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Specialization on a technologically atagnant aector need not be bad for growth

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Abstract

This paper presents a simple North-South model of endogenous growth, based on learning by doing, which is consistent with the following empirical observations: (i) the price of investment goods relative to consumption goods has been falling for the last 40 years in most industrialized countries, (ii) poor countries are net importers of investment equipment and (iii) after a period of initial convergence, the sample of open economies exhibits remarkable stability of the per capita income distribution. In contrast to the research tradition started by Lucas (1988), in the proposed model, specialization on the technologically stagnant consumption sector does not entail a growth penalty.

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Paper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2004-02.

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Date of creation: Mar 2004
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Handle: RePEc:jku:econwp:2004_02

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Keywords: endogenous growth; AK model; international trade; embodied technical change;

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  1. Nancy L. Stokey, 1990. "Human Capital, Product Quality, and Growth," Discussion Papers 883, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Gabriel J. Felbermayr & Omar Licandro, . "The underestimated virtues of the two-sector AK model," Working Papers 2003-13, FEDEA.
  3. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)," NBER Working Papers 9846, National Bureau of Economic Research, Inc.
  4. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  5. Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Embodied Technological Change, Learning-by-Doing and the Productivity Slowdown," Economics Working Papers ECO2002/12, European University Institute.
  6. Grilli, Enzo R & Yang, Maw Cheng, 1988. "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," World Bank Economic Review, World Bank Group, vol. 2(1), pages 1-47, January.
  7. Daron Acemoglu & Jaume Ventura, 2001. "The World Income Distribution," NBER Working Papers 8083, National Bureau of Economic Research, Inc.
  8. Zhiqi Chen, 1992. "Long-Run Equilibria in a Dynamic Heckscher-Ohlin Model," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 923-43, November.
  9. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  10. Maurice Obstfeld & Alan M. Taylor, 2003. "Globalization and Capital Markets," NBER Chapters, in: Globalization in Historical Perspective, pages 121-188 National Bureau of Economic Research, Inc.
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Cited by:
  1. Gabriel J. Felbermayr, 2005. "Dynamic Panel Data Evidence on the Trade-Income Relation," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(4), pages 583-611, December.
  2. Hiroaki Sasaki, 2013. "Positive and Negative Population Growth and Long-Run Trade Patterns: A Non-Scale Growth Model," Discussion papers e-13-004, Graduate School of Economics Project Center, Kyoto University.
  3. Maoz, Yishay D. & Peled, Dan & Sarid, Assaf, 2011. "Trade agreements, bargaining and economic growth," Journal of Macroeconomics, Elsevier, vol. 33(1), pages 92-101, March.
  4. Hiroaki Sasaki, 2008. "North-South Asymmetry in Returns to Scale, Uneven Development, and the Population Puzzle," TERG Discussion Papers 238, Graduate School of Economics and Management, Tohoku University.
  5. Hiroaki Sasaki, 2010. "Trade, Non-Scale Growth, and Uneven Development," Discussion papers e-10-002, Graduate School of Economics Project Center, Kyoto University.
  6. Hiroaki Sasaki, 2012. "Trade Patterns and Non-Scale Growth between Two Countries," Discussion papers e-12-006, Graduate School of Economics Project Center, Kyoto University.

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