Hostname: page-component-cd9895bd7-jkksz Total loading time: 0 Render date: 2024-12-22T11:04:50.590Z Has data issue: false hasContentIssue false
  • English
  • Français

GROWTH AND CONVERGENCE THROUGH TECHNOLOGICAL INTERDEPENDENCE

Published online by Cambridge University Press:  09 December 2020

Wei Jin  and
Yixiao Zhou
Wei Jin*
Affiliation:
Tianjin University
Yixiao Zhou
Affiliation:
Australian National University
*
Address correspondence to: Wei Jin, Ma Yinchu School of Economics, Tianjin University, No. 92 Weijin Road, Tianjin 300072, China. e-mail: wei.jin19@outlook.com. Phone: (+86) 13616513164.
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper presents a multi-country version of the Ramsey growth model with cross-country technological interdependence. The results rationalize several stylized facts about growth and convergence. First, individual countries tend to converge toward country-specific balanced growth paths rather than steady-state equilibria. Second, an economy that accounts for a smaller share of the world technology distribution harnesses the “advantages of backwardness” to catch up at a faster speed. Third, countries grow at different rates during the phase of transitional dynamics. However, technological interdependence creates a force toward cross-country convergence in the growth rate and stability of world income distribution in the long run. Finally, cross-country differences in structural characteristics and initial conditions lead to divergences in the level of income per capita.

Keywords

ConvergenceEndogenous GrowthTechnological InterdependenceAdvantages of Backwardness
Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 5 , July 2022 , pp. 1338 - 1374
Copyright
© Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We are grateful to the detailed comments and advice of William Barnett (the editor), Oded Galor (the coeditor), and anonymous referees. We also thank Angus Chu, James Madison, and participants at: 2018 Asian Meeting of the Econometric Society (Seoul), 2019 Asian Meeting of the Econometric Society (Xiamen), 2019 Econometric Society Australasian Meeting (Perth), 2019 China International Conference in Macroeconomics (Shenzhen), and various seminars for helpful comments. The usual disclaimer applies.

References

REFERENCES

Abramovitz, M. (1986) Catching up, forging ahead, and falling behind. Journal of Economic History 46(2), 385–406.CrossRefGoogle Scholar
Acemoglu, D. (2009) Introduction to Modern Economic Growth. Princeton and Oxford: Princeton University Press.Google Scholar
Acemoglu, D., Aghion, P., Bursztyn, L. and Hemous, D. (2012) The environment and directed technical change. American Economic Review 102(1), 131–166.CrossRefGoogle ScholarPubMed
Acemoglu, D., Aghion, P. and Zilibotti, F. (2006) Distance to frontier, selection, and economic growth. Journal of the European Economic Association 4, 37–74.CrossRefGoogle Scholar
Acemoglu, D., Robinson, J. and Verdier, T. (2017) Asymmetric growth and institutions in an interdependent world. Journal of Political Economy 125(5), 1245–1305.CrossRefGoogle Scholar
Acemoglu, D. and Ventura, J. (2002) The world income distribution. Quarterly Journal of Economics 117(2), 659–694.CrossRefGoogle Scholar
Acemoglu, D. and Zilibotti, F. (2001) Productivity differences. Quarterly Journal of Economics 116(2), 563–606.CrossRefGoogle Scholar
Aghion, P. and Howitt, P. (1998) Endogenous Growth Theory. Cambridge, MA: MIT Press.Google Scholar
Alesina, A., Battisti, M. and Zeira, J. (2018) Technology and labor regulations: Theory and evidence. Journal of Economic Growth 23, 41–78.CrossRefGoogle Scholar
Arrighetti, A., Landini, F. and Lasagni, A. (2014) Intangible assets and firm heterogeneity: Evidence from Italy. Research Policy 43, 202–213.CrossRefGoogle Scholar
Azariadis, C. (1996) The economics of development traps. Journal of Economic Growth 1, 449–486.CrossRefGoogle Scholar
Barro, R. (1991) Economic growth in a cross section of countries. Quarterly Journal of Economics 106(2), 407–443.CrossRefGoogle Scholar
Barro, R. (2015) Convergence and modernisation. Economic Journal 125, 911–942.CrossRefGoogle Scholar
Barro, R. and X. Sala-i-Martin (1992) Convergence. Journal of Political Economy 100(2), 223–251.CrossRefGoogle Scholar
Barro, R. and X. Sala-i-Martin (1997) Technological diffusion, convergence, and growth. Journal of Economic Growth 2, 1–27.CrossRefGoogle Scholar
Basu, S. and Weil, D. (1998) Appropriate technology and growth. Quarterly Journal of Economics 113(4), 1025–1054.CrossRefGoogle Scholar
Baumol, W. (1986) Productivity growth, convergence, and welfare: What the long-run data show. American Economic Review 76(5), 1072–1085.Google Scholar
Benhabib, J., Perla, J. and Tonetti, C. (2014) Catch-up and fall-back through innovation and imitation. Journal of Economic Growth 19(3), 1–35.CrossRefGoogle Scholar
Bernard, A. B. and Durlauf, S. N. (1995) Convergence in international output. Journal of Applied Econometrics 10(2), 97–108.CrossRefGoogle Scholar
Bernard, A. B. and Durlauf, S. N. (1996) Interpreting tests of the convergence hypothesis. Journal of Econometrics 71(585), 161–173.CrossRefGoogle Scholar
Caselli, F. and Coleman, W. J. (2001) Cross-country technology diffusion: The case of computers. American Economic Review 91(2), 328–335.CrossRefGoogle Scholar
Caselli, F., Esquivel, G. and Lefort, F. (1996) Reopening the convergence debate: A new look at cross-country growth empirics. Journal of Economic Growth 40, 363–389.CrossRefGoogle Scholar
Chen, W. (2018) Cross-country income differences revisited: Accounting for the role of intangible capital. Review of Income and Wealth 64(3), 626–648.CrossRefGoogle Scholar
Chu, A., Cozzi, G. and Galli, S. (2014) Stage-dependent intellectual property rights. Journal of Development Economics 106, 239–249.CrossRefGoogle Scholar
Coe, D. and Helpman, E. (1995) International R&D spillovers. European Economic Review 39(5), 859–887.CrossRefGoogle Scholar
Coe, D., Helpman, E. and Hoffmaister, A. (1997) North-south R&D spillovers. Economic Journal 107(5), 134–149.CrossRefGoogle Scholar
Cohen, W. and Levinthal, D. (1989) Innovation and learning: The two faces of R&D. Economic Journal 99, 569–596.CrossRefGoogle Scholar
Comin, D. and Hobijn, B. (2004) Cross-country technology adoption: Making the theories face the facts. Journal of Monetary Economics 51(1), 39–83.CrossRefGoogle Scholar
Comin, D. and Hobijn, B. (2010) An exploration of technology diffusion. American Economic Review 100(5), 2031–2059.CrossRefGoogle Scholar
Comin, D. and Mestieri, M. (2018) If technology has arrived everywhere, why has income diverged? American Economic Journal: Macroeconomics 10(3), 137–178.Google Scholar
Corrado, C. and Hulten, C. (2014) Innovation accounting. In: Jorgenson, D., Landefeld, S. and Schreyer, P. (eds.), Measuring Economic Sustainability and Progress: Studies in Income and Wealth, pp. 595–628. Chicago: University of Chicago Press.Google Scholar
Corrado, C., Hulten, C. and Sichel, D. (2009) Intangible capital and U.S. economic growth. Review of Income and Wealth 55(3), 661–685.CrossRefGoogle Scholar
Corrado, C. and Hulten, C. (2010) How do you measure a “technological revolution”? American Economic Review 100(2), 99–104.CrossRefGoogle Scholar
Eaton, J. and Kortum, S. (1996) Trade in ideas patenting and productivity in the OECD. Journal of International Economics 40(3), 251–276.CrossRefGoogle Scholar
Eaton, J. and Kortum, S. (1999) International technology diffusion: Theory and measurement. International Economic Review 40(3), 537–570.CrossRefGoogle Scholar
Eaton, J. and Kortum, S. (2001) Technology, trade, and growth: A unified framework. European Economic Review 45(4–6), 742–755.CrossRefGoogle Scholar
Eisfeldt, A. and Papanikolaou, D. (2014) The value and ownership of intangible capital. American Economic Review 104(5), 189–194.CrossRefGoogle Scholar
Epstein, L. and Zin, S. (1991) Substitution, risk aversion, and the temporal behavior of consumption and asset returns: An empirical analysis. Journal of Political Economy 99(2), 263–286.CrossRefGoogle Scholar
European Commission (2013) The Technological Profile and Specialization Pattern of Countries. Luxembourg: Publications Office of the European Union.Google Scholar
Feenstra, R., Inklaar, R. and Timmer, M. (2015) The next generation of the Penn World Table. American Economic Review 105(10), 3150–3182.CrossRefGoogle Scholar
Galor, O. (1996) Convergence? Inference from theoretical models. Economic Journal 106, 1056–1069.CrossRefGoogle Scholar
Galor, O. (2005) From stagnation to growth: Unified growth theory. In: Aghion, P. and Durlauf, S. (eds.), Handbook of Economic Growth, pp. 171–293. Amsterdam: North-Holland.Google Scholar
Galor, O. and Tsiddon, D. (1997) Tecnological progress, mobility, and growth. American Economic Review 87(3), 363–382.Google Scholar
Gerschenkron, A. (1962) Economic Backwardness in Political Perspective. Chicago: University of Chicago Press.Google Scholar
Grossmann, T. V. Steger and T. Trimborn (2013) Dynamically optimal R&D subsidization. Journal of Economic Dynamics and Control 37(3), 516–534.CrossRefGoogle Scholar
Hall, R. and Jones, C. (1999) Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics 114(1), 83–116.CrossRefGoogle Scholar
Howitt, P. (2000) Endogenous growth and cross-country income differences. American Economic Review 90(4), 829–846.CrossRefGoogle Scholar
Howitt, P. and Mayer-Foulkes, D. (2005) R&D, implementation and stagnation: A Schumpeterian theory of convergence clubs. Journal of Money, Credit and Banking 37(1), 147–177.CrossRefGoogle Scholar
Jones, C. (1995) R&D-based models of economic growth. Journal of Political Economy 103(4), 759–784.CrossRefGoogle Scholar
Jones, C. (1999) Growth: With or without scale effects?. American Economic Review 89(2), 139–144.CrossRefGoogle Scholar
Jones, C. (2016) The facts of economic growth. In: Taylor, J. and Uhlig, H. (eds.), Handbook of Macroeconomics, pp. 3–69. Elsevier.Google Scholar
Kogan, L. and Papanikolaou, D. (2019) Technological innovation, intangible capital, and asset prices. Annual Review of Financial Economics 11(1), 221–242.CrossRefGoogle Scholar
Krugman, P. (1979) A model of innovation, technology transfer, and the world distribution of income. Journal of Political Economy 87(2), 253–266.CrossRefGoogle Scholar
Maddison, A. (2003) The World Economy: Historical Statistics. Paris: Organisation for Economic Cooperation and Development.CrossRefGoogle Scholar
Madsen, J. (2008) Semi-endogenous versus Schumpeterian growth models: Testing the knowledge production function using international data. Journal of Economic Growth 13, 1–26.CrossRefGoogle Scholar
Mankiw, G., Romer, D. and Weil, D. (1992) A contribution to the empirics of economic growth. The Quarterly Journal of Economics 107(2), 407–437.CrossRefGoogle Scholar
Marrocu, E., Paci, R. and Pontis, M. (2012) Intangible capital and firms’ productivity. Industrial and Corporate Change 21(2), 377–402.CrossRefGoogle Scholar
Mehra, R. and Prescott, E. (1985) The equity premium: A puzzle. Journal of Monetary Economics 15(2), 145–161.sCrossRefGoogle Scholar
Nakamura, L. (2010) Intangible assets and national income accounting. Review of Income and Wealth 56, S135–S155.CrossRefGoogle Scholar
Nelson, R. and Phelps, E. (1966) Investment in humans, technological diffusion, and economic growth. American Economic Review 56(1), 69–75.Google Scholar
OECD (2014) How was Life? Global Well-being since 1820. Paris: OECD Publishing.Google Scholar
Parente, S. and Prescott, E. (1994) Barriers to technology adoption and development. Journal of Political Economy 102(2), 298–321.CrossRefGoogle Scholar
Pesaran, H., Shin, Y. and Smith, R. (1999) Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association 94(446), 621–634.CrossRefGoogle Scholar
Pesaran, H. and Smith, R. (1995) Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics 68(1), 79–113.CrossRefGoogle Scholar
Peters, R. and Taylor, L. (2017) Intangible capital and the investment-q relation. Journal of Financial Economics 123(2), 251–272.CrossRefGoogle Scholar
Quah, D. (1997) Empirics for growth and distribution: Stratication, polarization, and convergence clubs. Journal of Economic Growth 2, 27–59.CrossRefGoogle Scholar
Quah, D. (1996) Twin peaks: Growth and convergence in models of distribution dynamics. Economic Journal 106, 1045–1055.CrossRefGoogle Scholar
Romer, P. (1990) Endogenous technological change. Journal of Political Economy 98(5), S71–S102.CrossRefGoogle Scholar
Rosenberg, N. (1982) Inside the Black Box: Technology and Econonmics. New York: Cambridge University Press.Google Scholar
Stokey, N. (2015) Catching up and falling behind. Journal of Economic Growth 20, 1–36.CrossRefGoogle Scholar
van der Ploeg, F. and Withagen, C. (2014) Growth, renewables, and the optimal carbon tax. International Economic Review 55, 283–311.CrossRefGoogle Scholar
Ventura, J. (1997) Growth and interdependence. Quarterly Journal of Economics 112(1), 57–84.CrossRefGoogle Scholar
Williamson, J. (1996) Globalization, convergence, and history. Journal of Economic History 56(2), 277–306.CrossRefGoogle Scholar
World Bank (2017) World Development Indicators 2017. Washington, D.C.: World Bank.Google Scholar
Zeira, J. (1998) Workers, machines, and economic growth. Quarterly Journal of Economics 113(4), 1091–1117.CrossRefGoogle Scholar