Capital Goods Imports and Long-Run Growth

Jong-Wha Lee

No 4725, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents an endogenous growth model of an open economy in which the growth rate of income is higher if foreign capital goods are used relatively more than domestic capital goods for the production of capital stock. Empirical results, using cross country data for the period 1960-85, confirm that the ratio of imported to domestically produced capital goods in the composition of investment has a significant positive effect on per capita income growth rates across countries, in particular, in developing countries. Hence, the composition of investment in addition to the volume of total capital accumulation is highlighted as an important determinant of economic growth.

JEL-codes: F43 O40 (search for similar items in EconPapers)
Date: 1994-04
Note: EFG ITI
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Citations: View citations in EconPapers (25)

Published as Journal of Development Economics, Vol. 48, no. 1 (1995): 91-110.

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Journal Article: Capital goods imports and long-run growth (1995)
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