Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175919
Authors: 
Sağlam, Bahar Bayraktar
Yetkiner, I. Hakan
Year of Publication: 
2012
Series/Report no.: 
Working Papers in Economics 12/01
Abstract: 
Mankiw Romer and Weil (1992) made the Solovian set up widely-used to test the determinants of economic growth and the speed of convergence. Subsequently, in almost all convergence studies, an exogenously growing technology is assumed and this component is treated as part of the constant term. In this study, we expand the Mankiw Romer and Weil (1992) set-up through a Solovianized Romer (1990) framework, which allows us to decompose the exogenously growing technological progress. Within this framework, the growth rate of technology depends on the characteristics of the R&D sector, including the share of labor devoted to R&D activities. We estimate the convergence equation derived from Solovianized Romer model for 31 OECD countries for the period 1980-2008 by applying the system GMM approach. The empirical findings of the model supports the conditional convergence hypothesis, but predicts a much lower convergence rate (0.01) than that predicted by the existing empirical growth literature (0.02). The model supports the positive and significant role of R&D on economic growth. Another contribution of the model is the elegant introduction of human capital to the convergence equation.
Subjects: 
Convergence
Economic Growth
Exogenous Technological Change
JEL: 
O30
O47
O50
C23
Document Type: 
Working Paper
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