Explaining economic growth in developed economies after 1980

We use the Aguion and Howitt (2009) theoretical model of endogenous economic growth to explain the declining economic growth in developed economies in the period 1981-2009. Aguion and Howitt theoretical framework combines Solownian and Schumpeterian elements in a single scenario, so that labor-augmenting technological progress and capital accumulation per efficiency unit of labor are both caused not only by exogenous changes in the investment rate but also by shocks to the degree of efficiency in the Research and Development (R&D) expenditure process. Empirical results revealed that per worker output growth rates and capital stock per efficiency unit of labor growth rates both have a common panel unit root. Since the panel cointegration tests and estimates revealed a statistical significant negative long-run relationship between per worker output growth rate and capital stock per efficiency unit of labor, the interpretation of the econometric results analized from the Aguion and Howitt ́s theoretical perspective is that labor-augmenting technological progress is endogenously falling over time mainly because of an exogenous deterioration of the environment conditions for the transformation of the investment rate and R&D expenditures in technological progress.

Foreign direct investment, exports, gross domestic product and the labor market in Puerto Rico

In this paper, a vector autorregresive model (VAR) is applied to examine the interrelationship among foreign direct investment, exports, Gross Domestic Product (GDP), unemployment rate and labor force participation rate in Puerto Rico, taking into account a time period that includes the fiscal years from 1980 to 2010 -- Four cointegrating vectors were found in the system which indicates that there is a long run relationship between the variables -- The findings suggest that consecutive increases in foreign direct investment inflows could significantly reduce the unemployment rate and increase interest in joining the labor force in Puerto Rico -- The same result also applies to increases in export levels -- The variations in Gross Domestic Product are mainly explained in the long run by the unemployment rate