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Openness and Human Capital as Sources of Productivity Growth: An Empirical Investigation

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  • Måns Söderbom

    (Centre for the Study of African Economies)

  • Francis Teal

    (Centre for the Study of African Economies)

Abstract

Do openness to trade and higher levels of human capital promote faster productivity growth? That they do is a key implication of several versions of endogenous growth theory. To answer the question we use panel data on 93 countries spanning the 1970-2000 period. Controlling for fixed effects as well as endogeneity, the results show a significant effect of openness on productivity growth. If the level of openness of an economy is doubled the underlying rate of technical progress will increase by 0.8 per cent per annum. We find an effect, significant at the ten per cent level, of the level of human capital on the level of income but no effect on underlying productivity growth. Our preferred estimator combines high and low frequency differences of the data. We discuss reasons why this estimator is well suited for empirical analysis of economic growth.

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File URL: http://econwpa.repec.org/eps/dev/papers/0409/0409031.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0409031.

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Length: 30 pages
Date of creation: 23 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0409031
Note: Type of Document - pdf; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

Keywords: Productivity; openness; human capital; growth; panel data;

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Find related papers by JEL classification:
  • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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Cited by:

  1. Amavilah, Voxi Heinrich, 2006. "Intensity of technology use and per capita real GDP across some African countries," MPRA Paper 1675, University Library of Munich, Germany.
  2. Majid Karimzadeh & Behzad Karimzadeh, 2013. "Impact of Trade and Human Capital on Economic Growth of India: An Empirical Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 16(48), pages 201-214, June.
  3. Markus Eberhardt & Christian Helmers, 2010. "Untested Assumptions and Data Slicing: A Critical Review of Firm-Level Production Function Estimators," Economics Series Working Papers 513, University of Oxford, Department of Economics.
  4. Mine Yilmazer & Serkan Çinar, 2015. "Human Capabilities and Economic Growth: A Comparative Human Capability Index," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 843-853.
  5. Bigsten, Arne, 2003. "Globalisation and the Asia-Pacific Revival," Working Papers in Economics 118, University of Gothenburg, Department of Economics.
  6. German Hector Gonzalez & Fernando Andres Delbianco, 2011. "Apertura y productividad total de los factores: análisis de la contemporaneidad en los quiebres estructurales para América Latina y el Caribe," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 26(1), pages 53-81, Junio.

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