From Smith to Schumpeter: A Theory of Take-Off and Convergence to Sustained Growth
AbstractThis paper develops a theory of the emergence of modern innovation-driven Schumpeterian growth. It uses a tractable model that yields a closed-form solution, consisting of an S-shaped (i.e., logistic-like) time path of firm size and a set of equations that express the relevant endogenous variables – GDP, product variety and product quality, consumption, the shares of GDP earned by the factors of production – as functions of firm size. It also obtains closed-form solutions for the dates of the events that drive the economy's phase transitions as functions of the fundamentals. The resulting path of GDP per capita consists of a convex-concave profile replicating the key feature of long-run data: an accelerating phase followed by a deceleration with convergence to a stationary growth rate. Compared to other availables theories, the paper focuses on the within-industry forces that regulate the response of firms and entrepreneurs to Smithian market expansion.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 13-10.
Date of creation: 2013
Date of revision:
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Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
Phone: (919) 660-1800
Fax: (919) 684-8974
Web page: http://econ.duke.edu/
Endogenous Growth; Firm Size; Market Structure; Take-off;
Other versions of this item:
- Pietro Peretto, 2012. "From Smith to Schumpeter: A Theory of Take-off and Convergence to Sustained Growth," DEGIT Conference Papers c017_009, DEGIT, Dynamics, Economic Growth, and International Trade.
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-24 (All new papers)
- NEP-DGE-2013-06-24 (Dynamic General Equilibrium)
- NEP-ENT-2013-06-24 (Entrepreneurship)
- NEP-FDG-2013-06-24 (Financial Development & Growth)
- NEP-HIS-2013-06-24 (Business, Economic & Financial History)
- NEP-HME-2013-06-24 (Heterodox Microeconomics)
- NEP-MAC-2013-06-24 (Macroeconomics)
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- Mauro Rota & Luca Spinesi, 2013. "At the Onset of the original capital accumulation," Departmental Working Papers of Economics - University 'Roma Tre' 0179, Department of Economics - University Roma Tre.
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