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Cognitive Skills, Openness and Growth

Basu, P.; Bhattarai, K.R.

Authors

K.R. Bhattarai



Abstract

A significant positive relationship exists between the ratios of trade and educational spending to gross domestic product, implying that countries which are more open on the trade front also spend more on education. An open economy endogenous growth model with human capital is developed to understand this stylised fact. The model predicts that countries with greater cognitive skills spend more on education, and grow faster. These countries open up on the trade front to finance importation of raw materials for investment goods production, which becomes scarce due to the diversion of resources to education. The model highlights the importance of the productivity of human capital or cognitive skill as an important economic fundamental determining the cross-country correlation between growth, trade share and education share.

Citation

Basu, P., & Bhattarai, K. (2012). Cognitive Skills, Openness and Growth. Economic Record, 88(280), 18-38. https://doi.org/10.1111/j.1475-4932.2011.00764.x

Journal Article Type Article
Publication Date Mar 1, 2012
Deposit Date Sep 2, 2011
Journal Economic Record
Print ISSN 0013-0249
Electronic ISSN 1475-4932
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 88
Issue 280
Pages 18-38
DOI https://doi.org/10.1111/j.1475-4932.2011.00764.x
Public URL https://durham-repository.worktribe.com/output/1504636

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