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New Technology, Human Capital, Total Factor Productivity and Growth Process for Developing

Cuong Le van () and Tu Nguyen

No 26, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: Solowian view on miracle growth rate in NIEs as a result of productivity growth whereas many others (e.g. Krugman [1997]) convince that broad capital accumulation is only true engine underlying NIEs growth. Krugman's view is correct in the short and mid terms, however in the long term, TFP is the main engine of growth. We show that the optimal strategy for a developing country consists of accumulating physical capital first and there is no research activity. When the country reaches a certain level of development, which is endogenously determined in the model, the technological progress may be generated. Three critical factors: the amount of available human capital; the relative price of technological capital; and the initial income of the economy.

Keywords: Optimal growth model; New technology capital; Human Capital; Developing country (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008-08
New Economics Papers: this item is included in nep-dev, nep-hrm and nep-knm
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