Growth, Sectoral Composition, and the Wealth of Nations

Jaime Alonso-Carrera (jalonso@uvigo.es) and Xavier Raurich

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: We characterize the dynamic equilibrium of a two-sector endogenous growth model with constant returns to scale. We assume that both sectors produce consumption and investment goods, and we introduce a minimum consumption requirement. In this model, economies with the same fundamentals but different endowments of capitals will converge to a common growth rate, although the long run level and sectoral composition of GDP will be different. Because total factor productivity depends on sectoral composition, capital endowments will also contribute to GDP by means of changing the sectoral composition. This suggests that the development accounting exercises should consider the endogeneity of total factor productivity when measuring the contribution of capital to GDP. Along the transition, the slope of the policy functions depends on the initial values of the capital stocks and of the minimum consumption requirement. This implies that the minimum consumption is a barrier to development and that economies initially similar may diverge along the transition.

Keywords: sectorial composition; human capital; endogenous growth; two-sector growth model (search for similar items in EconPapers)
JEL-codes: O41 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2006-06
New Economics Papers: this item is included in nep-dev and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://degit.sam.sdu.dk/papers/degit_11/C011_019.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to degit.sam.sdu.dk:80 (No such host is known. )

Related works:
Working Paper: Growth, Sectoral Composition, and the Wealth of Nations (2015)
Working Paper: GROWTH, SECTORAL COMPOSITION, AND THE WEALTH OF NATIONS (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c011_019

Access Statistics for this paper

More papers in DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade Contact information at EDIRC.
Bibliographic data for series maintained by Jan Pedersen (jan@sam.sdu.dk).