & Vélez, Jorge, 2013. "Impacto de las TIC en el nivel de innovación en América Latina y el Caribe: Estimaciones econométricas a nivel de un panel
      [Impact of ICT on the level of innovation in Latin America and the Caribbe
      ," MPRA Paper 60480, University Library of Munich, Germany, revised Oct 2013.
    10. Jorge Andrés Vélez Ospina, 2009. "Determinantes de la inversión en innovación en el sector de Bogotá:estimaciones econométricas a nivel de la firma," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 27(60), pages 110-167, December.
    11. repec:eco:journ1:2017-04-44 is not listed on IDEAS
    12. Kezia De Lucas Bondezan & Joilson Dias, 2014. "Crescimento Econômico De Longo Prazo No Brasil: Uma Abordagem Sobre O Da Acumulação De Capital E Das Instituições," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 096, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    13. Anselm komla Abotsi, 2016. "Theory of Foreign Direct Investment and Corruption," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 6(6), pages 359-378, June.

    More about this item

    Keywords

    Institutions; innovation; human capital; economic growth;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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