New Product Technology, Accumulation, and Growth

This paper asks whether new technological capacity for producing and exporting additional products provides incentives for greater capital accumulation, without being fully reflected in a higher rate of total factor productivity (TFP) growth. Using a highly disaggregated data set of each country's trade flows into the United States, the author constructs a direct and independent measure of technological improvements for each country over time based on the number of new product varieties exported to the United States. The author shows, in a panel data setting, that acquiring the technological capacity for producing new products stimulates more rapid capital accumulation in developing countries, even after holding fixed the rate of TFP growth. His findings provide evidence against the alternative view that technological improvements are essentially unimportant: a view based on the findings of Young (1995) and others that instances of spectacular economic growth have been associated with unspectacular rates of TFP growth. The author provides a model to show how an expansion in the technological capacity for producing additional products can lead to more rapid factor accumulation, without necessarily improving measured TFP. His findings suggest that while rapid accumulation of physical and human capital may have characterized the East Asian growth experience, these gains were stimulated by stellar improvements in technological capacity.

Bibliographic Details

Main Author:	Khan, Faruk A.
Language:	English
Published:	World Bank, Washington, DC 2006-02
Subjects:	ABSOLUTE ADVANTAGE, BASE YEAR, BENCHMARK, CAPITAL ACCUMULATION, CAPITAL GROWTH, CAPITAL STOCK, CAPITAL STOCK GROWTH, COMMODITIES, CONSTANT PRICES, CONSUMERS, COST OF CAPITAL, COUNTRY EXPERIENCES, COUNTRY SIZE, COUNTRY VARIATION, DATA SET, DEVELOPING COUNTRIES, DIMINISHING RETURNS, DISCOUNT RATE, DOMESTIC MARKET, ECONOMIC GROWTH, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPIRICAL WORK, EQUAL WEIGHT, EQUILIBRIUM, EXOGENOUS FACTORS, EXPENDITURE, EXPORTS, FACTOR ACCUMULATION, FACTOR ENDOWMENTS, FACTORS OF PRODUCTION, FIRST YEAR, GROWTH ACCOUNTING, GROWTH EPISODES, GROWTH LITERATURE, GROWTH PROCESS, GROWTH RATE, GROWTH RATES, HETEROSKEDASTICITY, HIGH GROWTH, HUMAN CAPITAL, INCOME DISTRIBUTION, INITIAL STEADY-STATE EQUILIBRIUM, INTERNATIONAL TRADE, INVESTMENT RATES, LEVEL OF CAPITAL, NATIONAL INCOME, NEGATIVE COEFFICIENT, OPTIMIZATION, POLICY MEASURES, POLICY RESEARCH, POLITICAL INSTABILITY, POSITIVE EFFECT, POSITIVE IMPACT, PRODUCT QUALITY, PRODUCTION FUNCTION, PRODUCTIVITY GROWTH, RAPID GROWTH, RATES OF RETURN, RETURN TO CAPITAL, SPREAD, STATE EQUILIBRIUM, STOCKS, TAX INCENTIVES, TECHNOLOGICAL PROGRESS, TFP, TOTAL FACTOR PRODUCTIVITY, UTILITY FUNCTION, WAGES, WORLD MARKET,
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6596718/new-product-technology-accumulation-growth https://hdl.handle.net/10986/8739
Tags:	Add Tag No Tags, Be the first to tag this record!