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Unified growth based on the specific factors model

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  • Caspari, Volker
  • Pertz, Klaus

Abstract

The two-sector specific factor model is typically used in the theory of international trade where it helps to clarify the principle of comparative advantage. Instead, we use this model as explicit theoretical framework to explain major trends of long-run economic development. Combined with endogenous technical progress functions which assume that knowledge accumulates as a by-product of agricultural and manufacturing experience, the two-sector specific factors model can explain major historical trends and structural turnarounds. The technical progress functions establish the link between the agricultural and the manufacturing sector through the land-labour ratio, which is determined by the savings propensities of wage-earners, landlords and capitalists. This result is achieved by making use of the traditional investment = savings condition, without reference to complicated micro-based models of human capital accumulation.

Suggested Citation

  • Caspari, Volker & Pertz, Klaus, 2008. "Unified growth based on the specific factors model," Darmstadt Discussion Papers in Economics 193, Darmstadt University of Technology, Department of Law and Economics.
    • Handle: RePEc:zbw:darddp:dar_35697
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic development; growth; Industrial Revolution; income distribution;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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