Growth, inequality and innovation: A CGE analysis of India
AbstractThis paper probes into the growth and distributional consequences of four basic policy options emanating from the three sources of economic growth, namely, physical capital, human capital and technological progress, with the help of a computable general equilibrium model of India. The simulation results show that, the efficacy of physical capital accumulation in augmenting growth and abating income inequality is greater than that of human capital accumulation. In the long term, however, the latter overtakes the former in promoting growth, but inequality worsens. When the two policies are commingled, growth improves but it continues to be inequality-augmenting. Finally, with concomitant Hicks-neutral technological progress, not only is growth enhanced further, but it turns out to be significantly inequality-mitigating. The emerging policy lesson is that any integrated policy of boosting investments in physical as well as human capital must be closely bound up with technological progress for growth to be inclusive.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Policy Modeling.
Volume (Year): 35 (2013)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/505735
Economic Growth; Inequality; Technological Progess; CGE model; India; Asia;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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