Unified Growth Based on the Specific Factors Model

Volker Caspari and Klaus Pertz

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: The two-sector specific factor model is typically used in the theory of international trade where it helps to clarify the principle of comparative advantage. Instead, we use this model as explicit theoretical framework to explain major trends of long-run economic development. Combined with endogenous technical progress functions which assume that knowledge accumulates as a by-product of agricultural and manufacturing experience, the two-sector specific factors model can explain major historical trends and structural turnarounds. The technical progress functions establish the link between the agricultural and the manufacturing sector through the land-labour ratio, which is determined by the savings propensities of wage-earners, landlords and capitalists. This result is achieved by making use of the traditional investment = savings condition, without reference to complicated micro-based models of human capital accumulation.

JEL-codes: E13 N1 O4 (search for similar items in EconPapers)
Date: 2008-08-01
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Published in Darmstadt Discussion Papers in Economics . 193 (2008-08-01)

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:35697

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