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Extensive and Intensive Growth in a Neoclassical Framework

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  • Irmen, Andreas

Abstract

Extensive growth based on the expansion of inputs is likely to be subject to diminishing returns. Therefore it is often viewed as having no effect on per capita magnitudes in the long run. This Paper argues that periods of extensive growth through capital accumulation may be a precursor to periods of intensive growth during which output per unit of input grows through endogenous technical change. Such a sequence of stages of development occurs as capital accumulation affects the incentives to engage in labour-saving technical change. A steady rise in the capital-labour ratio affects the relative scarcity of factors of production, their (expected) relative price, and induces innovation investments.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4266.

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Date of creation: Feb 2004
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Handle: RePEc:cpr:ceprdp:4266

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Keywords: endogenous technical change; induced innovation; neoclassical growth model; productivity growth;

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References

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  1. Michal Kejak, 2001. "Stages of Growth in Economic Development," Development and Comp Systems 0012014, EconWPA.
  2. Susanto Basu, 1994. "Intermediate Goods and Business Cycles: Implications for Productivity and Welfare," NBER Working Papers 4817, National Bureau of Economic Research, Inc.
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  4. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  5. Matsuyama, K., 1996. "Growing through cycles," DELTA Working Papers 96-18, DELTA (Ecole normale supérieure).
  6. S. Illeris & G. Akehurst, 2002. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 22(1), pages 1-3, January.
  7. Rotemberg, Julio J & Woodford, Michael, 1996. "Imperfect Competition and the Effects of Energy Price Increases on Economic Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 550-77, November.
  8. Hellwig, Martin & Irmen, Andreas, 1999. "Endogenous Technical Change in a Competitive Economy," Sonderforschungsbereich 504 Publications 99-53, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  9. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  10. Bester, Helmut & Petrakis, Emmanuel, 1998. "Wages and Productivity Growth in a Competitive Industry," CEPR Discussion Papers 2031, C.E.P.R. Discussion Papers.
  11. Oded Galor & Omer Moav, 2000. "Das Human Kapital," Working Papers 2000-17, Brown University, Department of Economics.
  12. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
  13. Larry E. Jones & Rodolfo Manuelli, 1990. "A Convex Model of Equilibrium Growth," NBER Working Papers 3241, National Bureau of Economic Research, Inc.
  14. Irmen, Andreas, 2004. "Extensive and Intensive Growth in a Neoclassical Framework," CEPR Discussion Papers 4266, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2006. "Can China’s Growth be Sustained? A Productivity Perspective," Working Papers in Economics 236, University of Gothenburg, Department of Economics.
  2. Andreas Irmen, 2009. "Population Aging and the Direction of Technical Change," CESifo Working Paper Series 2888, CESifo Group Munich.
  3. Burkhard Heer & Andreas Irmen, 2008. "Population, Pensions, and Endogenous Economic Growth," CESifo Working Paper Series 2480, CESifo Group Munich.
  4. Irmen, Andreas, 2010. "Steady-State Growth and the Elasticity of Substitution," Working Papers 0496, University of Heidelberg, Department of Economics.
  5. Shiro Kuwahara, 2013. "Dynamical analysis of the R&D-based growth model with a regime switch," Journal of Economics, Springer, vol. 108(1), pages 35-57, January.
  6. Luca Zamparelli, 2009. "Direction and Intensity of Technical Change: a Micro Model," Working Papers 4, Doctoral School of Economics, Sapienza University of Rome.
  7. Andreas Irmen, 2008. "Cross-Country Income Differences and Technology Diffusion in a Competitive World," CESifo Working Paper Series 2504, CESifo Group Munich.
  8. Doner, Richard, 2012. "Success as Trap? Crisis Response And Challenges To Economic Upgrading in Export-Oriented Southeast Asia," Working Papers 45, JICA Research Institute.
  9. Irmen, Andreas, 2005. "Extensive and intensive growth in a neoclassical framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(8), pages 1427-1448, August.
  10. Andreas Irmen, 2010. "Ist Wirtschaftswachstum systemimmanent?," CREA Discussion Paper Series 10-19, Center for Research in Economic Analysis, University of Luxembourg.
  11. zamparelli, luca, 2008. "Direction and intensity of technical change: a micro-founded growth model," MPRA Paper 10843, University Library of Munich, Germany.
  12. Jinghai Zheng & Angang Hu & Arne Bigsten, 2009. "Potential output in a rapidly developing economy: the case of China and a comparison with the United States and the European Union," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 317-342.
  13. Harada, Tsutomu, 2012. "Advantages of backwardness and forwardness with shifting comparative advantage," Research in Economics, Elsevier, vol. 66(1), pages 72-81.
  14. Shiyi Chen, 2009. "Engine or drag: Can high energy consumption and CO 2 emission drive the sustainable development of Chinese industry?," Frontiers of Economics in China, Springer, vol. 4(4), pages 548-571, December.

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