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Does high technology matter? An application to United States regional growth

Author

Listed:
  • Boltho, Andrea
  • King, Robert

Abstract

This paper studies the influence of"high technology"on the growth of output by using cross-section data on U.S. states. An eclectic approach to the"sources-of-growth"literature leads to the estimate of a"base"equation which explains about half of the differences in per capita GSP growth rates of the 48 contiguous states in the decade 1976-86. Through the use of micro-data on employment in high-tech activities, tests are then conducted to see whether the importance of high-tech, as measured by employment creation in new firms, enhances the explanation of growth differences. The results obtained confirm first, the importance of starting income levels and of changes in the investment share in output, as well as of participation rate changes, in influencing regional growth rates. In addition, it appears that a high overall birth rate of firms, on average during the period, is negatively related to growth during that period. However, the share of employment created in new firms that occurs in high-tech activities does have a powerful and positive influence on per capita income growth. This provides support for the hypothesis that innovative activity at the frontier of technology contributes to rising living standards.

Suggested Citation

  • Boltho, Andrea & King, Robert, 1990. "Does high technology matter? An application to United States regional growth," Policy Research Working Paper Series 547, The World Bank.
  • Handle: RePEc:wbk:wbrwps:547
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    References listed on IDEAS

    as
    1. Fagerberg, Jan, 1987. "A technology gap approach to why growth rates differ," Research Policy, Elsevier, vol. 16(2-4), pages 87-99, August.
    2. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    3. Wallis, John Joseph & Oates, Wallace E, 1988. "Does Economic Sclerosis Set in with Age? An Empirical Study of the Olson Hypothesis," Kyklos, Wiley Blackwell, vol. 41(3), pages 397-417.
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