New entries and economic growth
AbstractThe main goal of this paper is to construct a theoretical model that provides an explanation for the relationship between growth and new entry that is consistent with empirical evidence. The model is a four sector endogenous growth model in which there is a technologically advanced and a technologically laggard consumption goods which are imperfect substitutes. The production of each good requires its own stock of human capital and physical capital. The accumulation of physical capital and human capital in each industry is modelled by a Cobb-Douglas production function. The main result of the model is that new entries have a positive effect on the fraction of the existing stock of human capital devoted to the accumulation of human capital in both the advanced and laggard sectors. However, this effect is stronger in the advanced sectors than in the laggard sectors. This result is consistent with empirical evidence.
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Bibliographic InfoPaper provided by Victoria University of Wellington, School of Economics and Finance in its series Working Paper Series with number 2068.
Date of creation: 2012
Date of revision:
Contact details of provider:
Postal: Alice Fong, Administrator, School of Economics and Finance, Victoria Business School, Victoria University of Wellington, PO Box 600 Wellington, New Zealand
Phone: +64 (4) 463-5353
Fax: +64 (4) 463-5014
Web page: http://www.victoria.ac.nz/sef
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new entry; growth; advanced; laggard; technology;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-23 (All new papers)
- NEP-DGE-2012-04-23 (Dynamic General Equilibrium)
- NEP-FDG-2012-04-23 (Financial Development & Growth)
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