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The Road Not Taken: What Is The “Appropriate” Path To Development When Growth Is Unbalanced?

  • Rahman, Ahmed S.

This paper develops a model that endogenizes both directed technologies and demography. Potential innovators decide which technologies to develop after considering available factors of production, and individuals decide the quality and quantity of their children after considering available technologies. This interaction allows us to evaluate potentially divergent development paths. We nd that exogenous unskilled-labor biased technological growth can induce higher fertility and lower education, inhibiting overall growth in per person income. However, if technical progress is locally endogenous, increases in the overall workforce caused by unskilled intensive technological progress can make R&D more pro table; this can actually induce more income growth can the alternative, skill-intensive path.

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Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 17 (2013)
Issue (Month): 04 (June)
Pages: 747-778

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Handle: RePEc:cup:macdyn:v:17:y:2013:i:04:p:747-778_00
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