High-Tech Human Capital: Do the Richest Countries Invest the Most?
FEUNL Working Paper No. 430
14 Pages Posted: 15 Feb 2006
Date Written: 2003
Research and Development (R&D) endogenous growth models predict and most evidence show that investment in R&D increase with economic development. We consider the type of human capital mainly used in research labs and show that the richest countries are investing proportionally less than middle income countries in engineering and technical human capital. We generalize this result, controlling for other explanatory variables, cross-time error correlations, heteroskedaticity and endogeneity bias. Thus, we establish a stylized fact (about human capital composition) that is a puzzle to economic theory: the ratio of high-tech to low-tech human capital presents an inverted U-shaped relationship with GDP per capita.
Keywords: human capital composition, high-tech human capital, R&D, Development
JEL Classification: O15, O33, O50
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