Chapter

Why Growth Rates Differ, I

Maurice FitzGerald Scott

in A New View of Economic Growth

Published in print June 1991 | ISBN: 9780198287421
Published online November 2003 | e-ISBN: 9780191596872 | DOI: http://dx.doi.org/10.1093/0198287429.003.0010

Series: Clarendon Paperbacks

 Why Growth Rates Differ, I

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A linear equation, in which growth of output is determined by the share of investment and the growth of quality‐adjusted employment, is derived from the model, and fitted by ordinary least squares regression to 26 observations for a non‐residential business in different countries and periods. The efficiency of investment is allowed to depend on various factors, of which two are significant: efficiency improved over time, especially after the Second World War, and countries behind the leader (the USA) then benefited from ’catch‐up’. The fit of the equation and the size of its coefficients give reasonable confirmation of the theory. In particular, there is no evidence of exogenous technical progress, and the contribution of investment to growth is more than double that of, e.g. Denison's careful estimates.

Keywords: catch‐up; Denison; exogenous technical progress; investment contribution to growth; investment efficiency; least squares regression; linear equation; non‐residential business; rate of growth

Chapter.  12892 words. 

Subjects: Economic Development and Growth

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