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Industrial Development, Technological Change, and Long-RunGrowth

  • Peretto, Pietro F.

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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Paper provided by Duke University, Department of Economics in its series Working Papers with number 97-10.

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Date of creation: 1997
Date of revision:
Publication status: Published in JOURNAL OF DEVELOPMENT ECONOMICS, Vol. 59, 1999, pages 389-417
Handle: RePEc:duk:dukeec:97-10
Contact details of provider: Postal:
Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097

Phone: (919) 660-1800
Fax: (919) 684-8974
Web page: http://econ.duke.edu/

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  1. Peretto, Pietro F, 1996. "Sunk Costs, Market Structure, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 895-923, November.
  2. Peretto, P. & Smulders, J.A., 1998. "Specialization, Knowledge Dilution, and Scale Effects in an IO-Based Growth Model," Discussion Paper 1998-02, Tilburg University, Center for Economic Research.
  3. Kiminori Matsuyama, 1995. "Complementarities and Cumulative Processes in Models of Monopolistic Competition," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 701-729, June.
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  7. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
  8. 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..
  9. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-26, October.
  10. Smulders, Sjak & van de Klundert, Theo, 1995. "Imperfect competition, concentration and growth with firm-specific R & D," European Economic Review, Elsevier, vol. 39(1), pages 139-160, January.
  11. Antonio Ciccone & Kiminori Matsuyama, 1993. "Start-up costs and pecuniary externalities as barriers to economic development," Discussion Paper / Institute for Empirical Macroeconomics 83, Federal Reserve Bank of Minneapolis.
  12. van de Klundert, Theo & Smulders, Sjak, 1997. " Growth, Competition and Welfare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 99-118, March.
  13. Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 651-667.
  14. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July.
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  17. Klevorick, Alvin K. & Levin, Richard C. & Nelson, Richard R. & Winter, Sidney G., 1995. "On the sources and significance of interindustry differences in technological opportunities," Research Policy, Elsevier, vol. 24(2), pages 185-205, March.
  18. Peretto, Pietro F., 1997. "Technological Change, Market Rivalry, and the Evolution of theCapitalist Engine of Growth," Working Papers 97-06, Duke University, Department of Economics.
  19. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  20. Quah, Danny T, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
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  22. Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
  23. Peretto, Pietro F, 1998. "Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
  24. Backus, David K. & Kehoe, Patrick J. & Kehoe, Timothy J., 1992. "In search of scale effects in trade and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 377-409, December.
  25. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  26. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
  27. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
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