Young Soo Lee

This study empirically tests the effects of income inequality on growth for 43 countries from 1991 to 2014 based on a cumulative growth model. The results show that, first, the estimation results using a reduced equation reveal a positive correlation between the income inequalities of lagging countries and the respective growth gaps with the frontier country. This confirms that the increase in income inequality negatively affects growth. Secondly, a cumulative growth model using 3SLS estimation shows that income inequality has a negative effect only on investment. However, we fail to find correlations between technological innovation and income inequality and between human capital accumulation and income inequality. Considering that investment has a positive impact on productivity, we conclude that income inequality has a negative impact on investment and that the resulting sluggish investment has a negative impact on productivity, which in turn negatively influences growth. Third, contrary to Kaldor and Barro’s prediction, we find that income inequality in developing countries is negatively correlated with growth, particularly for investment. The effects of income inequality on investment are found to be similar in both developed and developing countries. We also find region-specific differences in the paths through which income inequality affects sustainable economic growth.

This article builds a model of cumulative growth in order to analyze the relationship between intellectual property rights (IPRs) and economic growth in 38 countries from 1980 to 2005. The analysis focuses on the impacts of IPRs on the growth gap between countries using a catch-up model and USPTO database. The empirical results show that the strengthening of IPRs has a positive impact on innovation in developed and developing countries in Asia, while we fail to find evidence in Latin America. Secondly, similar to assertions made by De Long and Summers (1991) and Dowrick and Nguyen (1989), investment in fixed capital plays a critical role in growth gap dynamics. What needs to be emphasized here is the cumulative causal relationship between investment and growth: investment in fixed capital improves productivity and encourages economic growth thereby triggering even more investment. This paper confirms that the strengthening of IPRs and investment in fixed capital contribute to the widening of the economic development gap for the 1980–2005 period.

We examine the relationship between the directly observable indicator of new technology, information and communication technology (ICT) investment intensity, and skill upgrading by analyzing changes in employment and wage structure of 25 Korean industrial sectors over the 1993–1999 period. The estimation results indicate the following implications. First, although ICT expenditure and investment have increased sharply since 1993, it appears that ICT investment has begun to be complementarily combined with skilled labor only since 1996. Second, our results support the ‘limited substitution hypothesis’. ICT has substituted low-skilled non-production workers, whereas the increased demand for high-skilled workers is driven by ICT diffusion in the second sub-period. This asymmetric trend between high-skilled and low-skilled non-production workers in Korea reveals significant differences in comparison with the experiences of other OECD countries. Third, the existence of substitutability between ICT diffusion and low-skilled non-production workers in Korea may cast doubt on the appropriateness of the non-production workers' category, a category regarded as a proxy variable of high-skilled workers in most previous studies.