Michael Chen, Northwestern University
Why do some poor countries exhibit rapid economic growth while others do not? Traditional growth models, which rely on factors of production, theorize that there will be economic convergence since there are diminishing returns to input growth, yet empirical evidence exists both for and against this theory. In this paper, I research the extent to which knowledge growth drives economic growth. In particular, since knowledge can be transferred between countries cheaper than traditional inputs like raw goods or labor, embracing change can be instrumental towards growth. I develop a model of economic growth as a function of domestic knowledge growth and international knowledge sharing. I then show that under this model, there is economic convergence. I test my theory with worldwide developmental data. Finally, I conclude that absolute and conditional economic convergence has been observed in the past 30 years.
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