Investment-specific technical change as a factor of economic growth

Roberto M. SAMANIEGO, George Washington University
Juliana Yu SUN, Singapore Management University

Abstract

Investment-specific technical change (ISTC) contributes little to growth in most countries. This is because in many countries the investment process does not become notably more efficient over time. Still, cross-country di¤erences in the contribution of ISTC to growth are significant. Differences in the rate of ISTC appear due to cross-country variation in the use of R&D intensive capital goods, as well as trade costs.