Does Intelligence Affect Economic Diversification?

Kodila-Tedika, Oasis and Asongu, Simplice A (2014): Does Intelligence Affect Economic Diversification?

Abstract

This paper extends the growing literature on knowledge economy by investigating the effect of intelligence on economic diversification. Using a battery of estimation techniques that are robust to endogeneity, we find that human capital has positive correlations with export diversification, manufactured added value and export manufactures. This empirical evidence is based on a world sample for the year 2010. The findings have significant implications for the fight against the Dutch disease. In essence, investing in human capital could bring economic diversity and therefore dampen negative external shocks related to resource-dependence. Other knowledge-economy implications are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Intelligence; Economic Diversification
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Al-marhubi, F. (2000). “Export diversification and growth: an empirical investigation”. Applied economics letters , 7(9): 559–562.

Asongu, S. A., (2014a). “Knowledge Economy Gaps, Policy Syndromes and Catch-Up Strategies: Fresh South Korean Lessons to Africa”, African Governance and Development Institute Working paper, No. 14/014.

Asongu, S. A., (2014b). “Software piracy and scientific publications: knowledge economy evidence from Africa”, Africa Development Review: Forthcoming.

Barro, R., 1991. Economic Growth in a Cross-Section of Countries. Quarterly Journal of Economics 106, 407–443.

Benhabib, J. and Spiegel, M. 1994. The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data. Journal of Monetary Economics 34, 143–173.

Cadot, O., Carrère, C. and Strauss-Kahn, V. (2007). “Export diversification: what’s behind the hump?”. Centre for Economic Policy Research Discussion Paper, No. 6590.

Caselli, F., Ciccone, A. (2013), The Contribution of Schooling in Development Accounting: Results from a Nonparametric UpperBound, Journal of Development Economics, 1-13, http://dx.doi.org/10.1016/j.jdeveco.2013.02.006

Caselli, Francesco, Esquivel, Gerardo, Lefort, Fernando, 1996. Reopening the Convergence Debate: a New Look at Cross-Country Growth Empirics. Journal of Economic Growth 3, 363–389.

Cohen, D. & Soto, M. (2007) Growth and Human Capital: Good Data, Good Results. Journal of Economic Growth 12: 51-76.

Costas, A., Demidova, S., Klenow, P. and Rodriguez-Clare, A. (2008). “Endogenous variety and the gains from trade”. American Economic Review Papers and Proceedings, 98(2): 444–450.

De Benedictis, L., Gallegati, M. and Tamberi, M. (2009). “Overall specialisation and development:countries diversify”. The Review of World Economics, 145(1): 37–55.

De la Fuente, A. & Doménech, R. (2006) Human Capital in Growth Regressions: How Much Difference Does DataQuality Make? Journal of the European Economic Association 4: 1-36.

Easterly, W and Sewadeh, M. (2001), Global Development Network Growth Database (GDN)

Dobrinsky, R., (2008). “Knowledge-Oriented Diversification Strategies: Policy Options for Transition Economies”, UN Commission for Europe, http://www.un.org/en/development/desa/policy/publications/general_assembly/eitconference/4aprpm_dobrinsky.pdf (Accessed: 18/10/2014).

FAO Statistics Division (2010). Food Balance Sheets. Rome, Italy: Food and Agriculture Organization of the United Nations.

Feenstra, R., Madani, D., Yang, T. and Liang, C. (1999). "Testing endogenous growth in South Korea and Taiwan", Journal of Development Economics, 60(2): 317–341.

Funke, M., and Ruhwedel R. (2005). ”Export variety and economic growth in East European transition economies”. Economics of Transition, 13 (1): 25–50.

Gullstrand, J. (2000). Country-Specific Determinants od Vertical Intra-Industry Trade With Application to Trade Between Poland and EU, [in:] B. Wawrzynjak (Ed.), Globalisation and Change – Ways to Future, Leon Kozminski Academy of Enterpreneurship and Management, Warsaw.

Hanushek, E. A. & Woessmann, L. (2008). The Role of Cognitive Skills in Economic Development. Journal of Economic Literature, 46(3), 607-668.

Hanushek, E. A., & Kimko, D. D. (2000). Schooling, Labor-Force Quality, and the Growth of Nations. American Economic Review, 90, 1184-1208.

Hanushek, E.A. & Woessmann, L. (2009) Do better schools lead to more growth? Cognitive skills, economicoutcomes, and causation. IZA Discussion Papers No. 4575

Hausmann, R., Hwang, J. and Rodrik, D. 2007. What you export matters. Journal of Economic Growth 12 (1), 1–25.

Herzer, D. and Nowak-Lehmann, F. (2006). “What does export diversification do for growth? An Econometric Analysis”. Applied Economics, Vol. 38 (15), S. 1825–1838.

Hess, H. 2008. “Export Diversification and Growth” Working Paper No. 21, Growth Commission, World Bank, Washington DC.

Huber, P.J. (1973). Robust Regression: Asymptotics, Conjectures and Monte Carlo, The Annals of Statistics, 1: 799-821.

Hummels, D. and Klenow, P. (2005). “The variety and quality of a nation’s exports”. The American Economic Review 95(3): 704-723.

Imbs, J. and Wacziarg, R. (2003). "Stages of diversification," American Economic Review, 93(1): 63–86.

Jarreau, J., Poncet, S. 2012. Export sophistication and economic growth: evidence from China. Journal of Development Economics 97 (2), 281-292.

Jones, G. & Schneider, W. J. (2006). Intelligence, human capital, andeconomic growth: A Bayesian Averaging of Classical Estimates (BACE)approach. Journal of Economic Growth, 11, 71-93.

Kalonda-Kanyama I, Kodila-Tedika O (2012). Quality of Institutions: Does Intelligence Matter?, Working Papers 308. Economic Research Southern Africa.

Kodila-Tedika and Cinyabuguma, M. 2014. HIV/AIDS, Intelligence and Human Capital : Exploration New, mimeo.

Kodila-Tedika, 2014, Governance and Intelligence: Empirical Analysis from African Data, forthcoming in the Journal of African Development

Kodila-Tedika, O. and Bolito-Losembe, R. 2014, Poverty and Intelligence: Evidence Using Quantile Regression, Economiic Researrch Guarrdiian, (1): 25-32.

Kodila-Tedika, Oasis & Mutascu, Mihai, 2014. "Tax Revenues and Intelligence: A Cross-Sectional Evidence," MPRA Paper 57581, University Library of Munich, Germany.

Krueger, Alan, Lindhal, Mikael, 2001. Education for growth: why and for whom? Journal of Economic Literature XXXIX, 1101–1136.

Krugman, P. (1981). Intraindustry specialisation and the gains from trade. The Journal of Political Economy, 89(5): 959–973.

Krugman, P. and Venables, A. (1990). Integration and the competitiveness of peripheral industry. [in:] Bliss C. and J. Braga de Macedo (Eds.). Unity with diversity in the European economy: the Community's southern frontier. Cambridge University Press, Cambridge.

Lee, K., (2009), “How Can Korea be a Role Model for Catch-up Development? A ‘Capability- based’ View”, UN-WIDER Research Paper No. 2009/34.

Levine, R. & Renelt, D.(1992) A sensitivity analysis of cross-country growth regressions. AmericanEconomic Review 82: 942-963.

Limão, N. and Venables, A. (2001). “Infrastructure, geographical distance, transport costs and trade”. World Bank economic review, 15(3): 451–479.

Lutz, W. (2009) Sola schola et sanitate: human capital as the root cause and priority for international development? Philosophical Transactions of the Royal Society B 364: 3031-3047

Lynn, R. & Vanhanen, T. (2001) National IQ and economic development: a study of eighty-one nations. Mankind Quarterly 41: 415-435.

Lynn, R. & Vanhanen, T. (2002) IQ and the Wealth of Nations. Westport CT: Praeger.

Lynn, R. & Vanhanen, T. (2006) IQ and Global Inequality. Augusta GA: Washington Summit.

Lynn, R. & Vanhanen, T.(2012a) Intelligence. A Unifying Construct for the Social Sciences. London: Ulster Institute.

Lynn, R. (2012), IQs predict differences in the technological development of nations from 1000 BC through 2000 AD, Intelligence 40 (2012) 439–444.

Lynn, R., & Vanhanen, T. (2012b). National IQs: A review of their educational,cognitive, economic, political, demographic, sociological, epidemiological,geographic and climatic correlates. Intelligence, http://dx.doi.org/10.1016/j.intell.2011.11.004.

Mankiw, Gregory, Romer, David, Weil, David, 1992. A contribution to the empirics of growth. Quarterly Journal of Economics 107, 407–437.

Meisenberg, G. & Lynn, R. (2011). Intelligence: A measure of human capital in nations. Journal of Social, Political and Economic Studies, 36(4), 421-454.

Meisenberg, G. & Lynn, R. (2012). Cognitive Human Capital and Economic Growth:Defining the Causal Paths. Journal of Social, Political and Economic Studies, 37(4), 141-179.

Midi, H. and Talib, B.A. (2008). The Performance of Robust Estimator on Linear Regression Model Having both Continuous and Categorical Variables with Heteroscedastic Errors, Malaysian Journal of Mathematical Sciences, 2(1): 25-48.

Mitchell, B.R. (2003a) International Historical Statistics: Africa, Asia & Oceania, 1750–2001, 4th ed. (New York: Palgrave Macmillan).

Mitchell, B.R. (2003b) International Historical Statistics: Europe, 1750–2000, 5th ed. (New York: Palgrave Macmillan).

Mitchell, B.R. (2003c) International Historical Statistics: The Americas 1750–2000, 5th ed. (New York: Palgrave Macmillan).

Parteka, A. (2007). Employment and export specialisation patterns versus GDP per capita performance: unifying approach. Quaderno di Ricerca (WorkingPaper), No 302,Università Politecnica delle Marche, Dipartimento di Economia Universita'

Parteka, A. and Tamberi M., (2008). “Determinants of export diversification: an empirical investigation". Quaderno di Ricerca (WorkingPaper), No. 327, Politecnica delle Marche, Dipartimento di Economia Universita'

Piñeres, S. and Ferrantino, M. (1997). “Export diversification and structural dynamics in the growth process: A case study of Chile.” Journal of Development Economics , 52, 375–391.

Potrafke, N. (2012). Intelligence and corruption. Economics Letters, 114,109-112.

Radelet, S. and Sachs, J. (1998). “Shipping Costs, Manufactured Exports, and Economic Growth.” Draft paper presented at the American Economic Association meetings, (January).

Ram, R. (2007). IQ and economic growth: Further augmentation ofMankiw-Romer-Weil model. Economics Letters, 94, 7-11.

Rindermann, H. (2007a). Intelligence, cognitive abilities, human capital, and rationality at differentlevels. Psychologische Rundschau, 58(2), 137-145.

Rindermann, H. (2007b). The g-factor of international cognitive ability comparisons: The homogeneity of results in PISA, TIMSS, PIRLS and IQ-tests across nations. European Journal of Personality, 21, 667-706.

Rindermann, H., Kodila-Tedika, O. & & Christainsen, G. 2014. "Cognitive capital, governance, and the wealth of nations," MPRA Paper 57563, University Library of Munich, Germany.

Sala-i-Martin, X., Doppelhofer, G. & Miller, R.I.(2004) Determinants of long-term growth: a Bayesian averaging of classicalestimates (BACE) approach. American Economic Review 94: 813-835.

Schneider, F., A. Buehn and C.E. Montenegro (2010) “Shadow economies all over the world: new estimates for 162 countries from 1999 to 2007,” Policy Research Working Paper Series 5356, The World Bank.

Suh, J., & Chen, D. H. C., (2007). “Korea as a Knowledge Economy. Evolutionary Process and Lessons Learned”, Korea Development Institute, https://www.usp.ac.fj/worldbank2009/frame/Documents/Publications_regional/409300PAPER0KR101OFFICIAL0USE0ONLY1.pdf (Accessed: 18/10/2014).

Tchamyou, S. V., (2014). “The Role of Knowledge Economy in African Business”, Master Thesis. HEC-Management School, University of Liège.

Verardi, V. and C. Croux (2009).Robust regression in Stata. The Stata Journal 9: 439-453.

Weede, E. & Kämpf, S. (2002). The impact of intelligence and institutionalimprovements on economic growth. Kyklos, 55, 361-380.

Weldemicael, E. 2010, Determinants of Export Sophistication

Yohai, V. J. (1987). High Breakdown-Point and High Efficiency Robust Estimates for Regression. The Annals of Statistics, 15: 642-656