Journal of Global Economics

Economic Growth: Education vs. Research

Abstract

Byung Woo Kim

Barro and Sala-i-Martin analyzed the empirical determinants of growth. They used a cross-sectional empirical framework that considered growth from two kinds of factors, initial levels of steady-state variables and control variables (e.g., investment ratio, infrastructure). Recent literature suggests that education is important in determining steadystate growth. Sequeira Following Baumol, we also consider the growth regression. We extend the previous research for Asian countries of Kim to developed countries. Following the implications of semi-endogenous growth theory, we regressed output growth on a constant, one-year lagged output (initial income) and the determinants of steady-state income [investment rate, population growth, the quadratic (or linear) function of R&D intensity and human capital measured by years of schooling or enrollment rate in secondary school]. The regression suggests higher significance in research efforts. This contradicts with that of Sequeira, which asserts the speed is determined by only education, preference and technology parameter. The coefficients for the determinants of steady-state income, especially for the quadratic function of R&D intensity, are significant and occur in the expected direction. Our results suggests that adopting appropriate growth policy related with R&D, an economy can grow more rapidly through transition dynamics or changing fundamentals.