Fatma DİDİN

Integration and Growth: The Role of Human Capital and Technology

2008

(Supervisor: A. Suut Doğruel)

ABSTRACT

The role of new technology in enhancing economic growth is widely accepted. Trade is an important mechanism through which knowledge and technological progress is transmitted across countries. In this study I have focused on human capital as an important factor which can favor or limit to exploit their growth potential. The purpose of this study is to analyze the impact of economic integration between developed and developing countries on the rate of technological change and the rate of growth. Even if foreign countries producing technology is voluntary to give their innovations, domestic capacity of countries may be insufficient to use these innovations. In this thesis, this idea is represented by inserting some fixed cost into the model. Thus, in contrast to other papers, in this study, using foreign technology is costly. In short, this thesis suggests that integration may decrease growth rate of economy by slowing down the growth rate of technology. The critical point is that positive growth effects of integration may be reversed by cost of technology available with integration.