Externalities and Growth / Peter J. Klenow, Andres Rodriguez-Clare.

Format:

Book

Author/Creator:

Klenow, Peter J.

Contributor:

National Bureau of Economic Research.

Rodriguez-Clare, Andres.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11009.

NBER working paper series no. w11009

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2004.

Summary:

Externalities play a central role in most theories of economic growth. We argue that international externalities, in particular, are essential for explaining a number of empirical regularities about growth and development. Foremost among these is that many countries appear to share a common long run growth rate despite persistently different rates of investment in physical capital, human capital, and research. With this motivation, we construct a hybrid of some prominent growth models that have international knowledge externalities. When calibrated, the hybrid model does a surprisingly good job of generating realistic dispersion of income levels with modest barriers to technology adoption. Human capital and physical capital contribute to income differences both directly (as usual), and indirectly by boosting resources devoted to technology adoption. The model implies that most of income above subsistence is made possible by international diffusion of knowledge.

Notes:

Print version record

December 2004.