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Structural Change and Decisions on Investment Allocation

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  • Araujo, Ricardo Azevedo
  • Teixeira, Joanílio Rodolpho

Abstract

In this article the growth models of Feldman (1928) and Mahalanobis (1953) are extended to analyse the implications of the process of structural change on the decisions of investment allocation. By using the device of vertical integration, their constructions are shown to be a particular case of the Pasinetti’s (1981) model of structural change. Their analysis is then carried out in a multi-sector framework, where both productivity and demand change at a particular rate in each of the sectors. A particular rate of investment allocation for each sector is established subject to the full employment of the labour force. Following these lines, we are able to put some of the Halevi’s (1996) descriptive observations into a formal context and within this context to analyse and to extend his ideas about the role of demand on the decisions of investment allocation. Finally, an additional condition is added to the Pasinetti’s model in order to fully characterise the equilibrium path in the most general version of his framework, where capital goods are needed to produce capital goods.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53293.

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Date of creation: 2002
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Publication status: Published in Structural Change and Economic Dynamics 13.2(2002): pp. 249-258
Handle: RePEc:pra:mprapa:53293

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Keywords: Structural Dynamics; Investment Allocation; Multi-sector Models; Vertical Integration.;

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References

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  1. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  2. Halevi, Joseph, 1996. "The significance of the theory of vertically integrated processes for the problem of economic development," Structural Change and Economic Dynamics, Elsevier, vol. 7(2), pages 163-171, June.
  3. Lavoie, M, 1995. "Pasinett's Vertically Hyper-Integrated Sectors and Natural Prices," Working Papers 9515e, University of Ottawa, Department of Economics.
  4. Hishiyama, Izumi, 1996. "Appraising Pasinetti's structural dynamics," Structural Change and Economic Dynamics, Elsevier, vol. 7(2), pages 127-134, June.
  5. Weitzman, Martin L, 1971. "Shiftable Versus Non-Shiftable Capital: A Synthesis," Econometrica, Econometric Society, vol. 39(3), pages 511-29, May.
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Cited by:
  1. Ricardo Azevedo Araujo & Joanílio Rodolpho Teixeira, 2010. "A Multi-Sector Version of the Post-Keynesian Growth Model," Working papers - Textos para Discussao do Departamento de Economia da Universidade de Brasilia 330, Departamento de Economia da Universidade de Brasilia.
  2. repec:eut:journl:v:11:y:2006:i:3:p:41 is not listed on IDEAS
  3. Ricardo Azevedo Araujo & JoanÌlio Rodolpho Teixeira, 2003. "An Extension of the Structural Change Model to International Economic Relations," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 458-473, November.
  4. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2008. "Investment-Specific Technological Change, Investment Sectoral Allocation and Human Capital Accumulation in a Model of Export-Led Growth," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211332520, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  5. Silva, Ester G. & Teixeira, Aurora A.C., 2008. "Surveying structural change: Seminal contributions and a bibliometric account," Structural Change and Economic Dynamics, Elsevier, vol. 19(4), pages 273-300, December.
  6. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2012. "Capital-Specific Technological Change and Human Capital Accumulation in a Model of Export-Led Growth," PSL Quarterly Review, Economia civile, vol. 65(262), pages 275-311.
  7. Araujo, Ricardo Azevedo & Lima, Gilberto Tadeu, 2011. "Embodied technological change, capital sectoral allocation and export-led growth," MPRA Paper 29810, University Library of Munich, Germany.

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