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Path-dependent economic growth with technological trajectory

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  • Tsutomu Harada

Abstract

This paper develops an integrated model of neoclassical and endogenous growth, which accounts for both income inequalities across countries and the convergence hypothesis, while all the growth stylized facts are satisfied. The model in this paper assumes that an economy industrializes in two stages. In the first stage, the economy starts industrialization through factor accumulation (the Solow stage); and after sufficient factor accumulation, it switches to the second stage of endogenous growth through innovation (the AK stage). Therefore, it becomes crucial to determine when switching from the Solow to the AK stages is implemented. We model this switching problem as a two-stage optimal control and show that the growth rate declines during the Solow stage, while in the AK stage it becomes constant. In addition, we draw several policy implications.

Suggested Citation

  • Tsutomu Harada, 2010. "Path-dependent economic growth with technological trajectory," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(6), pages 521-538.
    • Handle: RePEc:taf:ecinnt:v:19:y:2010:i:6:p:521-538
    DOI: 10.1080/10438590903166412
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    References listed on IDEAS

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    Cited by:

    1. Martina Janková & Veronika Novotná & Tereza Varyšová, 2013. "Functions of several variables analysis applied in inventory management," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(7), pages 2221-2227.
    2. Harada, Tsutomu, 2010. "Path-dependent economic progress and regress: The negative role of subsidies in economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 197-205, August.

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