NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Externalities and Growth

Peter J. Klenow, Andres Rodriguez-Clare

NBER Working Paper No. 11009
Issued in December 2004
NBER Program(s):   EFG

Externalities play a central role in most theories of economic growth. We argue that international externalities, in particular, are essential for explaining a number of empirical regularities about growth and development. Foremost among these is that many countries appear to share a common long run growth rate despite persistently different rates of investment in physical capital, human capital, and research. With this motivation, we construct a hybrid of some prominent growth models that have international knowledge externalities. When calibrated, the hybrid model does a surprisingly good job of generating realistic dispersion of income levels with modest barriers to technology adoption. Human capital and physical capital contribute to income differences both directly (as usual), and indirectly by boosting resources devoted to technology adoption. The model implies that most of income above subsistence is made possible by international diffusion of knowledge.

download in pdf format
   (349 K)

email paper

This paper is available as PDF (349 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11009

Published: Klenow, Peter J. & Rodriguez-Clare, Andres, 2005. "Externalities and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 11, pages 817-861 Elsevier.

Users who downloaded this paper also downloaded these:
Klenow and Rodriguez-Clare The Neoclassical Revival in Growth Economics: Has It Gone Too Far?
Benhabib and Jovanovic w3190 Externalities and Growth Accounting
Levine w10766 Finance and Growth: Theory and Evidence
Moretti w9641 Human Capital Externalities in Cities
Arrow Political and Economic Evaluation of Social Effects and Externalities
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us