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Functional Distribution, Land Ownership and Industrial Takeoff


  • Ennio Bilancini

    (University of Siena)

  • Simone D'Alessandro

    (University of Siena)


This paper investigates how the distribution of land property rights affects industrial take-off and aggregate income through the demand side. We study a stylized two sectors economy where the manufacturing sector is assumed to be constituted by a continuum of small markets producing distinct commodities. Following Murphy et al. (1989) we model industrialization as the introduction of an increasing returns technology in place of a constant returns one. However, we depart from their framework by assuming income to be distributed according to functional groups’ membership (landowners, capitalists, workers). We carry out an equilibrium analysis for different levels of land ownership concentration proving that, under the specified conditions, there is a non-monotonic relation between the distribution of land property rights and both industrialization and income. We clarify that non-monotonicity arises because of the way land ownership concentration affects the level and the distribution of profits among capitalists. Our results suggest that i) both a too concentrated and a too diffused distribution of land property rights can be detrimental to industrialization, ii) landownership affects the economic performance of an industrializing country by determining industrial profits and iii) in terms of optimal land distribution there may be a tradeoff between income and industrialization.

Suggested Citation

  • Ennio Bilancini & Simone D'Alessandro, 2005. "Functional Distribution, Land Ownership and Industrial Takeoff," Development and Comp Systems 0511018, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0511018
    Note: Type of Document - pdf; pages: 30

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    References listed on IDEAS

    1. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-1198, December.
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    13. Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2003. "Land Inequality and the Origin of Divergence and Overtaking in the Growth Process: Theory and Evidence," CEPR Discussion Papers 3817, C.E.P.R. Discussion Papers.
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    income ditribution; land; industrialization;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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