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A knowledge economy approach in empirical growth models for the Nordic countries

Arusha Cooray, Marcella Lucchetta () and Antonio Paradiso ()

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: We estimate, employing a “knowledge economy” approach, the steady state growth rate for the Nordic countries. An endogenous growth framework is developed, in which total factor productivity is a function of human capital (measured by average years of education), trade openness, research and development, and investment ratio. We identify the key variables having a significant level and growth effects within this framework. We find that education plays an important role on the long-run growth rates of Sweden, Norway, and Denmark; trade openness, instead, has growth effects in Sweden, Finland, and Iceland. The investment ratio is able to explain patterns of growth only in Finland. Surprisingly, research and development has no level or growth effects in any of the Nordic countries. This may be attributable to the fact that research and development are driven by openness and education. Policy measures are identified to improve the long-run growth rates for these countries.

Keywords: Endogenous growth models; Trade openness; human capital; investment ratio; Steady state growth rate; Nordic countries (search for similar items in EconPapers)
JEL-codes: C22 O52 O40 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2013
New Economics Papers: this item is included in nep-fdg, nep-gro and nep-knm
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