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Accounting for Trends in Productivity and R&D: A Schumpeterian Critique of Semi‐Endogenous Growth Theory
Author(s) -
HA JOONKYUNG,
HOWITT PETER
Publication year - 2007
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2007.00045.x
Subject(s) - total factor productivity , endogenous growth theory , economics , growth theory , endogeny , growth accounting , productivity , keynesian economics , neoclassical economics , macroeconomics , econometrics , chemistry , market economy , human capital , biochemistry
This paper argues that long‐run trends in R&D and TFP are more supportive of fully endogenous “Schumpeterian” growth theory than they are of semi‐endogenous growth theory. The distinctive prediction of semi‐endogenous theory that sustained TFP growth requires sustained growth of R&D input is not supported by co‐integration tests and forecasting exercises, as TFP growth has been stationary even though the growth rate of R&D input has fallen three‐fold since the early 1950s. In contrast, the prediction of Schumpeterian theory that sustained TFP growth requires a sustained fraction of GDP to be spent on R&D is not contradicted by similar tests.