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Sources of Economic Growth: Physical Capital, Human Capital, Natural Resources, and TFP Tu-Anh Nguyen

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Sources of Economic Growth: Physical Capital, Human Capital, Natural Resources, and TFP Tu-Anh Nguyen Sources of Economic Growth: Physical capital, Human Capital, Natural Resources, and TFP Tu-Anh Nguyen To cite this version: Tu-Anh Nguyen. Sources of Economic Growth: Physical capital, Human Capital, Natural Resources, and TFP. Economics and Finance. Université Panthéon-Sorbonne - Paris I, 2009. English. tel- 00402443 HAL Id: tel-00402443 https://tel.archives-ouvertes.fr/tel-00402443 Submitted on 7 Jul 2009 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Université de Paris I - Panthéon Sorbonne U.F.R de Sciences Economiques Année 2009 Numéro attribué par la bibliothèque |0|0|P|A|0|0|0|0|0|0|0| THESE Pour obtenir le grade de Docteur de l’Université de Paris I Discipline : Sciences Economiques Présentée et soutenue publiquement par Tu Anh NGUYEN le 22 June 2009 Titre : Sources of Economic Growth: Physical Capital, Human Capital, Natural Resources and TFP Directeur de thèse :Professor: Cuong LE VAN JURY : M. Philippe Askenazy, directeur de recherche au CNRS M. Raouf Boucekkine, professeur à l’Université Catholique de Louvain (rapporteur) M. Jean-Bernard Châtelain, professeur à l’Université Paris M. Cuong Le Van, directeur de recherche au CNRS (directeur de thèse) M. Lionel Ragot, professeur à l’Université Lille 1 (rapporteur) Mme. Katheline Schubert, professeur à l’Université Paris 1 To my Parents, Thu Thuy, and Bao Anh who made it happen CONTENTS i L’Université de Paris I n’entend donner aucune approbation ou improbation aux opin- ions émises dans cette thèse. Ces opinions doivent être considérées comme propre à leur auteur. Contents Acknowledgement ii General Introduction b 1 Revision of economic growth models: TFP is essential 1 1.1 Introduction................................... 1 1.2 The Solow Model (Solow, 1956) . 4 1.3 The Ramsey Model (Ramsey, 1928) . 5 1.4 The Convex-Concave Production Function . 9 1.5 The Solow-Krugman Controversy . 10 1.6 Human Capital Growth Model (Lucas, 1988) . 15 1.7 The Romer Model (Romer, 1986) . 16 1.8 Conclusion.................................... 19 2 New technology, Human capital and Growth for Developing Economies 20 2.1 Introduction................................... 20 2.2 TheModel ................................... 23 i CONTENTS ii 2.3 TheDynamicModel .............................. 29 2.4 ALookAtEvidence .............................. 31 2.5 Conclusion.................................... 39 2.6 Appendix1 ................................... 40 2.7 Appendix2 ................................... 47 2.8 Appendix3 ................................... 49 3 Total Factor Productivity, Saving and Learning-by-Doing in Growth Pro- cess 52 3.1 Introduction................................... 52 3.2 The Basic Neoclassical Model . 55 3.3 Endogenous TFP: Learning-by-Doing . 56 3.4 Conclusion.................................... 64 3.5 Appendix .................................... 65 3.5.1 Proof proposition 9 . 65 3.5.2 Proof proposition 11 . 70 4 With Exhaustible Resources, Can A Developing Country Escape From The Poverty Trap? 73 4.1 Introduction................................... 73 4.2 Themodel.................................... 75 4.3 Properties of the optimal paths . 77 CONTENTS i 4.3.1 Marginal revenue at origin and exhaustion . 78 4.3.2 The Euler conditions and the Hotelling rule . 78 4.3.3 To accumulate or to “eat”the resource stock? . 80 4.3.4 The long term: is it possible to escape from the poverty trap? . 84 4.4 Summary of the main results and conclusion . 90 4.4.1 Proof of Proposition 16 . 97 4.4.2 Proof of Proposition 17 . 99 4.4.3 Proof of Proposition 18 . 100 5 Vietnam economic growth in 1986-2007: role of TFP and learning-by- doing 108 5.1 Introduction................................... 108 5.2 An overview of Vietnam’seconomic reforms . 113 5.3 TheModel.................................... 117 5.4 Data....................................... 120 5.5 Empirical results . 123 5.6 Conclusion.................................... 129 5.7 Appendix .................................... 130 General Conclusion 135 Bibliographie 138 Acknowledgement Leaving my interested works in CIEM for Paris to attempt PhD degree was an adventurous decision of mine. By this moment when I am …nalizing this dissertation I can say that "Yes, I was right by that time". Two years and four months in Europe have not been only of hard working time but also enjoying time in my life. I have to say that it has never been easy for me to allocate restricted time for traveling with my beloved wife and for researching with my revere professor, Cuong Le Van. At last, I did. This PhD dissertation can not be done without devoted assistances of people around me, who have tremendously inspired and supported me during my studies. My greatest gratitude goes to Professor Cuong Le Van for his whole-hearted supervision and his invaluable "criticism". I am deeply indebted to his precious input into our research papers, his patience and constant help, and his great personality. His broad and profound knowledge and experiences in scienti…c research play vital role in successes of my works. I am also indebted professor Katheline Schubert for her essential contribution to the paper on natural resource which is now positively reviewed by Journal of Economic Theory. I learnt a lot from her thorough knowledge on the …eld. I wish to convey similar indebted- ness to two friends of mine Manh Hung and Thai Bao, who worked hard and e¢ ciently ii ACKNOWLEDGEMENT iii wish us to produce a paper on human capital and new technology. I gratefully acknowledge the Central Institute for Economics Management (CIEM) in Hanoi; the Department for International Integration Study in CIEM; the Centre de Eco- nomie de la Sorbonne (CES); the Centre of Research on Mathematics, Statistics and Math- ematic Economics (CERMSEM) in CES; and Paris 1 University, Pantheon Sorbonne for having provided me with excellent and pleasant working environments and all the facilit- ies necessary for doing my research. I am also grateful for French Government for their …nancial support during my stay in Paris. I wish to convey many thanks to all my friends and colleagues that I have luckily had in the Paris for sharing with me those joyful and also hard moments during the past few years. I highly appreciate your kindness and friendliness that are so warm, so sweet and precious to me. Those qualities of yours are greatly similar even when you come from all di¤erent nations - Vietnam, the French, China, Germany, Tunisia, Morocco. Although no speci…c name (in the very long list) is mentioned here, I can never forget any of you. My thanks also go to my friends and colleagues in CIEM (Hanoi) who have been, either online or o• ine, constantly inspiring and encouraging me during my studies, in spite of the thousands of miles separating us. My life in France would be much harder without supports of my fellow-countrymen: Thai Ha Huy, Van San Nguyen, Thai Bao Luong, Ngoc Giang Hoang and many others who helped me to make all complicated administrative works done. I wish to convey my sincere thanks to you all. I can never su¢ ciently express my indebtedness to my parents. They have given me life, love, trust and support, or simply everything! All of my achievements today, big or small, are dedicated to them. My sister Huyen Nga has undertaken all responsibility for caring our parents at their aged time. Her spiritual and material supports for me, our parents and my daughter are invaluable. I gratefully acknowledge those. My deep thanks go to my respectful parents-in-law and to all other members of our big families for their love, support and inspiring encouragement. Without you all behind, I would not have accomplished this mission. Last, but not least, I express my great gratitude to my beloved wife, Thu Thuy, for her constant love, her understanding and encouraging, her undertaking of pressures during the times we had to be apart and simply for her being by my life. Our happy time together in the past, at the present, and forever, as well as our sweet trips are indeed the rewarding compensation for the those we have paid during our PhDs. I thank my little angel, Bao Anh, for her unconditional love, for her bravely sharing with me and with her mother during the most di¢ cult time in our life - when she was even too young to be consciously aware of it. a General Introduction In essence theories of economic growth are to show the nature of the exogenous variables which ultimately determine the rate at which the general level of production of an eco- nomy is growing, and thereby contribute to an understanding of the question of why some societies grow so much faster than others. There is general agreement that the critical factors determining the trend rate of growth are to be sought in the savings propensities of the community (which determine the rate of physical capital accumulation), the ‡ow of invention or innovation (which determines the rate of growth of productivity), the growth of population and to some extent the endowment of natural resources. The Solow model (1956), a corner-stone of neoclassical growth models, contains two bases: …rst, steady state growth is independent of the savings rate; second, the main source of growth is technolo- gical change, rather than capital accumulation. However, the essential factor for economic growth in these models, namely technological progress, is however, exogenous to the model. This shortcoming inspires scholars such as Romer (1986, 1987, 1990), Lucas (1988), Rebelo (1991), Grossman and Helpman (1991), Aghion and Howitt (1992) and many others to develop new "endogenous" growth models which provide more insights into the Solow’s residual.
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