Functional Distribution, Land Ownership and Industrial Takeoff: The Role of Effective Demand
AbstractThis paper analyses how the distribution of land property rights affects industrial takeoff and aggregate income through the demand side. We study a stylized economy composed of two sectors, agriculture and manufacturing. The former produces a single subsistence good while the latter is constituted of a continuum of markets producing distinct commodities. Following Murphy et al.  we model industrialization as the introduction of an increasing returns technology in place of a constant returns one. However, we depart from their framework by assuming income to be distributed according to functional groups membership (landowners, capitalists, workers). We carry out an equilibrium analysis for different levels of land ownership concentration proving that, under the specified conditions, there is a non-monotonic relation between the distribution of land property rights and both industrialization and income. We clarify that non-monotonicity arises because of the way land ownership concentration affects the level and the distribution of profits among capitalists which, in turn, shape their demand. Our results suggest that i) both a too concentrated and a too diffused distribution of land property rights can be detrimental to industrialization, ii) land ownership affects the economic performance of an industrializing country by determining the demand of manufactures of both landowners and capitalists, iii) in terms of optimal land distribution there may be a tradeoff between income and industrialization.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_051.
Length: 32 pages
Date of creation: Jun 2006
Date of revision:
Other versions of this item:
- Bilancini Ennio & D'Alessandro Simone, 2008. "Functional Distribution, Land Ownership and Industrial Takeoff: The Role of Effective Demand," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-36, August.
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
This paper has been announced in the following NEP Reports:
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.:
- Zweimüller, Josef, 1998.
"Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth,"
CEPR Discussion Papers
1880, C.E.P.R. Discussion Papers.
- Zweimuller, Josef, 2000. " Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth," Journal of Economic Growth, Springer, vol. 5(2), pages 185-206, June.
- Josef Zweimueller, . "Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth," IEW - Working Papers 009, Institute for Empirical Research in Economics - University of Zurich.
- Kiminori Matsuyama, 1999.
"The Rise of Mass Consumption Societies,"
1289, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 2000. "The Rise of Mass Consumption Societies," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
- Jeon, Yoong-Deok & Kim, Young-Yong, 2000. "Land Reform, Income Redistribution, and Agricultural Production in Korea," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 253-68, January.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989.
"Industrialization and the Big Push,"
3606235, Harvard University Department of Economics.
- Oded Galor & Omer Moav & Dietrich Vollrath, 2004.
"Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence,"
2003-04, Brown University, Department of Economics.
- Oded Galor & Omer Moav, 2005. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," 2005 Meeting Papers 24, Society for Economic Dynamics.
- Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2003. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," CEPR Discussion Papers 3817, C.E.P.R. Discussion Papers.
- G. Bellettini & G. Ottaviano, 1999.
"Special Interests and Technological change,"
340, Dipartimento Scienze Economiche, Universita' di Bologna.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989.
"Income Distribution, Market Size, and Industrialization,"
The Quarterly Journal of Economics,
MIT Press, vol. 104(3), pages 537-64, August.
- Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1988. "Income Distribution, Market Size, and Industrialization," NBER Working Papers 2709, National Bureau of Economic Research, Inc.
- Eswaran, Mukesh & Kotwal, Ashok, 1993. "A theory of real wage growth in LDCs," Journal of Development Economics, Elsevier, vol. 42(2), pages 243-269, December.
- Abhijit V. Banerjee & Paul J. Gertler & Maitreesh Ghatak, 2002. "Empowerment and Efficiency: Tenancy Reform in West Bengal," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 239-280, April.
- Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
- Mani, Anandi, 2001. " Income Distribution and the Demand Constraint," Journal of Economic Growth, Springer, vol. 6(2), pages 107-33, June.
- Baland, Jean-Marie & Ray, Debraj, 1991. "Why does asset inequality affect unemployment? A study of the demand composition problem," Journal of Development Economics, Elsevier, vol. 35(1), pages 69-92, January.
- Jeorge Àlvarez & Ennio Bilancini & Simone D’Alessandro & Gabriel Porcile, 2010.
"Agricultural institutions, industrialization and growth: the case of New Zealand and Uruguay in 1870-1940,"
Center for Economic Research (RECent)
053, University of Modena and Reggio E., Dept. of Economics.
- Álvarez, Jorge & Bilancini, Ennio & D'Alessandro, Simone & Porcile, Gabriel, 2011. "Agricultural institutions, industrialization and growth: The case of New Zealand and Uruguay in 1870-1940," Explorations in Economic History, Elsevier, vol. 48(2), pages 151-168, April.
- Jeorge Álvarez & Ennio Bilancini & Simone D’Alessandro & Gabriel Porcile, 2010. "Agricultural Institutions, Industrialization and Growth: the Case of New Zealand and Uruguay in 1870-1940," Department of Economics 0635, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michaela Rank).
If references are entirely missing, you can add them using this form.