Variety Expansion and Sustainable Growth in East Asia

Se-Jik Kim, Yong-Jin Kim and Jong-Wha Lee
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Se-Jik Kim: International Monetary Fund

Korean Economic Review, 2001, vol. 17, 183-205

Abstract: This paper presents an endogenous growth model in which a sustained long-term growth can be achieved by a continuous expansion of varieties of goods despite Neo-classical diminishing returns in capital and no productivity-augmenting technological progress. The model contrasts the existing endogenous growth models of the product-varieties expansion by emphasizing that the introduction of new final goods occurs by raising capital accumulation rather than productivity growth. The model may well explain the coexistence of rapid introduction of new goods, high investment ratios, high income growth, and high welfare, even with a low growth rate of total factor productivity as we observe from the experience of the fast growing countries in East Asia.

Keywords: variety expansion; capital accumulation; East Asia (search for similar items in EconPapers)
JEL-codes: O1 O3 O4 P5 (search for similar items in EconPapers)
Date: 2001
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