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Structural change and economic growth with relation-specific investment

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  • Harada, Tsutomu

Abstract

This article develops an inter-sectoral endogenous innovation model that is able to account for changing productive relations among sectors and examines how the relation-specific investment affects the evolution of industry structure. It is shown that in the steady state, the economy gets stuck in the “growth trap” where the economy still achieves positive growth, but at the lowest level. The most efficient remedies for the growth trap are to facilitate relation-specific investment among sectors and to decrease the degree of specialization in the economy. Thus, the relation-specific investment is indeed instrumental in improving economic efficiency in the face of the growth trap. These remedies could be implemented by subsidies on relation-specific groups and permanent R&D taxes.

Suggested Citation

  • Harada, Tsutomu, 2015. "Structural change and economic growth with relation-specific investment," Structural Change and Economic Dynamics, Elsevier, vol. 32(C), pages 1-10.
    • Handle: RePEc:eee:streco:v:32:y:2015:i:c:p:1-10
    DOI: 10.1016/j.strueco.2014.12.002
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    Cited by:

    1. Villarreal, Francisco G. & Gomes Nogueira, Caroline & Padilla, Ramón, 2017. "Value chain selection and industrial policy," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43153, May.
    2. Roberts Skapars & Sandra Jekabsone & Janis Priede & Irina Skribane, 2017. "Productivity and its Impact on the Competitiveness of Latvia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 920-930.
    3. Garry, Stefanie & Oddone, Nahuel, 2017. "Strengthening tourism value chains in rural settings," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43155, May.
    4. Oddone, Nahuel & Padilla, Ramón, 2017. "Methodology for strengthening value chains," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43152, May.
    5. Padilla, Ramón, 2017. "Strengthening value chains in primary and agro-industrial products," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43154, May.
    6. Padilla-Pérez, Ramón & Villarreal, Francisco G., 2017. "Structural change and productivity growth in Mexico, 1990–2014," Structural Change and Economic Dynamics, Elsevier, vol. 41(C), pages 53-63.
    7. Quiróz Estrada, Verónica, 2017. "Productive development challenges in the rural areas of Central America and the Dominican Republic," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43150, May.
    8. -, 2017. "Rural industrial policy and strengthening value chains," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 42074 edited by Eclac, May.
    9. Padilla, Ramón & Quiróz Estrada, Verónica, 2017. "Rural industrial policy," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 43151, May.

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    More about this item

    Keywords

    Inter-sectoral growth; Growth trap; Relation-specific groups; Permanent taxes;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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