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Advent of Industrial Mass Production: Three Stages of Economic Development

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  • Bhattacharya Rudrani

    (Indian Statistical Institute, New Delhi)

  • Das Satya P

    (Indian Statistical Institute, Delhi)

Abstract

This paper develops a human-capital-based endogenous growth scenario in which an economy initially produces the agricultural good, characterized by diminishing returns to scale, then produces `traditional manufacturing' under constant-returns and finally produces `modern manufacturing' under increasing-returns. Transition dates are endogenous and depend on the non-essentiality of the industrial goods in preferences and fixed costs in the technology of the modern manufacturing. Each transition is followed by a jump in the long-run growth rate of real income. The theoretical model is calibrated to U.S. historical data. It `predicts' the first transition to occur around 1820s and the second transition to happen around 1900.

Suggested Citation

  • Bhattacharya Rudrani & Das Satya P, 2008. "Advent of Industrial Mass Production: Three Stages of Economic Development," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-47, September.
    • Handle: RePEc:bpj:bejmac:v:8:y:2008:i:1:n:24
    DOI: 10.2202/1935-1690.1642
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    Cited by:

    1. Bradford, Scott C. & Das, Satya & Saha, Anuradha, 2022. "Country size, per-capita income, and comparative advantage: services versus manufacturing," MPRA Paper 115091, University Library of Munich, Germany.

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