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Converging Wages, Diverging GRP: Directed Technical Change and Endogenous Growth. Empirical Analysis of Growth Patterns across Kazakh regions

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  • Alisher Aldashev

    (Osteuropa-Institut, Regensburg (Institut for East European Studies))

Abstract

The paper analyzes unequal regional development in Kazakhstan. Applying the nonlinear least squares method in presence of spatial correlation we estimate the convergence rate of wages across Kazakh regions for the period 2003–2009. The estimated convergence rate is about 3% which is somewhat higher than estimates obtained for the USA and Europe. At the same time there is slight divergence in the GRP per capita. It is argued that convergence in wages which coincides with divergence in the per capita GRP is consistent with the endogenous growth model where profit maximizing firms choose the capital intensity of the technology. This implies that the inequality between regions will only exacerbate and the central government may wish to invest more in low-growth regions to alleviate disproportional development.

Suggested Citation

  • Alisher Aldashev, 2011. "Converging Wages, Diverging GRP: Directed Technical Change and Endogenous Growth. Empirical Analysis of Growth Patterns across Kazakh regions," Working Papers 307, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    • Handle: RePEc:ost:wpaper:307
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    More about this item

    Keywords

    convergence; endogenous growth; Kazakhstan; capital intensive technology; nonlinear least squares; spatial correlation;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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