IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Yeast vs. Mushrooms: A Note on Harberger's "A Vision of the Growth Process"

  • Mauro Napoletano
  • Andrea Roventini
  • Sandro Sapio

Harberger's "A Vision of the Growth Process", Presidential Address at the 1998 Annual Meeting of the American Economic Association, provides evidence that contributions to aggregate real cost reduction (RCR) are concentrated in a small number of industries. According to Harberger, this is because the effect of broad externalities - such as those linked to the growth of the total stock of knowledge or human capital, or brought about by economies of scale tied to the scale of the economy - is negligible as compared to industry- and firm-specific causes of productivity growth. The argument is that, if growth was driven mainly by broad externalities, contributions to aggregate RCR ought to be quite evenly distributed across sectors. Hence, the growth process looks more like "mushrooms" than "yeast". In this note, we argue that Harberger's evidence is not incompatible with the yeast vision. More specifically, we show that, if there is heterogeneity in the elasticities of sectoral total factor productivities (TFP) to shocks from other sectors, then concentration in the sectoral contributions to aggregate RCR can occur. But this is true even if sectoral TFP growth processes are completely driven by a broad externality stemming from a single sector. To the extent that the response of a sector's TFP to shocks from other sectors can be seen as a measure of absorptive capacity, we suggest that a realistic description of the growth process must go beyond the simple dichotomy "yeast vs. mushrooms", and take account of the intersectoral patterns of knowledge transfer.

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.lem.sssup.it/WPLem/files/2004-03.pdf
Download Restriction: no

Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2004/03.

as
in new window

Length:
Date of creation: 01 Feb 2004
Date of revision:
Handle: RePEc:ssa:lemwps:2004/03
Contact details of provider: Postal: Piazza dei Martiri della Liberta, 33, 56127 Pisa
Phone: +39-50-883343
Fax: +39-50-883344
Web page: http://www.lem.sssup.it/
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. Paul David & Gavin Wright, 1999. "Early Twentieth Century Productivity Growth Dynamics: An Inquiry into the Economic History of Our Ignorance," Economics Series Working Papers 1999-W33, University of Oxford, Department of Economics.
  2. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  4. Trajtenberg, M. & Bresnahan, T.F., 1992. "General Purpose Technologies: "Engines of Growth"," Papers 16-92, Tel Aviv.
  5. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters, in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc.
  6. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, June.
  7. Rosenberg, Nathan & Trajtenberg, Manuel, 2001. "A General Purpose Technology at Work: The Corliss Steam Engine in the Late 19th Century," CEPR Discussion Papers 3008, C.E.P.R. Discussion Papers.
  8. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May.
  9. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  10. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  11. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
  12. Nathan Rosenberg & Manuel Trajtenberg, 2001. "A General Purpose Technology at Work: The Corliss Steam Engine in the late 19th Century US," NBER Working Papers 8485, National Bureau of Economic Research, Inc.
  13. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  14. Devine, Warren D., 1983. "From Shafts to Wires: Historical Perspective on Electrification," The Journal of Economic History, Cambridge University Press, vol. 43(02), pages 347-372, June.
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:ssa:lemwps:2004/03. 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: ()

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.