Bernard and Durlauf (1995), applying cross-section and time-series data set for different types of economies for the analysis of convergence hypothesis. Economic growth strongly predicted by Solow model using exogenous technological change, capital deepening and short-run concave production opportunities, provides evidence regarding behavior of economies over time. The analysis shows that how economies, in the long-run, converge to the balance growth, irrespective of the initial capital endowments. The new growth theory contradicts with the statement of above convergence, hence divergence occurred, but again both theorists try to stress the convergence hypothesis by applying the tests of convergence. The cross-section test shows negative correlation between initial per capita income and growth rate, implies convergence. Cross-section generally reject the no convergence null for advanced economies, instead time series accepted no convergence null for large range of data set. Hence, time series test is stricter notion of convergence than cross-section test, also in terms of making assumptions. Andrew et al. (2008), employed country level data for the sample period of 1970-1998, also used 3058 cross-sectional observations for United States. The purpose was to analyze β-convergence and σ-convergence, for which convergence hypothesis stressed. Many of the economists argued that β-convergence is necessary but not the sufficient condition for σ-convergence, but least of them showed interest in σ-convergence. Applying 3SLS estimation method, results shows that β-convergence is statistically significant across the United States and many of its individual states, implying strong β-convergence. The null hypothesis for United States an... ... middle of paper ... ...e (HI) and low initial income and low growth (LILG) is not consistent with convergence process, due to the fact that former has already achieved steady state and the later yet not approached convergence. The coefficient of convergence is not significant for low initial income and high growth (LIHG), hence weak evidence. The reason may be of, time-lag in, the diffusion of technology from developed to developing countries, causing a big hindrance. Huang (2005), used pooled data averaged over the period of 1960s, 1970s and 1980s for the analysis of 86 countries, including 258 observations. Applying the regression tree and flexible non-linear approaches, result explains the strong evidence of cross-country growth regression but not for multiple steady-states. The countries in different regimes may attain different steady-state equilibria due to varied state variables.
Robert E. Lucas Jr.’s journal article, “Some Macroeconomics for the 21st Century” in the Journal of Economic Perspectives, uses both his own and other economist’s models to track and predict economic industrialization and growth by per capita income. Using models of growth on a country wide basis, Lucas is able to track the rate at which nations become industrialized, and the growth rate of the average income once industrialization has taken place. In doing so, he has come to the conclusion that the average rate of growth among industrialized nations is around 2% for the last 30 years, but is higher the closer the nation is to the point in time that it first industrialized. This conclusion is supported by his models, and is a generally accepted idea. Lucas goes on to say that the farther we get from the industrial revolution the average growth rate is more likely to hit 1.5% as a greater percentage of countries become industrialized.
Empirical growth models typically rely on changes in per capita GDP as their measure of economic growth although a number rely on levels of per capita income. As Hall and Jones (1999: 114) indicate, the results from both are relevant since ‘many of the predictions of growth theory can be successfully considered in a cross section context by examining the levels of income across countries’. The independent variables of these studies include a number of those that have been established as significant in the growth literature: initial per capita GDP to account for a conditional convergence mechanism or the catch up effect (namely the hypothesis that poorer countries – starting from a lower starting level of per capita income – grow more rapidly than wealthier ones), fertility rates/population growth and life expectancy to capture labour supply and levels of health; investment rates; human capital; various measures of the ...
Every year there is a ‘league table‘ published showing the level of economic growth achieved by each country. The comparison is made using each countries Gross Domestic Product, or GDP. An important factor to look at is the difference between actual and potential economic growth. Actual economic growth increases in real GDP. This increase can occur as result of using previously unemployed resources, or reallocating resources into more productive areas or improving existing resources. Whereas potential economic growth is the productive capacity of the economy. For example, it can be shown by the predicted ability of the country to produce goods and services. This changes when there is an increase in the quantity or quality of the resources. All countries have different ways of achieving this with the resources they have available to them. For this reason it party answers the question of why some countries are richer than others. It is widely thought that the productive capacity of an economy will increase each year largely due to improvements in education and technology. This will obviously differ from country to country. For example, in the UK the quality of fertilizer could be improved, hence forth increase the years fruit and vegetable output.
[15]. Andrei Shleifer and Lawrence H. Summers, 1990. Journal of Economics Perspectives, Vol. 4, No. 2, Spring 1990, pp. 19-33
Compare and contrast the Solow Growth Model with one Endogenous Growth Model In order to compare two models of economic growth, I will look at the primary model of exogenous growth, the Solow model, and ArrowÂ’s endogenous growth theory, based on research and development generated within the system. I will define the models and identify their similarities and differences. The Solow model, or Neoclassical growth model as it is sometimes known, is an example of exogenous growth models. This is to say that the level of economic growth depends on externally determined rates of growth in certain variables.
The Repressive hypothesis states how we currently live in a sexual repressed society. The repressive hypothesis also states that sexuality needs to be liberated, or that it does not have to be repressed. Identifying with ones sexuality is the key to unlocking ones identity and one’s happiness. The repressive hypothesis initially implies three edicts; that derive from our repressed society. According to the repressive hypothesis, specifically in the repressive culture we live in, the first edict explains how all sexuality must be silenced in all occasions, for the mention of sexuality is taboo. In modern times, specifically within the 17th century, it was also important to keep sexuality “hush-hush”, only those who belong to the lower class
Mankiw, NG. (1995). “The Growth of the Nations”. Brookings paper of economics activities. pp 275-326
Barro, R. J. (2000) Inequality and Growth in a Panel of Countries, Journal of Economic Growth, 5:5-32
There have been many great mathematicians in the world, though many are not well known. People have been studying math for ages, the oldest mathematical object dated all the way back to around 35,000 BC. There are still mathematicians today, studying math and figuring out ways to improve the mathematical world. Some of the most well-known mathematicians include Isaac Newton, Albert Einstein, and Aristotle. These mathematicians (and many more) have influenced the mathematical world and mathematics would not be where it is today without them. There were many great individuals who contributed greatly in mathematics but there was one family with eight great mathematicians who were very influential in mathematics. This was the Bernoulli family. The Bernoulli family contributed a lot to mathematics, medicine, physics, and other areas. Even though they were great mathematicians, there was also hatred and jealousy between many of them. These men did not want their brothers or sons outdoing them in mathematics. Most Bernoulli fathers told their sons not to study mathematics even if they wanted. They were told to study medicine, business, or law, instead, though most of them found a way to study mathematics. The mathematicians in this family include Jacob, Johann, Daniel, Nicolaus I, Nicolaus II, Johann II, Johann III, and Jacob II Bernoulli.
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
Throughout the chapter the text exerts more emphasis on the economical evaluation of a country's development rather than the alternative method. It begins to branch off quickly into the classification of countries deriving new topics all relating back to the economical approach. Beginning this discussion is the topic of underdevelopment.
Rostow's five stages of economic growth begin with the traditional society. As described by Rostow, the underdevelopment is naturalised in this structure with the evidence of constrained production means such as technology. In this part, the society applies subsistence economy that technically results in small margins of productivity such as hunter-gatherer society (Sahlins 1972:1) Undesired to do nature exploitation, Rostow viewed society at this stage as restrained from progress. The second phase following the previous stage is preconditions of take-off. Economic growth starting to take place and is essential to justify the means within good definition. The society begins to implement the manufacturing of products while at the same time foreign intervention by advanced societies such as through colonialism is needed to bring about change in one's society. The next step towards moder...
These less-developed countries barely have enough skilled workers, managers and technology. Industrialized countries have four times as many managers and workers as the less-developed countries, also known as LDCs. It is almost impossible for the lower-developed countries to catch up or even compete with the industrialized countries.... ... middle of paper ... ...
The objective of this paper is to make an economic development and economic growth comparison of these four countries. The comparison will be multi-faceted. It will compare monetary perform...
Two prominent models of economic development that came about in the 20th century are Rostow's linear stages of growth and Lewis' structural changes model. Each model has its own unique characteristics, limitations and certain similarities with the other.