Structural Change and Decisions on Investment Allocation

Ricardo Araujo and Joanílio Teixeira ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this article the growth models of Feldman (1928) and Mahalanobis (1953) are extended to analyse the implications of the process of structural change on the decisions of investment allocation. By using the device of vertical integration, their constructions are shown to be a particular case of the Pasinetti’s (1981) model of structural change. Their analysis is then carried out in a multi-sector framework, where both productivity and demand change at a particular rate in each of the sectors. A particular rate of investment allocation for each sector is established subject to the full employment of the labour force. Following these lines, we are able to put some of the Halevi’s (1996) descriptive observations into a formal context and within this context to analyse and to extend his ideas about the role of demand on the decisions of investment allocation. Finally, an additional condition is added to the Pasinetti’s model in order to fully characterise the equilibrium path in the most general version of his framework, where capital goods are needed to produce capital goods.

Keywords: Structural Dynamics; Investment Allocation; Multi-sector Models; Vertical Integration. (search for similar items in EconPapers)
JEL-codes: O41 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (13)

Published in Structural Change and Economic Dynamics 13.2(2002): pp. 249-258

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Journal Article: Structural change and decisions on investment allocation (2002)
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