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Returns to specialization, competition, population, and growth

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  • Bucci, Alberto

Abstract

Using an expanding-variety endogenous growth model with purposive human capital accumulation, this paper provides an alternative explanation of why we may observe an ambiguous correlation between product market competition (PMC) and economic growth, and between population and economic growth rates. Our explanation is based on the notion of ‘returns to specialization’. Under the model's assumptions, PMC and economic growth are ambiguously correlated when returns to specialization are decreasing, whereas population growth and productivity growth are ambiguously correlated when returns to specialization are increasing. From a theoretical point of view, these results are explained by the presence or absence of an ‘increasing production-complexity’ effect associated to the use of a larger number of intermediate-input varieties in the same production process.

Suggested Citation

  • Bucci, Alberto, 2013. "Returns to specialization, competition, population, and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2023-2040.
    • Handle: RePEc:eee:dyncon:v:37:y:2013:i:10:p:2023-2040
    DOI: 10.1016/j.jedc.2013.05.005
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    More about this item

    Keywords

    Semi-endogenous growth; Population growth; Human capital; R&D; Monopolistic competition; Returns to specialization;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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