Productivity, technological spillovers and economic growth

This dissertation presents an analysis of productivity differences between countries, with particular attention paid to technological spillovers. Chapter One investigates the finding that the cross country distribution of per capita income is becoming more twin peaked. This finding has supported and encouraged a large theoretical literature on development traps which produce twin peaks through physical and human capital accumulation.; I test the validity of these factor accumulation models by examining the evolution of the distributions of the parts of per capita output: physical capital, human capital, and productivity. Physical and human capital are found to be moving towards single peaked distributions while the productivity residual is moving toward a twin peaked distribution. The twin peaked result in per capita income therefore appears to be driven by productivity differences rather than factor accumulation. Dynamic externalities from factor accumulation and openness to productivity are found to be strong. Low levels of human capital and lack of openness to trade are potential causes of the lower peak in productivity.; Chapter Two (written with Shekhar Aiyar) develops and tests a dynamic model of technological spillovers where human capital levels determine a country's ability to dynamically appropriate technology from abroad. Controlling for human capital levels, lower levels of productivity are associated with higher productivity growth due to the catch up effect. Higher levels of human capital result in higher long run levels of productivity. This result is noteworthy because growth regressions using panel data have previously found insignificant or negative coefficients on human capital.; Chapter Three (written with David N. Weil and Susanto Basu) investigates the interaction between technological leadership and spillovers through a theoretical model where technological followers benefit from spillovers from a technological leader. Simulations of the model show that technological leadership is persistent and history dependent. A more patient nation may choose to remain behind an impatient technological leader in order to benefit from spillovers. The result is lower steady state growth than would occur if the more patient nation took leadership. The probability of a persistent, impatient leader is higher the more easily technology flows between nations.