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Sectoral Specialisation and Growth Rate Differences Among Integrated Economies

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André Lorentz

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Abstract

This paper analyses the emergence of sectoral specialisation and its effects on growth rate differences providing an alternative approach to endogenous growth processes. To achieve this, we first investigate the conditions leading to sectoral specialisation as an emergent property from the dynamics generated by the model. Second, the paper investigates the relationship between specialisation patterns and growth rate differences among economies. Here again, growth rates differences are treated as an emergent property.

The framework developed relies on a Kaldorian growth model with evolutionary micro-founded technical change "à la Nelson and Winter". The paper develops a multi-sectoral growth model. Following the Kaldorian tradition economic growth is here driven by the aggregate demand dynamics, constrained by the balance of payment. Technical change modeling follows the evolutionary literature on growth and industrial dynamics. Firms production techniques are build on the accumulation of capital vintages, developed through an R&D activity. Firms and therefore economies are subject to selection mechanisms through sector-wide replicator dynamics.

Two regimes emerge from the simulation, the first is linked to technology dynamics and selection mechanisms and the second is linked to the evolution of the demand structure and demand characteristics. First, specialisation emerges from the heterogeneity in technical change generated by the micro-dynamics. The latter are amplified by the inter-sector selection process provided at the macro-level through wage dynamics. These mechanisms also generate growing differences in GDP growth rates. Second, demand factors influence the concentration of production in a limited number of sectors, this even when neutralising the effect of technical change. These demand factors also exert a major effect on patterns of growth rates differences. For each regimes, specialisation is combined to growth rate differences. But when in the first regime these differences are only transitory, in the second they are permanent.

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Article provided by IFReDE - Université Montesquieu Bordeaux IV in its journal The Electronic Journal of Evolutionary Modeling and Economic Dynamics.

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Handle: RePEc:jem:ejemed:1049

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Related research
Keywords: Economic Growth; Technical Change; Cumulative Causation; Evolutionary Modeling;

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Find related papers by JEL classification:
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

References listed on IDEAS
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  1. Bart Los & Bart Verspagen, 2006. "The Evolution Of Productivity Gaps And Specialization Patterns," Metroeconomica, Blackwell Publishing, vol. 57(4), pages 464-493, November. [Downloadable!] (restricted)
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  2. Marco Valente and Esben Sloth Andersen, . "A hands-on approach to evolutionary simulation: Nelson and Winter models in the Laboratory for Simulation Development," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV. [Downloadable!]
  3. Silverberg, Gerald & Verspagen, Bart, 1995. "An Evolutionary Model of Long Term Cyclical Variations of Catching Up and Falling Behind," Journal of Evolutionary Economics, Springer, vol. 5(3), pages 209-27, September.
  4. Patrick Llerena & André Lorentz, 2003. "Alternative Theories on Economic Growth and the Co-evolution of Macro-Dynamics and Technological Change: A survey," LEM Papers Series 2003/27, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  5. Dalum, Bent & Laursen, Keld & Verspagen, Bart, 1999. "Does Specialization Matter for Growth?," Industrial and Corporate Change, Oxford University Press, vol. 8(2), pages 267-88, June.
  6. Kaldor, Nicholas, 1972. "The Irrelevance of Equilibrium Economics," Economic Journal, Royal Economic Society, vol. 82(328), pages 1237-55, December. [Downloadable!] (restricted)
  7. Patrick Llerena & Andre' Lorentz, 2003. "Cumulative Causation and Evolutionary Micro-Founded Technical Change: A Growth Model with Integrated Economies," LEM Papers Series 2003/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
    Other versions:
  8. G. Silverberg & B. Verspagen, 1995. "Evolutionary Theorizing on Economic Growth," Working Papers wp95078, International Institute for Applied Systems Analysis. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tommaso Ciarli & André Lorentz & Maria Savona & Marco Valente, 2008. "The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model," Papers on Economics and Evolution 2008-13, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
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