However, where both coefficients are statistically significant, bilateral causlality exists. Thus technical change is viewed as an aspect of general economic efficiency. All other types of economic system are mere hybrids or variants of these two. Today, economists use Solow's sources-of-growth accounting to estimate the separate effects on economic growth of technological changecapitaland labor.
In other words it is not only factor accumulation that drives growth but also efforts to utilize them. What is the basic of Grossman-Helpman model of economic growth? Conditions that cause efficiency include education, diversification, privatization, liberalization, stabilization, strong capital market development etc.
Three waves of interest have currently emerged in studying economic growth. They take a model without capital accumulation and full employment.
It can also be extended to include the degree of trade openness, trade regimes, and incentives. Reversing this trend, therefore, requires, finding innovations to raise total productivity, which in turn requires laying out proper conditions for thriving entrepreneurship in Schumpeterian sense, and increased foreign direct investment FDI in order to bring about structural changes in the economy.
Estimation Technique and Procedure The study applied modern econometric analytical techniques namely - Co-integration, unit root test, Error correction mechanism ECM and Granger causality test for the data analysis, with time series secondary data obtained from CBN Statistical Bulletin,  and Annual Reports and Statement of Accounts  for the purpose of arriving at a dependable and unbiased analysis.
Furthermore Granger causality test is used to determine if it is economic growth or the selected determinants are significant in either enhancing or deteriorating the rate of each other.
Admittedly, some of the theories already discussed have helped immensely in explaining growth of individual countries but they do not completely explain why countries have differing growth trajectory.
The newer growth theory endogenous theory fits the real world perfectly well and has important policy implications. A search for parsimony in this dynamic model typically follows the general—to-specific modeling using various information criteria Akaike, Schwarz, log likelihood, etc which minimizes the possibility of estimating relationship while retaining long-run information, if the variables do not have the same order of integration, Engel and Granger .
Often endogenous growth theory assumes constant marginal product of capital at The grossman helpman model aggregate level, or at least that the limit of the marginal product of capital does not tend towards zero. As they introduce newer blueprints or prototypes, the earlier ones may be rendered obsolete.
Openness to trade without these conditions being met may be very costly. All the variables are correctly signed as predicted and measured by their regression coefficients. Many states have created risk pools in which relatively healthy enrollees subsidise the care of the rest. Secondly, the quality of the government and its economic policies matter a lot.
Grossman and Helpman extend this formulation on the supply side and bring in dynamic optimisation and optimisation over time.
This is combined with, and also brought about by an accumulation of knowledge. Inhe received an honorary degree in Doctor of Science from Tufts University. In Currie and Stabile published "Mental Health in Childhood and Human Capital" in which they assessed how common childhood mental health problems may alter the human capital accumulation of affected children.
Usually three outcomes are possible — unidirectional when one null hypothesis is accepted and the other, rejected, bilateral or feedback when both null hypotheses are accepted and independence when none of the pairs of null hypotheses is accepted.
Then he became interested in statistics and probability models. Peter Howitt has written: In addition, trade is an important and an integral part of an economic system. However, the concept of economic growth has not been quite easy to grasp and measure in real terms. It explains the poor growth performance of developing economies, especially the sub-Sahara Africa, and explained why the advanced countries have been getting richer.
Thus countries with high level of efficiency, appropriate economic system, sound, economic policy, tend to grow more rapidly Romer, . For instance, under the neoclassical theory, the long-run rate of growth in output was exogenously determined generally by an assumed rate of labour force growth.
Stephen Parente contends that new growth theory has proved to be no more successful than exogenous growth theory in explaining the income divergence between the developing and developed worlds despite usually being more complex.
The economic policy argument emphasizes mainly on stable macro-economic environment as an important determinant of economic growth, although there may be other considerations like access to capital and social welfare of the numerous macroeconomic variables, inflation has been found to be a critical determinant of growth.
For example, rather than assume people save at a given constant rate that Solow did, subsequent work applied a consumer-optimization framework to derive savings behavior endogenously, allowing saving rates to vary at different points in time, depending on income flows, for example.
Dixit-Stiglitz had formulated the presence of several types of consumer goods by looking at the behaviour of a typical consumer. His studies focused mainly in the fields of employment and growth policies, and the theory of capital. The objective of this test is to determine if there is existence of long run equilibrium relationship among the variables used in the study.
Lederman and Maloney  examined the empirical relationship between trade structure and economic growth particularly the influence of natural resource abundance, export concentration and intra industry trade, and found that regardless of estimation technique, trade structure variables were important determinants of economic growth.A prominent model in the recent political-economy literature on trade policy is Grossman and Helpman's () Protection for Sale' model.
This model yields clear predictions for the cross-sectional structure of trade protection. The objective of our" paper is to check whether the predictions of the. Published: Mon, 5 Dec One of the earliest ideas in the theory of economic development is that the degree of specialization or diversification of a country’s production and trade structure is important for its economic development (Wim Naudé and Riaan Rossouw, ).
By influencing the incentives to innovate, intellectual property rights protection may affect economic growth in important ways. An important question for many countries is whether stricter enforcement of intellectual property is a good strategy for economic growth. Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces.
Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic lietuvosstumbrai.com theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic.
contribute to raise living standard in OECD countries. Some of the same factors10 © OECD INTRODUCTION The past decade has witnessed a renewed interest in the.
This chapter focuses on the estimation and interpretation of gravity equations for bilateral trade. This necessarily involves a careful consideration of the theoretical underpinnings since it has become clear that naive approaches to estimation lead to biased and frequently misinterpreted results.Download