Knowledge Rich Industries and Balanced Growth for Transitional Economies

P. Luksha
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P. Luksha: Socio-economic Issues, Research Committee on Sociocybernetics, European Association of Evolutionary Po¬litical Economy

Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, 2003, vol. 7, issue 4, 471-495

Abstract: In this paper, economic development through knowledge-rich proc¬essing industries as a potential dominating path for countries in transi¬tion is examined. It is particularly important that all countries in transi¬tion are richly endowed with intellectual resources which is shown to be a factor (a) critical for transition, (b) receiving a growing value-added compensation, and (c) giving potential for intellectual rent. A twoindustry dynamic model considering intellectual resources demonstrates that there exists optimal distribution of investment allowing to maximize national income, that is, a way for balanced growth in knowledge-rich economy. Government can support this process through re-direction of investment flows to achieve optimal investment distribution and invest¬ment into institutional capital. For successful growth through know¬ledge-rich industries, R&D sector should also be enhanced to become market-oriented.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:scn:025886:16537817

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