Growth, sectoral composition, and the evolution of income levels

Jaime Alonso-Carrera () and Xavier Raurich

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Abstract: We assert that the endowments of production factors cause cross-country differences in GDP by generating disparities in the sectoral composition. We characterize the dynamic equilibrium of a two-sector endogenous growth model with several consumption goods that are subject to minimum consumption requirements. In this model, economies with the same fundamentals but different endowments of capitals will end up growing at a common rate, although the long run sectoral composition of GDP will be different. Because the total factor productivity (TFP) in multisector models depends on sectoral structure, these differences in capital endowments will also generate sustained differences in TFPs.

Keywords: Sectoral composition; Two-sector growth model; Minimum consumption; Total factor productivity (search for similar items in EconPapers)
Date: 2010-10-21
Note: View the original document on HAL open archive server: https://hal.science/hal-00743844
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Citations: View citations in EconPapers (11)

Published in Journal of Economic Dynamics and Control, 2010, 34 (12), pp.2440. ⟨10.1016/j.jedc.2010.06.011⟩

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Journal Article: Growth, sectoral composition, and the evolution of income levels (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00743844

DOI: 10.1016/j.jedc.2010.06.011

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