Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 238: Human Capital, R&D and Economic Growth

Anna Sjögren ()
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Anna Sjögren: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: People go to school and firms do R&D. These activities result in human capital accumulation and new ideas and technologies which make economies grow. We try to capture the interaction between human capital and R&D by allowing for endogenous human capital accumulation in an economy where the number of products and technologies expands because profit maximizing entrepreneurs do R&D. We find that, in the absence of scale effects, long run growth is determined by the capacity to accumulate human capital. A relative lack of R&D capital causes the economy to grow slowly during its transition to the steady state, while a relative abundance of R&D capital gives high growth rates during transition.

Keywords: human capital; R&D; endogenous growth; scale effects; transitional dynamics

JEL-codes: J24; O31; O41

47 pages, May 28, 1998

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