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A New View of Economic Growth$
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Maurice FitzGerald Scott

Print publication date: 1991

Print ISBN-13: 9780198287421

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198287429.001.0001

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Why Growth Rates Differ, I

Why Growth Rates Differ, I

(p.285) 10 Why Growth Rates Differ, I
A New View of Economic Growth

Maurice FitzGerald Scott

Oxford University Press

A linear equation, in which growth of output is determined by the share of investment and the growth of quality‐adjusted employment, is derived from the model, and fitted by ordinary least squares regression to 26 observations for a non‐residential business in different countries and periods. The efficiency of investment is allowed to depend on various factors, of which two are significant: efficiency improved over time, especially after the Second World War, and countries behind the leader (the USA) then benefited from ’catch‐up’. The fit of the equation and the size of its coefficients give reasonable confirmation of the theory. In particular, there is no evidence of exogenous technical progress, and the contribution of investment to growth is more than double that of, e.g. Denison's careful estimates.

Keywords:   catch‐up, Denison, exogenous technical progress, investment contribution to growth, investment efficiency, least squares regression, linear equation, non‐residential business, rate of growth

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