Endogenous sector–biased technological change and industrial policy

Berthold Herrendorf and Ákos Valentinyi

Economic Modelling, 2022, vol. 113, issue C

Abstract: We build a model of structural transformation with endogenous sector–biased technological change. We show that if the return to specialization is larger in the goods sector than in the service sector, then the equilibrium has the following properties: aggregate growth is balanced; the service sector receives more innovation but the goods sector experiences more productivity growth; structural transformation takes place from goods to services. Compared to the efficient allocation the laissez–faire equilibrium has too much labor in the goods sector, implying that optimal industrial policy should aim to increase, not decrease, the pace of structural transformation.

Keywords: endogenous Sector–biased technological change; Horizontal innovation; Industrial policy; Structural transformation (search for similar items in EconPapers)
JEL-codes: O11 O14 O31 O33 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Endogenous Sector-Biased Technological Change and Industrial Policy (2016)
Working Paper: Endogenous Sector-Biased Technological Change and Industrial Policy (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:113:y:2022:i:c:s0264999322001213

DOI: 10.1016/j.econmod.2022.105875

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