Essays in economic growth: Catching up and leaping ahead
Hultberg, Patrik Tomas
Doctor of Philosophy
I formalize growth ideas that go beyond rates of factor accumulation to also include the fact that countries may differ in technology and institutions. The first essay explores the empirical finding that cross-country convergence is also accompanied by significant relative income shifts (leapfrogging). Three measures of leapfrogging are suggested and applied to OECD countries (and the World). The results show high rank persistence annually, but display more mobility as time is extended. This indicates that rank movements exist and are not purely random. To determine if different accumulation rates can explain this finding, the human capital augmented Solow model is simulated with and without a random disturbance. The mobility measures from the simulations can be made to closely approximate the OECD data, but the simulated growth paths are quite different from the observed. The second essay presents a modified version of the Solow-Swan growth model which considers the possibility of adoption of technical knowledge from abroad and possible inefficiency caused by institutional rigidities. Adoption of technology becomes one mechanism through which the effective capital stock of a nation increases. The new model slightly modifies standard results for nations' steady states and rates of convergence. More importantly, it allows for quite different convergence paths. In the third essay, I estimate the model with panel data using methods consistent with the dynamic frontier literature. The model is estimated for three regions: Europe, East Asia, and Latin America. Follower countries benefit significantly from the technology gap to the leader nation and countries differ in average inefficiency levels. The estimated average inefficiency levels seem consistent with common beliefs and are significantly explained by institutional variables such as bureaucratic efficiency and political and civil rights.