Working Paper: NBER ID: w27278
Authors: Yunfang Hu; Takuma Kunieda; Kazuo Nishimura; Ping Wang
Abstract: We develop a unified theory with endogenous technology choice in human/knowledge capital accumulation to establish a rich array of equilibrium development paradigms, including poverty trap, middle income trap and flying geese growth. We then generalize the baseline structure and establish conditions for different development paradigms to arise. By calibrating the general model to fit the data from several representative economies with different income and growth patterns, we identify various prolonged flying geese episodes and middle income traps. By performing growth accounting, we find that improving human capital accumulation efficacy and mitigating barriers to human capital accumulation are most rewarding for advancing the economy and avoiding the middle income trap.
Keywords: Human Capital; Economic Development; Poverty Trap; Middle Income Trap; Flying Geese Growth
JEL Codes: D2; E2; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Total factor productivity (TFP) slowdowns (O49) | Economic outcomes (F69) |
| Improving human capital accumulation efficacy (J24) | Better economic outcomes (P17) |
| Mitigating barriers to human capital accumulation (J24) | Advancing economies (O53) |
| Productivity of prevailing technology is not excessively high and Scale barrier is sufficiently large (D24) | Economic stagnation (N14) |
| Large drops in human capital technology efficacy (D29) | Country into a middle income trap (O57) |
| Human capital upgrades (J24) | Economic growth (O00) |