Technology frontier, labor productivity and economic growth: Evidence from OECD countries
Théophile T. Azomahou, Bity Diene & Mbaye Diene
We use 29 OECD countries data spanning over 1960-2000 to study the
growth strategy when countries are close to the technology frontier.
Relying on a semi-parametric generalized additive model, we estimate
labor productivity equations. We find that the number of agents enrolled
in higher education is a determinant of growth. Moreover, when a country
is sufficiently near the technology frontier thanks to an increasing R&D
expenditure, it becomes optimal to invest in fundamental research, since
after a short period of efficiency, business R&D can no longer ensure
the transition toward the technology frontier, while higher education
presents the opposite shape. These findings support the main assertion
of Aghion and Cohen (2004) that countries which are near the technology
frontier have to invest in higher education while those far away from
the frontier make their technology level growing up by investing in
primary and secondary schooling.
JEL Classification: I23, J24, O40
Keywords: Education, R&D, Labor Productivity, Economic Growth.
UNU-MERIT Working Papers ISSN 1871-9872