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Variety, Competition, and Population in Economic Growth: Theory and Empirics

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  • Alberto BUCCI
  • Lorenzo CARBONARI
  • Giovanni TROVATO

Abstract

By considering the average density of sectors in a country’s product space, measured by the Lafay’s net export flows-based specialization index, as an indicator of the degree of complexity of the same country’s production structure (Hausmann and Klinger [29]), this is the first paper that provides aggregate macroeconomic evidence on how, in the long-run, a diverse degree of production-complexity may affect in a differential way not only economic growth, but also the relation between economic growth, population growth and the monopolistic (intermediate) markup. On average, for the countries included in the sample, we find that, following an increase in the number of horizontally-differentiated (intermediate) inputs entering the aggregate production function, the specialization effect is greater than the corresponding complexity effect. In this case, the impact of population growth on economic growth is definitely negative, whereas the influence of the monopolistic markup on the same variable is negative.

Suggested Citation

  • Alberto BUCCI & Lorenzo CARBONARI & Giovanni TROVATO, 2017. "Variety, Competition, and Population in Economic Growth: Theory and Empirics," Departmental Working Papers 2017-06, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2017-06
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    2. Alberto Bucci & Lorenzo Carbonari & Giovanni Trovato & Pedro Trivin, 2024. "Human Capital-based Growth with Depopulation and Class-size Effects: Theory and Empirics," CEIS Research Paper 575, Tor Vergata University, CEIS, revised 30 Apr 2024.
    3. Sequeira, Tiago Neves & Gil, Pedro Mazeda & Afonso, Oscar, 2018. "Endogenous growth and entropy," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 100-120.
    4. Alberto Bucci, 2022. "P. Aghion, C. Antonin, S. Bunel, The power of creative destruction: Economic upheaval and the wealth of nations," Journal of Economics, Springer, vol. 135(3), pages 299-306, April.
    5. Antonelli, Cristiano & Crespi, Francesco & Quatraro, Francesco, 2022. "Knowledge complexity and the mechanisms of knowledge generation and exploitation: The European evidence," Research Policy, Elsevier, vol. 51(8).
    6. Bucci, Alberto & Carbonari, Lorenzo & Gil, Pedro Mazeda & Trovato, Giovanni, 2021. "Economic growth and innovation complexity: An empirical estimation of a Hidden Markov Model," Economic Modelling, Elsevier, vol. 98(C), pages 86-99.
    7. Sakiru, Solarin Adebola & Gil-Alana, Luis A. & Gonzalez-Blanch, Maria Jesus, 2022. "Persistence of economic complexity in OECD countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 603(C).

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    More about this item

    Keywords

    Economic growth; Population growth; Variety-expansion; Specialization; Complexity; Product market competition;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • J1 - Labor and Demographic Economics - - Demographic Economics

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