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Technological Progress, Factor Endowments and Structural Change:A Note

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  • Quibria, M.G
  • Srinivasan, T.N.

Abstract

Economic development is accompanied by structural change. The trade theoretic literature offers two major hypotheses – i. e., the factor-endowment and the total-factor-productivity-- for explaining the stylized facts of structural change. This note revisits these hypotheses. In particular, it explores, with the help of a simple geometric apparatus, the analytical implications of the two hypotheses and draws out their striking similarities. It argues that although the literature has treated these two hypotheses as distinctly different, they are indeed analytically equivalent in the sense that they are both based on a similar type of shifts in the production functions. An important implication of this analytical equivalence is that, compounded with the data problems, it makes the task of empirical testing and discriminating between the two alternative hypotheses virtually impossible.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25613.

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Date of creation: Jul 2010
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Publication status: Published in Bangladesh Development Studies Number 4.32(2009): pp. 95-103
Handle: RePEc:pra:mprapa:25613

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Keywords: nontraded good; technological progress; total-factor-productivity; factor endowment; and economic growth;

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  1. L. Rachel Ngai & Christopher Pissarides, 2007. "Structural change in a multi-sector model of growth," LSE Research Online Documents on Economics 4468, London School of Economics and Political Science, LSE Library.
  2. Quibria, M. G., 1990. "Note on international differences in service prices and some related empirical phenomena," Journal of Development Economics, Elsevier, vol. 33(2), pages 357-370, October.
  3. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
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