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Structural Change and Decisions on Investment Allocation

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  • Araujo, Ricardo Azevedo
  • Teixeira, Joanílio Rodolpho

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.

Suggested Citation

  • Araujo, Ricardo Azevedo & Teixeira, Joanílio Rodolpho, 2002. "Structural Change and Decisions on Investment Allocation," MPRA Paper 53293, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:53293
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    References listed on IDEAS

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    1. Halevi, Joseph, 1996. "The significance of the theory of vertically integrated processes for the problem of economic development," Structural Change and Economic Dynamics, Elsevier, vol. 7(2), pages 163-171, June.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    3. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    4. Weitzman, Martin L, 1971. "Shiftable Versus Non-Shiftable Capital: A Synthesis," Econometrica, Econometric Society, vol. 39(3), pages 511-529, May.
    5. Lavoie, Marc, 1997. "Pasinetti's Vertically Hyper-integrated Sectors and Natural Prices," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(4), pages 453-467, July.
    6. Hishiyama, Izumi, 1996. "Appraising Pasinetti's structural dynamics," Structural Change and Economic Dynamics, Elsevier, vol. 7(2), pages 127-134, June.
    7. Sanjit Bose, 1968. "Optimal Growth and Investment Allocation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(4), pages 465-480.
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    Citations

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    Cited by:

    1. Pierre Gosselin & Aïleen Lotz & Marc Wambst, 2019. "Heterogeneity in social values and capital accumulation in a changing world," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(1), pages 47-92, March.
    2. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2012. "Capital-Specific Technological Change and Human Capital Accumulation in a Model of Export-Led Growth," PSL Quarterly Review, Economia civile, vol. 65(262), pages 275-311.
    3. Silva, Ester G. & Teixeira, Aurora A.C., 2008. "Surveying structural change: Seminal contributions and a bibliometric account," Structural Change and Economic Dynamics, Elsevier, vol. 19(4), pages 273-300, December.
    4. repec:eut:journl:v:11:y:2006:i:3:p:41 is not listed on IDEAS
    5. Cardinale, Roberto, 2019. "Theory and practice of State intervention: Italy, South Korea and stages of economic development," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 206-216.
    6. Ricardo Azevedo Araujo & Joanílio Rodolpho Teixeira, 2010. "A Multi-Sector Version of the Post-Keynesian Growth Model," Working papers - Textos para Discussao do Departamento de Economia da Universidade de Brasilia 330, Departamento de Economia da Universidade de Brasilia.
    7. Gosselin, Pierre & Lotz, Aïleen & Wambst, Marc, 2016. "How To Spend It? Capital Accumulation in a Changing World," MPRA Paper 71665, University Library of Munich, Germany.
    8. Ricardo Azevedo Araujo & Carlos Eduardo Drumond, 2021. "A two‐sector neo‐Kaleckian model of growth and distribution: Investment allocation and evolutionary dynamics," Metroeconomica, Wiley Blackwell, vol. 72(1), pages 213-236, February.
    9. Ricardo Azevedo Araujo & Joanílio Rodolpho Teixeira, 2003. "An Extension of the Structural Change Model to International Economic Relations," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 458-473, November.
    10. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2008. "Investment-Specific Technological Change, Investment Sectoral Allocation and Human Capital Accumulation in a Model of Export-Led Growth," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211332520, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Araujo, Ricardo Azevedo & Teixeira, Joanílio Rodolpho, 2011. "Decisions on investment allocation in the post-Keynesian growth models," MPRA Paper 33639, University Library of Munich, Germany.
    12. Antonio D'Agata, 2010. "Endogenous Adaptive Dynamics In Pasinetti Model Of Structural Change," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 333-363, May.
    13. Araujo, Ricardo Azevedo & Lima, Gilberto Tadeu, 2011. "Embodied technological change, capital sectoral allocation and export-led growth," MPRA Paper 29810, University Library of Munich, Germany.

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    More about this item

    Keywords

    Structural Dynamics; Investment Allocation; Multi-sector Models; Vertical Integration.;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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