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Economic Growth through the Development Process

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  • Fabrizio Zilibotti

Abstract

In this article, I discuss some recent research in the area of economic growth and development emphasizing the endogenous dynamics of policies and organizational forms in a world characterized by credit-market and labor-market imperfections. I present a simple model of technological convergence featuring an endogenous evolution of contractual arrangements. The key assumption is that economic growth is associated with investments as well as with the adoption and imitation of existing technologies in economies lying far from the technology frontier. In contrast, growth is increasingly driven by innovation as economies approach the technological frontier. The theory predicts that contractual arrangements evolve and adapt spontaneously to the changing needs of technological progress. However, this evolution is neither necessary nor serendipitous. Economies that fail to introduce economic reforms as they advance may become stuck in non-convergence traps. I discuss a number of empirical applications, including the wave of reforms of industrial policy in India in the 1980s and 1990s. (JEL Codes: O31, O33, O38, O40, L16) Copyright , Oxford University Press.

Suggested Citation

  • Fabrizio Zilibotti, 2008. "Economic Growth through the Development Process," CESifo Economic Studies, CESifo, vol. 54(3), pages 325-357, September.
    • Handle: RePEc:oup:cesifo:v:54:y:2008:i:3:p:325-357
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifn020
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    Citations

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    Cited by:

    1. Daniele Schilirò, 2010. "Investing in Knowledge: Knowledge, Human Capital and Institutions for the Long Run Growth," Chapters, in: Maarten J. Arentsen & Wouter van Rossum & Albert E. Steenge (ed.), Governance of Innovation, chapter 3, Edward Elgar Publishing.
    2. Walter Buhr, 2009. "Infrastructure of the Market Economy," Volkswirtschaftliche Diskussionsbeiträge 132-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    3. Juan Ricardo Perilla Jimenez, 2019. "Mainstream and evolutionary views of technology, economic growth and catching up," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 823-852, July.

    More about this item

    JEL classification:

    • 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
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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