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A Note on Barriers to Capital Accumulation and Income

Author

Listed:
  • John Landon-Lane

    (Rutgers University)

  • Peter Robertson

    (The Unviersity of New South Wales)

Abstract

In this paper we clarify the impact that barriers to capital accumulation can have on a two-sector neoclassical growth model's ability to explain the observed differences in incomes across countries. We show that the effect of barriers to technology adoption in a two sector model is necessarily identical to a one-sector model when there are no factor market imperfections and each sector has identical technologies. We also show that this result generalizes to the case when the technologies are different across the sectors.

Suggested Citation

  • John Landon-Lane & Peter Robertson, 2005. "A Note on Barriers to Capital Accumulation and Income," Departmental Working Papers 200509, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:200509
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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2005-09.pdf
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    References listed on IDEAS

    as
    1. Diego Restuccia, 2004. "Barriers to Capital Accumulation and Aggregate Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 225-238, February.
    2. Jones, Charles I., 1994. "Economic growth and the relative price of capital," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 359-382, December.
    3. Areendam Chanda & Carl-Johan Dalgaard, 2003. "Dual Economies and International Total Factor Productivity Differences," Macroeconomics 0305002, University Library of Munich, Germany.
    4. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-551, August.
    5. Robertson, Peter E, 1999. "Economic Growth and the Return to Capital in Developing Economies," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 577-594, October.
    6. Parente, Stephen L. & Prescott, Edward C., 2005. "A Unified Theory of the Evolution of International Income Levels," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 21, pages 1371-1416, Elsevier.
    7. John Landon-Lane & Peter Robertson, 2005. "Barriers to Accumulation and Productivity Differences in a Two Sector Growth Model," Departmental Working Papers 200510, Rutgers University, Department of Economics.
    8. Easterly, William, 1993. "How much do distortions affect growth?," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 187-212, November.
    9. Restuccia, Diego & Urrutia, Carlos, 2001. "Relative prices and investment rates," Journal of Monetary Economics, Elsevier, vol. 47(1), pages 93-121, February.
    10. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
    11. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic Growth; Economic Development; Barriers; Capital Accumulation;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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