IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Growth, Sectoral Composition, and the Wealth of Nations

Listed author(s):
  • Jaime Alonso-Carrera
  • Xavier Raurich

This paper asserts that the accumulation of capital causes cross-country differences in GDP per capita by generating disparities in the sectoral structure. For that purpose, we characterize the dynamic equilibrium of an endogenous growth that exhibits sectoral change due to the introduction of heterogenous consumption goods and of a minimum consumption requirement. In this model, economies with the same fundamentals but different endowments of capitals will end up growing at a common rate, although the long run level and sectoral composition of GDP will be different. Because total factor productivity depends on sectoral composition, capital endowments will also contribute to GDP by means of changing the sectoral composition. This suggests that the development accounting exercises should consider the endogeneity of total factor productivity when measuring the contribution of capital to GDP. Along the transition, the slope of the policy functions depends on the initial values of the capital stocks and of the minimum consumption requirement. This implies that the minimum consumption is a barrier to development and that economies initially similar may diverge along the transition.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/278.pdf
Download Restriction: no

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 278.

as
in new window

Length:
Date of creation: May 2006
Handle: RePEc:bge:wpaper:278
Contact details of provider: Postal:
Ramon Trias Fargas, 25-27, 08005 Barcelona

Phone: +34 93 542-1222
Fax: +34 93 542-1223
Web page: http://www.barcelonagse.eu
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Ananth Seshadri & Rodolfo Manuelli, 2005. "Human Capital and the Wealth of Nations," 2005 Meeting Papers 56, Society for Economic Dynamics.
  2. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-452, May.
  3. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
  4. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods 0409003, EconWPA.
  5. Areendam Chanda & Carl-Johan Dalgaard, 2003. "Dual Economies and International Total Factor Productivity Differences," Macroeconomics 0305002, EconWPA.
  6. Ellen R. McGrattan & James A. Schmitz, 1998. "Explaining cross-country income differences," Staff Report 250, Federal Reserve Bank of Minneapolis.
  7. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  8. Galor, Oded & Moav, Omer, 1999. "From Physical to Human Capital Accumulation: Inequality in the Process of Development," CEPR Discussion Papers 2307, C.E.P.R. Discussion Papers.
  9. Juan Carlos Cordoba & Marla Ripoll, 2004. "Development Accounting," 2004 Meeting Papers 325, Society for Economic Dynamics.
  10. Temple, Jonathan, 2001. "Structural Change and Europe's Golden Age," CEPR Discussion Papers 2861, C.E.P.R. Discussion Papers.
  11. Robertson, Peter E, 1999. "Economic Growth and the Return to Capital in Developing Economies," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 577-594, October.
  12. Stephen L Parente & Edward C Prescott, 2004. "A Unified Theory of the Evolution of International Income Levels," Levine's Working Paper Archive 122247000000000300, David K. Levine.
  13. Perli, Roberto & Sakellaris, Plutarchos, 1998. "Human capital formation and business cycle persistence," Journal of Monetary Economics, Elsevier, vol. 42(1), pages 67-92, June.
  14. Córdoba, Juan Carlos & Ripoll, Marla, 2008. "Endogenous TFP and cross-country income differences," Journal of Monetary Economics, Elsevier, vol. 55(6), pages 1158-1170, September.
  15. Bond, Eric W. & Wang, Ping & Yip, Chong K., 1993. "A general two sector model of endogenous growth with human and physical capital," Working Papers 9303, Federal Reserve Bank of Dallas.
  16. Peter J. Klenow & Andres Rodriguez-Clare, 2004. "Externalities and Growth," NBER Working Papers 11009, National Bureau of Economic Research, Inc.
  17. Foellmi, Reto & Zweimüller, Josef, 2002. "Structural Change and the Kaldor Facts of Economic Growth," IZA Discussion Papers 472, Institute for the Study of Labor (IZA).
  18. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers 10828, National Bureau of Economic Research, Inc.
  19. L. Rachel Ngai & Christopher Pissarides, 2004. "Balanced growth with structural change," LSE Research Online Documents on Economics 4658, London School of Economics and Political Science, LSE Library.
  20. Steger Thomas M., 2006. "Heterogeneous Consumption Goods, Sectoral Change, and Economic Growth," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 10(1), pages 1-18, March.
  21. Kongsamut, P. & Rebelo, S. & Xie, D., 1997. "Beyong Balanced Growth," RCER Working Papers 438, University of Rochester - Center for Economic Research (RCER).
  22. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  23. Baumol, William J & Wolff, Edward N, 1988. "Productivity Growth, Convergence, and Welfare: Reply," American Economic Review, American Economic Association, vol. 78(5), pages 1155-1159, December.
  24. Klenow, Peter J. & Rodriguez-Clare, Andres, 1997. "Economic growth: A review essay," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 597-617, December.
  25. John Laitner, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 545-561.
  26. Robertson, Peter E, 2000. "Industrialization versus Education: Optimal Investment Choices and Growth in a Developing Economy," Review of Development Economics, Wiley Blackwell, vol. 4(2), pages 175-183, June.
  27. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  28. Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, vol. 62(2), pages 343-361, August.
  29. Caballe, Jordi & Santos, Manuel S, 1993. "On Endogenous Growth with Physical and Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1042-1067, December.
  30. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  31. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, September.
  32. Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996. "A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics," Journal of Economic Theory, Elsevier, vol. 68(1), pages 149-173, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:278. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.