Public Policy and Growth in Canada: An Applied Endogeneous Growth Model with Human and Knowledge Capital Accumulation

Ebru Voyvoda and Erinc Yeldan

No 332236, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: We analytically investigate and assess the interactions between knowledge driven growth, acquisition of human capital, and the role of strategic public policy for the Canadian economy within the context of a general equilibrium model. For the purpose of characterization of a fully advanced economy, sources of economic growth are endogenized through the simultaneous interaction of two activities: technological innovations and human capital formation. Both of these activities have cross spill-over effects onto each other. With the aid of the modeling framework utilized in this paper, we aim to contribute to the intense discussion on “Canada’s Innovation/R&D puzzle” from a macroeconomic perspective, with a focus on the role of strategic public polices. To this end, we investigate alternative public policies aimed at fostering the development of human capital (investment in education, learning, basic research) and those at enhancing total factor productivity through investments in innovation; and study the impact of these public subsidization policies on patterns of growth, investment and capital accumulation, social welfare, and burden on government budget. Our results suggest that the re-allocation effects triggered by public subsidization policies on higher education and, alternatively on Industry/business R&D might be contributing to the current discussion that Canadian economy is falling short of it’s potential in (business) technological innovation and R&D production.

Keywords: Research and Development/Tech Change/Emerging Technologies; Labor and Human Capital (search for similar items in EconPapers)
Pages: 47
Date: 2012
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Related works:
Journal Article: Public policy and growth in Canada: An applied endogenous growth model with human and knowledge capital accumulation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332236

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