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A model on knowledge and endogenous growth, Volume 1
Author:Hiau Looi Kee; Chen, Derek H. C.; Country:World;
Date Stored:2005/03/17Document Date:2005/03/01
Document Type:Policy Research Working PaperSubTopics:Achieving Shared Growth; Governance Indicators; Economic Theory & Research; Health Monitoring & Evaluation; Economic Growth
Language:EnglishRegion:The World Region
Report Number:WPS3539Collection Title:Policy, Research working paper ; no. WPS 3539
Volume No:1  

Summary: The authors present a model of endogenous growth in which the main engine of economic development is knowledge. Using a two-sector closed economy model that comprises of a conventional goods-producing sector and a research and development sector, their model incorporates two key aspects of knowledge: technology and human capital. Steady-state equilibrium conditions show that the growth rate of per capita income hinges on the growth rate of human capital. While the growth rate of human capital has been previously shown to affect the growth of the economy in transition between steady states or balanced growth paths, the authors are the first to link the growth rate of human capital to the steady-state growth rate of productivity and output per worker. Furthermore, this result does not exhibit scale effects or policy invariance, both of which have been longstanding concerns with the predictions of endogenous growth models developed in the 1990s.

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