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Technological-knowledge bias and the industrial structure under costly investment and complementarities

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  • Sochirca, Elena
  • Afonso, Óscar
  • Gil, Pedro Mazeda

Abstract

We develop an extended directed technological change model with vertical and horizontal R&D to analyze the economic growth rate, the technological-knowledge bias and the industrial structure, assuming: (i) complementarities between intermediate goods, and (ii) internal costly investment. We find that complementarities directly affect long-run technological-knowledge bias and relative production, both elements influence the economic growth rate and neither affects the skill premium and the relative number of firms. We also verify that the relationship between the relative supply of skills and both economic growth and the industrial structure suggested by our model is qualitatively consistent with recent empirical data for a number of developed countries.

Suggested Citation

  • Sochirca, Elena & Afonso, Óscar & Gil, Pedro Mazeda, 2013. "Technological-knowledge bias and the industrial structure under costly investment and complementarities," Economic Modelling, Elsevier, vol. 32(C), pages 440-451.
  • Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:440-451
    DOI: 10.1016/j.econmod.2013.02.037
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    References listed on IDEAS

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    More about this item

    Keywords

    Vertical and horizontal R&D; Technological-knowledge bias; Industrial structure; Complementarities; Costly investment;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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