Are Poor Countries Coming Closer to the Rich
Year: 1997
Type: report
Abstract: ARE poor countries growing faster than rich countries and coming closer to them? Recently this has been a much-debated question in so-called mainstream economics. debate owes much to the so-called 'new' growth theory propagated by Romer (1986, 1990), Lucas (1988), Rebelo (1991) and many others. The new growth theory came as a challenge to the old neoclassical growth theory pioneered by Solow (1986) and Swan (1956). Bringing in the role of human capital formation in growth, technical progress was endogenid hence they tend to grow at high rates. This tendency for low-income countries to grow at high rates is reinforced in extensions of the neoclassical models that allow for international mobility of capital and technology [Barro 1991:407]. The new growth theory assumes constant returns to a broad concept of reproducible capital which includes human capital; hence the growth rate of per capita product is independent of the starting level of per capita product. Romer (1990) took human capital as the key input to the research sector which generates new products or ideas. So countries with greater initial stocks of human capital experience a more rapid rate of introduction of new goods and tend to grow faster. Thus the convergence implication of the SolowSwan neoclassical growth theory has been theoretically challenged.
Source: Figshare
Author: Prabirjit Sarkar
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2134162453