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Stages of Growth in Economic Development

  • Michal Kejak


The paper analyses a two-sector model of endogenous growth with two common features of economic development: stages of sustained growth and underdevelopment traps. The model also demonstrates the transitional issues of a temporary underdevelopment trap, seemingly sustainable growth, and a slowdown in productivity growth. The temporary underdevelopment trap occurs when the economy exhibits a regime of extensive growth (i.e. slowly declining growth in physical capital with no growth in human capital) but then starts a transition to a sustained growth. The seemingly sustainable growth occurs when the economy exhibits a regime of intensive growth (i.e. both capitals are growing) but the growth of human capital ceases and the economy eventually finishes in a zero growth trap. The slowdown in productivity growth occurs when the transition from low growth stage to high growth stage is not monotonic.

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Paper provided by EconWPA in its series Development and Comp Systems with number 0012014.

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Length: 35 pages
Date of creation: 19 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpdc:0012014
Note: Type of Document - Acrobat PDF; pages: 35 ; figures: Included
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  1. Mulligan, Casey B & Sala-i-Martin, Xavier, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 739-73, August.
  2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  3. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  4. Danyang Xie, 2002. "Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria," GE, Growth, Math methods 0210002, EconWPA.
  5. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  6. Kejak, Michal, 2003. "Stages of growth in economic development," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 771-800, March.
  7. 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.
  8. Kejak, Michal, 1995. "Application of Projection Method in a Model of Endogenous Growth," Economics Series 7, Institute for Advanced Studies.
  9. Antonio Ladron de Guevara & Salvador Ortigueira & Manuel S. Santos, 1994. "Equilibrium Dynamics in Two-Sector Models of Endogenous Growth," Working Papers 9403, Centro de Investigacion Economica, ITAM.
  10. F Zilibotti, 1993. "A Rostovian Model of Endogenous Growth and Underdevelopment Traps," CEP Discussion Papers dp0166, Centre for Economic Performance, LSE.
  11. Caballe, Jordi & Santos, Manuel S, 1993. "On Endogenous Growth with Physical and Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1042-67, December.
  12. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
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