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Industrial development, technological change, and long-run growth

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  • Peretto, Pietro F.

Abstract

To account for the qualitative differences between developed and developing countries, this paper argues that the expensive in-house R&D that manufacturing firms undertake in advanced industrial economies cannot be supported in countries that are in the early stage of industrialization and do not have sufficiently large markets for manufacturing goods. Such economies grow as standard development models predict: by accumulating physical and human capital and increasing specialization by industry. Only at sufficiently high levels of development are there incentives for systematic R&D efforts. As a result, economies go through an industrial life cycle as they move from initial backwardness to industrial maturity. In other words, development and growth are stages of a process of structural transformation characterized by changing patterns of capital accumulation, specialization by industry, and techological change.
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  • Peretto, Pietro F., 1999. "Industrial development, technological change, and long-run growth," Journal of Development Economics, Elsevier, vol. 59(2), pages 389-417, August.
  • Handle: RePEc:eee:deveco:v:59:y:1999:i:2:p:389-417
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    More about this item

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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