A unified theory of structural change

• María Dolores Guilló Fuentes ^[1] ; Chris Papageorgiou ^[2] ; Fidel Pérez Sebastián ^[1]
  1. [1] Universitat d'Alacant

     Universitat d'Alacant

     Alicante, España

     
  2. [2] International Monetary Fund
• Localización: Working papers = Documentos de trabajo: Serie AD, Nº. 34, 2010, págs. 1-30
• Idioma: inglés
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• Resumen

  • This paper uses dynamic general equilibrium and computational methods, inspired by the multi-sector growth model structure in Stephen Turnovsky's previous and more recent work, to develop a theory that unifies two of the traditional explanations of structural change: sector-biased technical change and non-homothetic preferences. More specifically, we build a multisector overlapping generations growth model with endogenous technical-change and non-homothetic preferences based on an expanding-variety setup with two different R&D technologies; one for agriculture, and another for non-agriculture. Results give additional support to the biased technical-change hypothesis as an important determinant of the structural transformation. The paper also explores where this bias might come from. Our findings suggest that production-side specific factors, such as asymmetries in cross-sector knowledge spillovers could be behind it, and therefore be important to fully explain the process of structural change.