Catching-up and Falling-behind in Economic Development: A Human Capital Approach

Jinyoung Kim

No 707, Discussion Paper Series from Institute of Economic Research, Korea University

Abstract: This paper proposes an endogenous growth model where human capital is the engine of growth and can be transferred across countries via costly foreign education. Importing advanced knowledge by students abroad can improve a developing country¡¯s chance of catching up with a developed host country. An excessively wide difference in knowledge level between the two countries, however, can hamper the chance of catching-up because few students can afford foreign education. Taking these two counteracting forces into account, our model predicts that the relationship between income growth in a developing country and income gap will assume the form of an inverted-U schedule. The model also produces an endogenous threshold level of income gap which separates catching-up and falling-behind. We test the model¡¯s propositions and estimate the threshold using international panel data, which lends support to our theory.

Keywords: Catch-up; Convergence; Divergence; Human capital; Foreign education (search for similar items in EconPapers)
JEL-codes: I20 O40 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:iek:wpaper:0707

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