Industrial Development, Technological Change, and Long-RunGrowth

Pietro Peretto

No 97-10, Working Papers from Duke University, Department of Economics

Abstract: To account for the qualitative differences between developed and developing countries, this paper argues that the expensive in-house R&D that manufacturing firms undertake in advanced industrial economies cannot be supported in countries that are in the early stage of industrialization and do not have sufficiently large markets for manufacturing goods. Such economies grow as standard development models predict: by accumulating physical and human capital and increasing specialization by industry. Only at sufficiently high levels of development are there incentives for systematic R&D efforts. As a result, economies go through an industrial life cycle as they move from initial backwardness to industrial maturity. In other words, development and growth are stages of a process of structural transformation characterized by changing patterns of capital accumulation, specialization by industry, and techological change.

JEL-codes: E10 L16 O31 O40 (search for similar items in EconPapers)
Date: 1997
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Published in JOURNAL OF DEVELOPMENT ECONOMICS, Vol. 59, 1999, pages 389-417

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