The role of technology spillovers in convergence

M. Junaid Khawaja and Toseef Azid (Department of Finance, Taibah University, Madinah, Saudi Arabia)

Humanomics

ISSN: 0828-8666

Publication date: 23 February 2010

Abstract

Purpose

The purpose of this paper is to evaluate the role of human capital technology spillovers across countries in converging their growth rates.

Design/methodology/approach

This paper develops a closed form mathematical endogenous growth model and applies it to a small open economy using simulation and calibration techniques.

Findings

The paper finds that human capital technology spillovers play an important role in convergence in growth rates across countries regardless of tax policy and that there will be non‐convergence in levels if saving rates are differentially distorted across countries because of taxes. In addition, the exploration of the optimal tax reveals that such a structure is a consumption tax.

Research limitations/implications

This paper implies that higher levels of human capital are important in attaining higher levels of per capita income.

Originality/value

This paper shows that some implications for the endogenous growth model are equivalent to those from the Solow model. This implies that some empirical tests commonly used will not resolve which model is more appropriate.

Keywords

Citation

Junaid Khawaja, M. and Azid, T. (2010), "The role of technology spillovers in convergence", Humanomics, Vol. 26 No. 1, pp. 53-64. https://doi.org/10.1108/08288661011024995

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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