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Growth, sectoral composition, and the evolution of income levels

Author

Listed:
  • Jaime Alonso-Carrera

    (Universidade de Vigo)

  • Xavier Raurich

    (Departament de Teoria Econòmica and CREB Universitat de Barcelona - Departament de Teoria Econòmica and CREB Universitat de Barcelona)

Abstract

We assert that the endowments of production factors cause cross-country differences in GDP by generating disparities in the sectoral composition. We characterize the dynamic equilibrium of a two-sector endogenous growth model with several consumption goods that are subject to minimum consumption requirements. 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 sectoral composition of GDP will be different. Because the total factor productivity (TFP) in multisector models depends on sectoral structure, these differences in capital endowments will also generate sustained differences in TFPs.

Suggested Citation

  • Jaime Alonso-Carrera & Xavier Raurich, 2010. "Growth, sectoral composition, and the evolution of income levels," Post-Print hal-00743844, HAL.
    • Handle: RePEc:hal:journl:hal-00743844
    DOI: 10.1016/j.jedc.2010.06.011
    Note: View the original document on HAL open archive server: https://hal.science/hal-00743844
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    Cited by:

    1. Kevin Genna & Christian Ghiglino & Kazuo Nishimura & Alain Venditti, 2024. "Knowledge-based structural change," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(4), pages 1333-1388, December.
    2. Debajyoti Chakrabarty, 2023. "Relative deprivation, time preference, and economic growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 489-525, September.
    3. Lorenzo Burlon, 2017. "Public expenditure distribution, voting, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(4), pages 789-810, August.
    4. Bastanzad, Hossein & Valipour Pasha, Mohammad, 2014. "Decomposition of Quality Growth in the I.R. of Iran during 1971-2013," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(1), pages 31-56, October.
    5. G. Candela & M. Castellani & R. Dieci, 2015. "The wise use of leisure time. A three-sector endogenous growth model with leisure services," Working Papers wp1010, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Mr. Marcelo Martinez & Mr. Montfort Mlachila, 2013. "The Quality of the Recent High-Growth Episode in Sub-Saharan Africa," IMF Working Papers 2013/053, International Monetary Fund.
    7. Cruz Edgar, 2017. "Structural change and non-constant biased technical change," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(2), pages 1-23, June.
    8. Christian Ghiglino & Kazuo Nishimura & Alain Venditti, 2018. "Non-Balanced Endogenous Growth and Structural Change: When Romer Meets Kaldor and Kuznets," AMSE Working Papers 1831, Aix-Marseille School of Economics, France.
    9. Giulia FELICE, 2009. "Size and composition of public investment, structural change and growth," Departmental Working Papers 2009-28, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano, revised 27 Dec 2011.
    10. Marrero, Gustavo A. & Novales, Alfonso, 2011. "Growth, income taxes and consumption aspirations," Economics Letters, Elsevier, vol. 113(3), pages 221-224.

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