Threshold effects in economic growth: Critiques, evidence, and further empirical exploration

• Main Author: Shimazaki, Yoshiaki
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01.01.2004
• Subjects: Capital stock; Consumption; Copyright; Decision making; Developing countries; Economic growth; Economics; Equilibrium; Essays; Externality; Fertility; Growth models; High income; Human capital; Industrial development; Infrastructure; International organizations; LDCs; Low income groups; Modems; Poverty; Production functions; Public policy
• ISBN: 049671922X; 9780496719228

This dissertation consists of three self-contained essays that consider why countries grow differently. There are diverse economic growth patterns leading to persistent income differences among countries. Explanations for the growth differences vary, as do the empirical studies based upon them. One strand of empirical studies identifies multiple factors that might explain growth differences, assuming a linear relationship between growth and the growth factors. These factors include growth determinants not explicit in the Solow growth models. The second strand of empirical studies assumes nonlinearity between growth and those factors directly implied by the Solow growth models. Studies in this strand explain growth differences by identifying a specific threshold level of initial capital. The empirical studies focusing on the search for growth determinants, and those focusing on nonlinearity are treated separately in the growth literature. The first essay in this study reviews various models explaining growth differences. This essay compares the empirical implications of each model, and suggests a unifying interpretation, focusing on the complementarities of the various models. This combined interpretation indicates the importance of public policy in explaining thresholds in growth. The second essay searches for evidence of the link between thresholds in growth (capital accumulation) and determinants of growth. This essay focuses on determinants related to public policy, and finds evidence of a nonlinear relationship between growth and these determinants. The results indicate a possible representation of thresholds in terms of policy factors instead of just initial capital. The third essay empirically tests the combined interpretation discussed in the first essay. This essay identifies countries with successful or disastrous growth by estimating structural breaks in the countries' growth histories. These structural breaks are considered thresholds. Regression results reveal that for openness shocks to trigger a take-off, there must be a long-run reduction in government size.