Bridging the Barriers: Knowledge Connections, Productivity, and Capital Accumulation

R. Quentin Grafton, Tom Kompas and Dorian Owen

International and Development Economics Working Papers from International and Development Economics

Abstract: The paper explains the large differences in cross-country productivity performance by modeling and testing the effects of social barriers to communication on productivity and capital accumulation. In an optimal growth model, social barriers to communication that impede the formation of knowledge connections are shown to reduce both transitory and steady-state levels of total factor productivity (TFP), per capita consumption, and reproducible capital. A ‘bridging’ parameter in the growth model that lowers the disutility of forming knowledge connections generates testable and dynamic implications about the effects of social barriers on capital, consumption, and productivity. Extensive empirical testing of the theoretical propositions yields a robust and theoretically consistent result — linguistic barriers to communication reduce productivity and capital accumulation. The findings provide a theoretical justification and a robust explanation for cross-country differences in TFP, and fresh insights into how productivity ‘catch up’ may be initiated.

JEL-codes: C21 C61 O41 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2004
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (2)

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Journal Article: Bridging the barriers: knowledge connections, productivity and capital accumulation (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:idc:wpaper:idec04-5

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