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Accumulation, Innovation and Catching-Up: An Extended Cumulative Growth Model

  • Miguel A. León-Ledesma


This paper presents an extended model of cumulative growth in which the effects of innovation and catching-up are considered. The effect of innovation adds another source of cumulative growth to that of the traditional models and allows for the consideration of the importance of non-price factors as determinants of international competitiveness. Catching-up, on the other hand, is the major force leading to convergence in productivity due to the effect of the diffusion of technology. The model allows for analysing whether cumulative forces may lead to stable growth and whether this solution generates convergence in productivity levels. The structural model is then tested for a set of OECD countries over the period 1965 to 1994 and the results are used for carrying out the comparative dynamics. The results support the view that both the Verdoorn-Kaldor mechanism, and the induced effect of innovation on export performance, are important cumulative forces that interact with the effect of catching-up towards a convergent pattern of growth.

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Paper provided by School of Economics, University of Kent in its series Studies in Economics with number 9906.

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Date of creation: May 1999
Date of revision:
Publication status: Forthcoming in Cambridge Journal of Economics, 2000
Handle: RePEc:ukc:ukcedp:9906
Contact details of provider: Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP
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  1. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  2. Targetti, Ferdinando & Foti, Alessandro, 1997. "Growth and Productivity: A Model of Cumulative Growth and Catching Up," Cambridge Journal of Economics, Oxford University Press, vol. 21(1), pages 27-43, January.
  3. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  4. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  5. Setterfield, Mark, 1997. "'History versus Equilibrium' and the Theory of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 21(3), pages 365-78, May.
  6. Dixon, R & Thirlwall, A P, 1975. "A Model of Regional Growth-Rate Differences on Kaldorian Lines," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 201-14, July.
  7. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  8. McCombie, J S L & de Ridder, J R, 1984. ""The Verdoorn Law Controversy": Some New Empirical Evidence Using U.S. State Data," Oxford Economic Papers, Oxford University Press, vol. 36(2), pages 268-84, June.
  9. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  10. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  11. Fingleton, B & McCombie, J S L, 1998. "Increasing Returns and Economic Growth: Some Evidence for Manufacturing from the European Union Regions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 89-105, January.
  12. Jan Fagerberg, 1988. "International Competitiveness," Working Papers Archives 1988001, Centre for Technology, Innovation and Culture, University of Oslo.
  13. Evans, Paul, 1996. "Using cross-country variances to evaluate growth theories," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1027-1049.
  14. Bairam, Erkin I, 1987. "The Verdoorn Law, Returns to Scale and Industrial Growth: A Review of the Literature," Australian Economic Papers, Wiley Blackwell, vol. 26(48), pages 20-42, June.
  15. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
  16. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  17. 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.
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