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Author: | Felbermayr, G. J. |
Title: | Specialization on a technologically stagnant sector need not be bad for growth |
Journal: | Oxford Economic Papers
2007 : OCT, VOL. 59:4, p. 682-701 |
Index terms: | economic development econometric models equilibrium analysis growth theory supply and demand technology |
Language: | eng |
Abstract: | The article develops a two-sector, North-South model of endogenous growth. The investment goods sector is characterized by learning by doing and the countries are integrated only via goods markets. Technological spillovers do not happen. South specializes on the consumption sector in equilibrium and the consumption goods' production function is strict concave. The incentives for capital accumulation are permanent due to the endogenous decline in the relative price of investment goods. Consequently, specialization on the stagnant consumption sector does not necessarily stop growth. In addition, a number of empirical evidence supporting the model is considered. |
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