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Innovation, specialization and growth in a model of structural change

Author

Listed:
  • Andergassen Rainer
  • Ricottilli Massimo

    (Department of Economics, University of Bologna, P.zza Scaravilli 2, 40126 Bologna, Italy)

  • Nardini Franco

    (Department of Mathematics, University of Bologna, Viale Filopanti 5, 40126 Bologna, Italy)

Abstract

In this paper we investigate the process of creation and destruction of industries as it stems from productivity increasing innovations and from the induced changes of consumption patterns. In our model industries whose demand increases experience an expansion of the number of intermediate goods and hence of their research effort, while those whose demand declines undergo a cost-cutting restructuring with a corresponding reduction of the number of intermediates. We show that if aggregate consumption is concentrated on high (low) priority goods in the early (later) stages of the economy’s development and spread out more evenly in an intermediate stage, then the diversification of the economy over the development path is inversely U-shaped: a result that is consistent with the empirical evidence in Imbs and Wacziarg 2003 “Stages of Diversification.” American Economic Review 93: 63–86.

Suggested Citation

  • Andergassen Rainer & Ricottilli Massimo & Nardini Franco, 2018. "Innovation, specialization and growth in a model of structural change," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(2), pages 1-15, June.
    • Handle: RePEc:bpj:bejmac:v:18:y:2018:i:2:p:15:n:5
    DOI: 10.1515/bejm-2017-0095
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    References listed on IDEAS

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    More about this item

    Keywords

    development; innovation; specialization; structural change;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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