Determinates of Savings and Economic Growth in Poland in Comparison to the OECD Countries

Authors investigate interactions between the rate of economic growth and the saving rate in Poland in the 1990s. Tendencies observed in the Polish economy are related to the long term trends of growth and saving in a number of OECD countries. A simulation of possible development paths of the Polish economy is conducted using results of the estimation of the saving function for the OECD countries in the period 1971-1994. The model implies that, if the factors determining the rate of saving and the rate of growth were the same as those in the OECD countries during the last 25 years, the rate of saving in Poland would be higher by 5 percentage points and would equal 22 percent. Moreover, assuming the medium term rate of growth of 5-7 percent, a reduction of the budget deficit and the current account deficit, would result in a rise in the saving rate up to the level of 25-27 percent of GDP. Savings of households would rise by 2-3 percentage points to the level of 12 percent of GDP. The long term rate of growth would either be lowered down to 4 percent or raised up to 8 percent depending on the extent of utilisation of externalities and increasing returns from the employment of the human capital and technological change.economic growth, Poland, OECD

A test of the international convergence hypothesis using panel data

The author, using a neoclassical Solow model, estimates an economy's rate of convergence to its own steady state. Using panel date for a sample of 98 countries, the author applies Chamberlain's (1984) estimation procedures to account for the presence of country-specific effects resulting from idiosyncratic unobservable factors. This procedure also prevents the estimation bias due to measurement error in the Gross Domestic Product. Controlling, additionally, for the country's level of education, the author estimates the rate of convergence to be 0.0494, which implies a half-life of about 14 years. This estimated rate of convergence is about two and a half times higher than those obtained by Barro and Salai-Martin (1992) and Makiw, Romer, and Weil (1992). The author claims that those estimates are biased toward zero because they fail to account for country specific effects. Finally, the author estimates the capital share in production to be 0.374, which is very close to the accepted benchmark value.Economic Theory&Research,Environmental Economics&Policies,Inequality,Health Monitoring&Evaluation,Economic Growth

The empirics of the Solow growth model: Long-term evidence

In this paper we reassess the standard Solow growth model, using a dynamic panel data approach. A new methodology is chosen to deal with this problem. First, unit root tests for individual country time series were run. Second, panel data unit root and cointegration tests were performed. Finally, the panel cointegration dynamics is estimated by (DOLS) method. The resulting evidence supports roughly one-third capital share in income, a.Economic growth, panel data, unit root, cointegration and convergence

Growth and Regional Inequality in China During the Reform Era

Chinese city-level data indicate that differences in growth rates are far more severe than indicated in previous studies which typically use data at higher levels of aggregation. We estimate growth equations using city-level data and find that the policy of awarding a special economic zone status enhances growth substantially, increasing annual growth rates by 5.5 percentage points. Annual growth rates of open coastal cities are, on average, 3 percentage points higher. Our qualitative results on the role of policy and the effects of FDI are similar to those of earlier studies that have employed provincial-level data; but, quantitatively, our results are substantially different. We also provide evidence of an indirect role of policy in the growth process through its ability to attract growth-enhancing foreign direct investment.http://deepblue.lib.umich.edu/bitstream/2027.42/39946/2/wp561.pd

REGIONS, TECHNOLOGICAL INTERDEPENDENCE AND GROWTH IN EUROPE

This paper presents a theoretical neoclassical growth model with two kinds of capital, and technological interdependence among regions. Technological interdependence is assumed to operate through spatial externalities caused by disembodied knowledge diffusion between technologically similar regions. The transition from theory to econometrics yields a reduced-form empirical model that in the spatial econometrics literature is known as spatial Durbin model. Technological dependence between regions is formulated by a connectivity matrix that measures closeness of regions in a technological space spanned by 120 distinct technological fields. We use a system of 158 regions across 14 European countries over the period from 1995 to 2004 to empirically test the model. The paper illustrates the importance of an impact-based model interpretation, in terms of the LeSage and Pace (2009) approach, to correctly quantify the magnitude of spillover effects that avoid incorrect inferences about the presence or absence of significant capital externalities among technologically similar regions.Economic growth, augmented Mankiw-Romer-Weil model, disembodied knowledge diffusion, technological similarity between regions, spatial econometrics, European regions

The Role of Human Capital and Technological Interdependence in Growth and Convergence Processes: International Evidence

This paper develops a bisectorial growth model with physical and human capital accumulation. Each sector is characterized by a different technology involving different human capital parameters. The model includes human capital externalities together with technological interdependence between economies. It leads to a spatial autoregressive reduced form for the real income per worker at steady state. The structural parameters of the model are recovered and evidence of the insignificance of human capital in explaining per capita growth, that is the human capital puzzle, is reconsidered. In fact, the parameter related to human capital in the consumption good sector is low which is consistent with evidence presented in the growth accounting framework. In contrast it is indeed higher in the education sector. Our model leads to spatial econometric specifications which are estimated on a sample of 89 countries over the period 1960-1995 using maximum likelihood as well as Bayesian estimation methods, which are robust versus outliers and heteroskedasticity. This model yields a spatially augmented convergence equation characterized by parameter heterogeneity. A locally linear spatial autoregressive specification is then estimated providing a different convergence speed estimate for each country of the sample.Conditional convergence, technological interdependence, spatial autocorrelation, parameter heterogeneity, locally linear estimation

Education and Economic Growth: Is There a Link?

This paper attempts to reconcile the mismatch between theoretical models and empirical results in addressing the issue of education and economic growth. Development theorists have made numerous attempts to explain the contribution of education to economic growth. Over the years, endogenous growth models have emerged to incorporate human capital and they have been subject to rigorous econometric techniques. However, these models have yielded inconclusive results. This paper begins by looking at the history of the development of endogenous growth theories and the various econometric specifications which were estimated. This paper also concludes by identifying the main themes that have emerged in the academic debate on education’s role in economic growth.Education, Economic Growth, Human Capital

Capital, wages and growth: Theory and evidence

Returns to scale to capital and the strength of capital externalities play a key role for the empirical predictions and policy implications of different growth theories. We show that both can be identified with individual wage data and implement our approach at the city-level using US Census data on individuals in 173 cities for 1970, 1980, and 1990. Estimation takes into account fixed effects, endogeneity of capital accumulation, and measurement error. We find no evidence for human or physical capital externalities and decreasing aggregate returns to capital. Returns to scale to physical and human capital are around 80 percent. We also find strong complementarities between human capital and labor and substantial total employment externalities.Returns to scale to capital, human capital, capital externalities, complementarities, scale effects, cities