Openness and Human Capital as Sources of Productivity Growth: An Empirical Investigation

Mans Soderbom and Francis Teal

Development and Comp Systems from University Library of Munich, Germany

Abstract: Do openness to trade and higher levels of human capital promote faster productivity growth? That they do is a key implication of several versions of endogenous growth theory. To answer the question we use panel data on 93 countries spanning the 1970-2000 period. Controlling for fixed effects as well as endogeneity, the results show a significant effect of openness on productivity growth. If the level of openness of an economy is doubled the underlying rate of technical progress will increase by 0.8 per cent per annum. We find an effect, significant at the ten per cent level, of the level of human capital on the level of income but no effect on underlying productivity growth. Our preferred estimator combines high and low frequency differences of the data. We discuss reasons why this estimator is well suited for empirical analysis of economic growth.

Keywords: Productivity; openness; human capital; growth; panel data (search for similar items in EconPapers)
JEL-codes: F43 O11 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-09-23
New Economics Papers: this item is included in nep-dev
Note: Type of Document - pdf; pages: 30
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Openness and human capital as sources of productivity growth: An empirical investigation (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0409031

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