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The Determination and Development of Sectoral Structure

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  • Groot, H.L.F. de

    (Tilburg University, Center for Economic Research)

Abstract

The development over time of sectors in terms of value added and employment has common characteristics in all economies. We develop a simple Ricardian multi-sector general equilibrium model that allows for (i) non-unitary income elasticities, (ii) different paces of technological progress per sector, and (iii) endogenously determined technological progress per sector. A model with these ingredients allows us to replicate the sectoral developments that are found empirically, and which are shown to be the outcome of an interplay between factors of demand and supply. Under reasonable assumptions, deindustrialization is shown to be a natural and unavoidable consequence of increases in the wealth of nations.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1998-125.

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Date of creation: 1998
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Handle: RePEc:dgr:kubcen:1998125

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Keywords: sectoral change; endogenous growth; deindustrialization;

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  1. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers.
  2. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
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  4. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
  5. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
  6. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, October.
  7. Cornwall, John & Cornwall, Wendy, 1994. "Growth Theory and Economic Structure," Economica, London School of Economics and Political Science, vol. 61(242), pages 237-51, May.
  8. David, P.A., 1989. "Computer And Dynamo: The Modern Productivity Paradox In A Not-Too Distant Mirror," The Warwick Economics Research Paper Series (TWERPS) 339, University of Warwick, Department of Economics.
  9. repec:fth:stanho:e-92-3 is not listed on IDEAS
  10. Gundlach, Erich, 1994. "Demand Bias as an Explanation for Structural Change," Kyklos, Wiley Blackwell, vol. 47(2), pages 249-67.
  11. van Schaik, Anton B. T. M. & de Groot, Henri L. F., 2002. "Macroeconomic consequences of downsizing," Economic Modelling, Elsevier, vol. 19(3), pages 331-352, May.
  12. Quibria, M G & Harrigan, Frank, 1996. "Demand Bias and Structural Change," Kyklos, Wiley Blackwell, vol. 49(2), pages 205-13.
  13. Eileen Appelbaum & Ronald Schettkat, 1999. "Are Prices Unimportant? The Changing Structure of the Industrialized Economies," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 21(3), pages 387-398, April.
  14. Steven Saeger, 1997. "Globalization and deindustrialization: Myth and reality in the OECD," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(4), pages 579-608, December.
  15. Dirk Pilat, 1996. "Labour Productivity Levels in OECD Countries: Estimates for Manufacturing and Selected Service Sectors," OECD Economics Department Working Papers 169, OECD Publishing.
  16. Ramana Ramaswamy & Bob Rowthorn, 1997. "Deindustrialization," IMF Working Papers 97/42, International Monetary Fund.
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