A model of unbalanced sectorial growth with application to transition economies
AbstractThis paper studies the implications of a dynamic general equilibrium model with three production sectors, which are agriculture, industry and services. Due to the assumption of increasing returns in industry and services, our model has multiple equilibria. Two equilibria are stable: one, in which a country produces only agricultural goods and converges to a steady state, and the other, in which a country operates all three sectors and has positive unbalanced long-run growth by contracting agriculture and expanding industry and services. These predictions agree well with the real-world development experiences of rich and poor countries. In the context of our model, we also investigate the evolution of the sectorial composition in the transition countries and find that such countries move to the rich rather than to the poor world.
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Bibliographic InfoArticle provided by Springer in its journal Economic Change and Restructuring.
Volume (Year): 40 (2007)
Issue (Month): 4 (December)
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Web page: http://www.springerlink.com/link.asp?id=113294
Growth model; Increasing returns to scale; Agriculture; Industry; Services; Multiple equilibria; Transition economies; F10; F12; O13; O30; O41;
Other versions of this item:
- Lilia Maliar & Dmytro Kylymnyuk & Serguei Maliar, 2005. "A Model Of Unbalanced Sectorial Growth With Application To Transition Economies," Working Papers. Serie AD 2005-26, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- F10 - International Economics - - Trade - - - General
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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