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GEMF

Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 02 de 2007

  

Levels of Education, Growth and Policy Complementarities


Marta Simões
GEMF/Faculdade de Economia, Universidade de Coimbra

Adelaide Duarte
GEMF/Faculdade de Economia, Universidade de Coimbra

Abstract:
Human capital acquired in the formal education sector is essential for knowledge creation and dissemination but the theoretical and empirical growth literature identifies other major determinants of innovation and imitation activities (R&D, international trade and FDI). This paper is an empirical investigation in a panel data framework of the effects of education and its sub-categories on economic growth emphasizing its complementarity with the other major determinants of technological change and growth. For this purpose we focus on a sample of OECD countries during the last decades of the twentieth century and use an extended and augmented version of the Benhabib and Spiegel (1994) growth specification that considers the role of education in innovation and imitation activities and that interacts education with the other major determinants of technological change. The results reveal the importance of education for growth through technology diffusion and domestic innovation activities. To fully exploit the benefits from R&D expenses in terms of growth the average OECD country needs a sufficient level of secondary and tertiary education and to benefit from the technology incorporated in imports of machinery countries need a sufficient level of overall education.

JEL Classification: O33, O38, O47, C33.

Keywords:
education, innovation, technological diffusion, panel data.

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