EconPapers    
Economics at your fingertips  
 

Why Does the Productivity of Investment Vary Across Countries?

Kevin Nell () and Anthony Thirlwall ()

Studies in Economics from School of Economics, University of Kent

Abstract: A country's growth of output is identically equal to its ratio of investment to output and the productivity of investment. In 'new' growth theory regressions, which include the investment ratio, all other included variables pick up why the productivity of investment differs between countries. This paper converts a 'new' growth theory regression equation into productivity of investment equation which allows for the direct testing of the diminishing returns to capital hypothesis of neoclassical growth theory, and to identify the major determinants of differences in the productivity of investment using the general-to-specific model selection algorithm - Autometrics. Nineteen explanatory variables are considered, and export growth, property rights, latitude, and education turn out to be the most important. Eighty-four countries are taken over the period 1980-2011. There is no evidence of diminishing returns to capital across countries, so investment matters for long run growth.

Keywords: 'new' growth theory; productivity of investment; cross-country growth regressions (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-pke and nep-tid
Date: 2017-03
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1703.pdf (application/pdf)

Related works:
Journal Article: Why does the productivity of investment vary across countries? (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ukc:ukcedp:1703

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Studies in Economics from School of Economics, University of Kent School of Economics, University of Kent, Canterbury, Kent, CT2 7NP.
Bibliographic data for series maintained by Tracey Girling ().

 
Page updated 2018-09-21
Handle: RePEc:ukc:ukcedp:1703