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A Model Of Unbalanced Sectorial Growth With Application To Transition Economies

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Author Info
Lilia Maliar () (Universidad de Alicante)
Dmytro Kylymnyuk (Universidad de Alicante)
Serguei Maliar (Universidad de Alicante)

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Abstract

This paper studies the implications of a dynamic general equilibrium model with three production sectors, which are agriculture, industry and services. Due to the assumption of increasing returns in industry and services, our model has multiple equilibria. Two equilibria are stable: one, in which a country produces only agricultural goods and converges to a steady state, and the other, in which a country operates all three sectors and has positive unbalanced long-run growth by contracting agriculture and expanding industry and services. These predictions agree well with the real-world development experiences of rich and poor countries. In the context of our model, we also investigate the evolution of the sectorial composition in the transition countries and find that such countries move to the rich rather than to the poor world.

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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2005-26.

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Length: 33 pages
Date of creation: Sep 2005
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2005-26

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Related research
Keywords: Growth model; Increasing returns to scale; Agriculture; Industry; Services; Multiple equilibria; Transition economies;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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