ECONOMIC GROWTH AND TRANSITION: A STOCHASTIC TECHNOLOGICAL DIFFUSION MODEL

Hui Ying Sng (), Shahidur Rahman and Wai Mun Chia ()
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Hui Ying Sng: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University
Shahidur Rahman: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University
Wai Mun Chia: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University

Journal of Economic Development, 2009, vol. 34, issue 2, 1-25

Abstract: This paper constructs a stochastic growth model that anchors on technology diffusion and improvement in social infrastructure to explain the growth of developing countries. The model is based on the technological diffusion model by Barro and Sala-i-Martin (1997) with two significant extensions: the (productivity) parameter in the model which represents social infrastructure is being endogenized and probability of adverse shocks is being incorporated. The stochastic technological diffusion model is able to explain the various economic growth and transition phases of developing economies. Technology diffusion is modeled as the determinant of conditional convergence, while technological progress and economic openness further strengthen the social infrastructure bringing about absolute convergence. The model is also able to explain why some developing economies experience economic take-off while others do not.

Keywords: Growth; Technology Diffusion; Social Infrastructure; Convergence; S-Curve Hypothesis (search for similar items in EconPapers)
JEL-codes: O11 O30 O40 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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