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Human capital composition, R&D and the increasing role of services

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  • Ana Balcao Reis
  • Tiago Neves Sequeira

Abstract

A growth model with endogenous innovation and accumulation of high-tech and low-tech human capital is developed. The model accounts for a recently established fact about human capital composition, which stated that \the richest countries are investing proportionally less than middle income countries in engineering and technical human capital", due to the consideration of a negative effect of technological development on the accumulation of high-tech human capital. Under this new and reasonable assump- tion, our model also accounts for other previously established stylized facts. Both the evolution of human capital composition and the transition across stages of development are endogenously determined. We relate an increasing R&D activity and a negative relationship between income and the ratio of high to low-tech human capital, both present in developed countries, to the transition to a services economy. Although all growth rates are optimal, we observe under-allocation of high-tech human capital to industry.

Suggested Citation

  • Ana Balcao Reis & Tiago Neves Sequeira, 2004. "Human capital composition, R&D and the increasing role of services," Nova SBE Working Paper Series wp456, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp456
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    Cited by:

    1. Manuel A. Gómez, 2012. "Equilibrium Dynamics Of An Endogenous Growth Model With An Erosion Effect And Duplication In R&D," Manchester School, University of Manchester, vol. 80(6), pages 700-717, December.
    2. Tiago Sequeira, 2012. "Facts and distortions in an endogenous growth model with physical capital, human capital and varieties," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(3), pages 171-188, December.
    3. Alberto Bucci, 2010. "Population in Factor Accumulation-based Growth," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 33-68.
    4. Bucci, Alberto, 2008. "Population growth in a model of economic growth with human capital accumulation and horizontal R&D," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1124-1147, September.
    5. Simone Marsiglio & Alberto Ansuategi & Maria Carmen Gallastegui, 2016. "The Environmental Kuznets Curve and the Structural Change Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 265-288, February.
    6. Tiago Neves Sequeira, 2008. "Transitional Dynamics Of An Endogenous Growth Model With An Erosion Effect," Manchester School, University of Manchester, vol. 76(4), pages 436-452, July.

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    More about this item

    Keywords

    Human capital composition; high-tech human capital; R&D; Development; structural transition;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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