Productivity, factor accumulation and social networks: theory and evidence
Grafton, R Quentin; Kompas, Tom; Owen, P. Dorian
The paper analyzes how social barriers to communication affect economy-wide productivity and factor accumulation. Using a dynamic model of an economy that includes a reproducible capital stock (physical or human) and effective labor, a negative relationship is shown to exist between social barriers to communication and total factor productivity (TFP), per capita consumption and reproducible capital. Robust estimates obtained from cross-country data are consistent with the model’s predictions. The theory and empirical results help explain cross-country differences in TFP, the high productivity performance of leading industrialized countries and how productivity ‘catch up’ may be initiated.
Publisher: University of Otago
Series number: 304
Keywords: productivity; social networks; Economic growth
Research Type: Discussion Paper
Revised March 2004.