Arbeitspapier

Explaining Differences in the Productivity of Capital Across Countries in the Context of 'New' Growth Theory

The purpose of this paper is to explain differences in the productivity of capital across countries taking 84 rich and poor countries over the period 1980-2011, and to test the orthodox neoclassical assumption of diminishing returns to capital. The marginal product of capital is measured as the ratio of the long-run growth of GDP to a country’s investment ratio. Twenty potential determinants are considered using a general-to-specific model selection procedure. Education, government consumption, geography, export growth, openness, political rights and macroeconomic instability turn out to be the most important variables. The data also suggest constant returns to capital, so investment matters for long-run growth.

Language
Englisch

Bibliographic citation
Series: School of Economics Discussion Papers ; No. 1412

Classification
Wirtschaft
Macroeconomic Analyses of Economic Development
Technological Change: Choices and Consequences; Diffusion Processes
Institutions and Growth
Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Subject
new growth theory
investment
productivity of capital

Event
Geistige Schöpfung
(who)
Nell, Kevin S.
Thirlwall, A. P.
Event
Veröffentlichung
(who)
University of Kent, School of Economics
(where)
Canterbury
(when)
2014

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Nell, Kevin S.
  • Thirlwall, A. P.
  • University of Kent, School of Economics

Time of origin

  • 2014

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