Capital goods imports and long-run growth

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146 Citations (Scopus)

Abstract

This paper presents an endogenous growth model of an open economy in which the growth rate of income is higher if foreign capital goods are used relatively more than domestic capital goods for the production of capital stock. Empirical results, using cross country data for the period 1960-1985, confirm that the ratio of imported to domestically produced capital goods in the composition of investment has a significant positive effect on per capita income growth rates across countries, in particular, in developing countries. Hence, the composition of investment in addition to the volume of total capital accumulation is highlighted as an important determinant of economic growth.

Original languageEnglish
Pages (from-to)91-110
Number of pages20
JournalJournal of Development Economics
Volume48
Issue number1
DOIs
Publication statusPublished - 1995 Oct

Keywords

  • Capital accumulation
  • Economic growth
  • International trade

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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