Date of Graduation

8-2013

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Economics (PhD)

Degree Level

Graduate

Department

Economics

Advisor

Javier A. Reyes

Committee Member

Gary D. Ferrier

Second Committee Member

Fabio Mendez

Keywords

Social sciences; Economic growth and development; International trade; Networks; Structural transformation; Technology diffusion

Abstract

This dissertation consists of three chapters exploring the Solow Residual of the Solow growth model. Two central components of the Solow Residual have been studied in my doctoral dissertation. The first is the structural transformation, an internal adjustment process that helps the economy attain the optimal points on its Production Possibility Frontier by reallocating resources from the low-productivity sectors to the high-productivity sectors. The second is the technology diffusion, a positive externality process that pushes forward the economy's Production Possibility Frontier if it adopts the newer technology.

The first chapter of my dissertation is devoted to a case study of China's structural transformation. As one of the fastest growing economies in the world, China has observed dramatic reallocation of resources from the agricultural sector to the nonagricultural sector over the last three decades. This chapter proposes a two-sector growth model and identifies three driving forces for China's structural transformation. Most importantly, the migration costs can be shown as a significant barrier to the reallocation process after I calibrate the model with real data.

The second and the third chapters of my dissertation are devoted to the study of the technology diffusion. The second chapter is a collaborative effort with Gary Ferrier and Javier Reyes. We approach the cross-country technology diffusion from a novel perspective - the trade network can be viewed as the conduit of the technology diffusion. The question we ask is whether the trade network structure matters in the technology diffusion process. We consider 24 major technologies over the period from 1962 to 2000 and find that, in most cases, there is strong and robust evidence to suggest that the better-connected countries on the trade network tend to adopt or assimilate newer and more advanced technologies faster. However, the better-connected countries tend to have lower technology intensity if the technology has become obsolete. Finally, the third chapter is a theoretical approach to the technology diffusion. In particular, the technology diffusion across countries can be generalized as a learning process on networks. Based on a stylized learning model, this chapter examines the impact of the network structures on the speed of the diffusion process.

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