The North-South divide: sources of divergence, policies for convergence

Lucrezia Fanti, Marcelo Pereira and Maria Enrica Virgillito

No dipe0027, DISCE - Working Papers del Dipartimento di Politica Economica from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: Building on the labour-augmented K+S framework (Dosi et al., 2010, 2017, 2020), we address the analysis of North-South divide by means of an agent-based model (ABM) endogenously reproducing the divergence between two artificial macro-regions. The latter are characterized by identical initial conditions in terms of productive and innovation structures, but different labour market organizations. We identify the role played by different labour markets functioning on the possible divergence across the two regions, by finding that divergences in labour market reverberate into asymmetric productive performance due to negative reinforcing feedback loop dynamics. We then compare alternative policies by showing that investment schemes aimed at increasing machine renewal and higher substitutionary investment are the most effective in fostering the convergence.

Keywords: Agent-Based Models; Technology Gap; Labour Market (search for similar items in EconPapers)
JEL-codes: C63 E24 J3 O1 (search for similar items in EconPapers)
Pages: 40
Date: 2022-05
New Economics Papers: this item is included in nep-cmp, nep-dem, nep-hme, nep-ino, nep-lma, nep-mac and nep-tid
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The North-South divide: Sources of divergence, policies for convergence (2023)
Working Paper: The North-South divide: sources of divergence, policies for convergence (2022)
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