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Technology, trade, and growth: The role of education

Klaus Prettner () and Holger Strulik ()

No 191, Center for European, Governance and Economic Development Research Discussion Papers from University of Goettingen, Department of Economics

Abstract: We generalize a trade model with firm-specific heterogeneity and R&D-based growth to allow for an endogenous education decision of households and an endogenously evolving population. Our framework is able to explain cross-country differences in living standards and trade intensities by the differential pace of human capital accumulation among industrialized countries. Consistent with the empirical evidence, scale matters for relative economic prosperity as long as countries are closed, whereas scale does not matter in a fully globalized world. Interestingly, however, the average human capital level of a country influences its relative economic prosperity irrespective of its trade-openness. While being consistent with the empirical evidence, our framework has the additional advantage that steady-state growth of income does not hinge on the unrealistic assumption of an ever expanding population.

Keywords: technological progress; globalization; demographic change; education; human capital accumulation (search for similar items in EconPapers)
JEL-codes: F10 I25 O31 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro, nep-ino, nep-int and nep-knm
Date: 2014
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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Related works:
Journal Article: TECHNOLOGY, TRADE, AND GROWTH: THE ROLE OF EDUCATION (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:191

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