FACTOR ACCUMULATION AND GROWTH MIRACLES IN A TWO‐SECTOR NEOCLASSICAL GROWTH MODEL*

John S. Landon‐lane and Peter Robertson
Authors registered in the RePEc Author Service: John Landon-Lane ()

Manchester School, 2009, vol. 77, issue 2, 153-170

Abstract: Countries that experience ‘growth miracles’ often exhibit rising investment rates and large intersectoral resource transfers. But how important are these factors to this process? We consider this question using a two‐sector growth model with a segmented labour market. Numerical simulations show that a doubling of the investment rate can generate a significant intersectoral re‐allocation of labour and can have a large impact on aggregate output per worker. Under our baseline parameter values, the effect of the investment rate on per capita incomes is amplified by 25–50 per cent, relative to a standard one‐sector growth model.

Date: 2009
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https://doi.org/10.1111/j.1467-9957.2008.02092.x

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