Interests of Social Groups, Direction of Technical Progress, and Barriers to Development: How Sustainable is the World Economic Growth?
A considerable part of literature in the theory of economic growth is devoted to detecting of a relative role of factor accumulation, technological changes and institutions in economic growth. In the present paper an attempt is made to link and explain stylized facts characterizing economic growth in the contemporary World: i) there is a high degree of heterogeneity in levels of development and growth rates of countries, ii) the countries are subdivided into groups characterized, correspondingly, by low, intermediate and high levels of the capital to labor ratio and of the average labor productivity, iii) these groups of countries are rather stable in their composition; in particular some countries with a low capital to labor ratio stay in a “poverty trap” for a long time, iv) there is a global tendency of an increase in the capital share in GNP, v) the growth is influenced by political and social factors. In this paper a model is proposed in which two types of technological changes are distinguished: (a) an endogenous growth of the total factor productivity (TFP) and (b) a change in a technological parameter of a production function defining a directedness of technological progress. The latter change in technology is controlled by social groups – owners of labor (workers) and owners of capital (“capitalists”) – in a country and takes place together with a change in factor shares. We describe areas of coincidence and of non-coincidence of interests of the social groups related to a choice of technology and, correspondingly, to a distribution of the national product. The frontiers of these areas are made more precise taking account of a boundedness of the capital to labor ratio. Roles of the TFP and the elasticity of substitution in formation of the areas of social cohesion are of social conflict are studied. It is proved that, under some conditions, a degree of social cohesion increases. In a certain degree, the model is close to models of the new political economy (see e.g. Besley, 2007) and fills their shortage of account of technological progress and of dependence of political decisions on the state of economy. The model provides a possible explanation of a stability of the poverty traps, it shows a role of the TFP as a potential for the economic growth, and, in particular, it demonstrates a possibility of an economic crisis in industrial countries in result of an “innovation pause”. The model also throws light on differences in possibilities of growth in poorly developed, actively developing and industrial countries; in particular, it explains, why there is no advantage of late start in low income countries in a poverty trap.
|Date of creation:||Sep 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Niels Bohrs Vej 9, 6700 Esbjerg|
Phone: +45 6550 2233
Fax: +45 6550 1090
Web page: http://degit.sam.sdu.dk/
More information through EDIRC
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.:
- Bentolila, Samuel & Saint-Paul, Gilles, 1998.
"Explaining Movements in the Labour Share,"
CEPR Discussion Papers
1958, C.E.P.R. Discussion Papers.
- Samuel Bentolila & Gilles Saint Paul, 1999. "Explaining movements in the labor share," Economics Working Papers 374, Department of Economics and Business, Universitat Pompeu Fabra.
- Bentollia, S. & Saint-Paul, G., 1999. "Explaining Movements in the Labor Share," Papers 9905, Centro de Estudios Monetarios Y Financieros-.
- Claude Diebolt & Faustine Perrin, 2014. "Growth Theories," Working Papers 02-14, Association Française de Cliométrie (AFC).
- 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.
- David N. Weil, 1996.
"Appropriate Technology and Growth,"
96-24, Brown University, Department of Economics.
- Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006.
"Distance to Frontier, Selection, and Economic Growth,"
Journal of the European Economic Association,
MIT Press, vol. 4(1), pages 37-74, 03.
- Zilibotti, Fabrizio & Aghion, Philippe & Acemoglu, Daron, 2006. "Distance to Frontier, Selection, and Economic Growth," Scholarly Articles 4554122, Harvard University Department of Economics.
- Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers 3467, C.E.P.R. Discussion Papers.
- Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2002. "Distance to Frontier, Selection, and Economic Growth," NBER Working Papers 9066, National Bureau of Economic Research, Inc.
- Carlaw, Kenneth I. & Oxley, Les, 2008. "Resolving the productivity paradox," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 78(2), pages 313-318.
- Chris Papageorgiou & Kaz Miyagiwa, .
"Endogenous Aggregate Elasticity of Substitution,"
Departmental Working Papers
2006-06, Department of Economics, Louisiana State University.
- Durlauf, S.N. & Johnson, P.A., 1994.
"Multiple Regimes and Cross-Country Growth Behavior,"
9419, Wisconsin Madison - Social Systems.
- Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-84, Oct.-Dec..
- Durlauf, S.M. & Johnson, P.A., 1995. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419r, Wisconsin Madison - Social Systems.
- Timothy Besley, 2007. "The New Political Economy," Economic Journal, Royal Economic Society, vol. 117(524), pages F570-F587, November.
- Rainer Klump & Peter McAdam & Alpo Willman, 2007. "The long-term sucCESs of the neoclassical growth model," Oxford Review of Economic Policy, Oxford University Press, vol. 23(1), pages 94-114, Spring.
- Harrison, Ann, 2005. "Has Globalization Eroded Labor’s Share? Some Cross-Country Evidence," MPRA Paper 39649, University Library of Munich, Germany.
- Rebelo, S., 1998. "The Role of Knowledge and Capital in Economic Growth," Research Paper 149, World Institute for Development Economics Research.
- Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
- Durlauf,S.N. & Kourtellos,A. & Tan,C.M., 2005.
"Empirics of growth and development,"
16, Wisconsin Madison - Social Systems.
- Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2005. "Empirics of Growth and Development," Discussion Papers Series, Department of Economics, Tufts University 0520, Department of Economics, Tufts University.
- Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2005. "Empirics of growth and Development," University of Cyprus Working Papers in Economics 8-2005, University of Cyprus Department of Economics.
- Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
- Daron Acemoglu, 2001.
"Directed Technical Change,"
NBER Working Papers
8287, National Bureau of Economic Research, Inc.
- Prescott, Edward C, 1998.
"Needed: A Theory of Total Factor Productivity,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
- Charles I. Jones & Paul M. Romer, 2009.
"The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital,"
NBER Working Papers
15094, National Bureau of Economic Research, Inc.
- Charles I. Jones & Paul M. Romer, 2010. "The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 224-45, January.
- Douglas Gollin, 2001.
"Getting Income Shares Right,"
Department of Economics Working Papers
2001-11, Department of Economics, Williams College.
- Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001.
"Competition, Imitation and Growth with Step-by-Step Innovation,"
12375013, Harvard University Department of Economics.
- Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 467-492.
- Sato, Ryuzo, 1970. "The Estimation of Biased Technical Progress and the Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(2), pages 179-208, June.
- V. Polterovich., 2009. "The Innovation Pause Hypothesis and the Strategy of Modernization," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
- Philippe Aghion & Peter Howitt, 1998.
"On the Macroeconomic Effects of Major Technological Change,"
Annals of Economics and Statistics,
GENES, issue 49-50, pages 53-75.
- Philippe Aghion & Peter Howitt, 1999. "On the Macroeconomic Effects of Major Technological Change," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 25, pages 15-32.
- Revankar, Nagesh S, 1971. "A Class of Variable Elasticity of Substitution Production Functions," Econometrica, Econometric Society, vol. 39(1), pages 61-71, January.
- Lipsey, Richard G. & Carlaw, Kenneth I. & Bekar, Clifford T., 2005. "Economic Transformations: General Purpose Technologies and Long-Term Economic Growth," OUP Catalogue, Oxford University Press, number 9780199290895.
- Duffy, John & Papageorgiou, Chris, 2000. "A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March.
- Atkinson, Anthony B & Stiglitz, Joseph E, 1969. "A New View of Technological Change," Economic Journal, Royal Economic Society, vol. 79(315), pages 573-78, September.
- Vladimir Matveenko, 2010. "Anatomy of production functions: a technological menu and a choice of the best technology," Economics Bulletin, AccessEcon, vol. 30(3), pages 1906-1913.
- Eicher, Theo & García-Peñalosa, Cecilia, 2008. "Endogenous strength of intellectual property rights: Implications for economic development and growth," European Economic Review, Elsevier, vol. 52(2), pages 237-258, February.
When requesting a correction, please mention this item's handle: RePEc:deg:conpap:c016_047. 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: (Jan Pedersen)
If references are entirely missing, you can add them using this form.