Public policy and industrial transformation in the process of development
AbstractThis paper studies the role of public policy in promoting industrial transformation from an imitationbased, low-skill economy to an innovation-based, high-skill economy, where technological progress now occurs through the domestic invention of ideas. Industrial transformation is measured by changes in an index of industrial structure, defined as the ratio of the variety of imitation- to innovation-based intermediate goods. A key mechanism through which productivity increases initially in both the imitation and innovation sectors is through a knowledge externality associated with learning by doing in the imitation sector. The process of industrialization increases the demand for high-skill labor, inducing individuals to invest in education. The model also emphasizes the distinction between basic or core infrastructure, which promotes imitation, and advanced infrastructure, which promotes innovation. A calibrated version for a low-income country is used to perform several policy experiments, including an increase in investment in infrastructure, a reduction in the cost of training, and improved enforcement of property rights.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6405.
Date of creation: 01 Apr 2013
Date of revision:
Labor Policies; Economic Theory&Research; Political Economy; Debt Markets; Labor Markets;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-20 (All new papers)
- NEP-DEV-2013-04-20 (Development)
- NEP-INO-2013-04-20 (Innovation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gustavo Crespi & Pluvia Zuniga, 2010.
"Innovation and Productivity - Evidence from Six Latin American Countries,"
Research Department Publications
4690, Inter-American Development Bank, Research Department.
- Crespi, Gustavo & Zuniga, Pluvia, 2012. "Innovation and Productivity: Evidence from Six Latin American Countries," World Development, Elsevier, vol. 40(2), pages 273-290.
- Andersen, Thomas Barnebeck & Dalgaard, Carl-Johan, 2012.
"Power outages and economic growth in Africa,"
Discussion Papers of Business and Economics
7/2012, Department of Business and Economics, University of Southern Denmark.
- Agenor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2005.
"Roads out of poverty? assessing the links between aid, public investment, growth, and poverty reduction,"
Policy Research Working Paper Series
3490, The World Bank.
- Agénor, Pierre-Richard & Bayraktar, Nihal & El Aynaoui, Karim, 2008. "Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction," Journal of Development Economics, Elsevier, vol. 86(2), pages 277-295, June.
- Lorenczik, Christian & Newiak, Monique, 2012.
"Imitation and innovation driven development under imperfect intellectual property rights,"
European Economic Review,
Elsevier, vol. 56(7), pages 1361-1375.
- Christian Lorenczik & Monique Newiak, 2010. "Imitation and Innovation Driven Development under Imperfect Intellectual Property Rights," DEGIT Conference Papers c015_056, DEGIT, Dynamics, Economic Growth, and International Trade.
- Iacopetta, Maurizio, 2010. "Phases of economic development and the transitional dynamics of an innovation-education growth model," European Economic Review, Elsevier, vol. 54(2), pages 317-330, February.
- Sequeira, Tiago Neves, 2008.
"R&D Spillovers in an Endogenous Growth Model with Physical Capital, Human Capital and Varieties,"
FEUNL Working Paper Series
wp532, Universidade Nova de Lisboa, Faculdade de Economia.
- Sequeira, Tiago Neves, 2011. "R&D Spillovers In An Endogenous Growth Model With Physical Capital, Human Capital, And Varieties," Macroeconomic Dynamics, Cambridge University Press, vol. 15(02), pages 223-239, April.
- Colin Davis, 2013. "Regional integration and innovation offshoring with occupational choice and endogenous growth," Journal of Economics, Springer, vol. 108(1), pages 59-79, January.
- Perez-Sebastian, Fidel, 2007. "Public support to innovation and imitation in a non-scale growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3791-3821, December.
- Pierre-Richard Agénor & Kyriakos C. Neanidis, 2010. "Innovation, Public Capital, and Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 135, Economics, The Univeristy of Manchester.
- German Cubas, 2010. "Accounting for Cross-Country Income Differences with Public Capital," Documentos de Trabajo (working papers) 3410, Department of Economics - dECON.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.