TY - JOUR
T1 - Endogenous sector–biased technological change and industrial policy
AU - Herrendorf, Berthold
AU - Valentinyi, Ákos
N1 - Funding Information:
Disclosure Statement for Akos Valentinyi: This research received financial support from the Hungarian Scientific Research Fund .
Funding Information:
Disclosure Statement for Berthold Herrendorf: This research received financial support from the Spanish Ministry for Education .
Funding Information:
For helpful comments and suggestions, we would like to thank Alexander Bick, Timo Boppart, Domenico Ferraro, Ágnes Kovács, B. Ravikumar, Todd Schoellman, Gustavo Ventura, and the audiences of presentations at ASU, Bocconi, European University Institute, Federal Reserve Bank of St. Louis, Manchester, and workshops on structural transformation at the Universities of Cagliari and St. Andrews. Herrendorf thanks the Spanish Ministry of Education for research support (Grant ECO 2012-31,358 ), and Valentinyi thanks the Hungarian Scientific Research Fund (OTKA) (Project KJS K 124,808 ).
Funding Information:
For helpful comments and suggestions, we would like to thank Alexander Bick, Timo Boppart, Domenico Ferraro, Ágnes Kovács, B. Ravikumar, Todd Schoellman, Gustavo Ventura, and the audiences of presentations at ASU, Bocconi, European University Institute, Federal Reserve Bank of St. Louis, Manchester, and workshops on structural transformation at the Universities of Cagliari and St. Andrews. Herrendorf thanks the Spanish Ministry of Education for research support (Grant ECO 2012-31,358), and Valentinyi thanks the Hungarian Scientific Research Fund (OTKA) (Project KJS K 124,808).Disclosure Statement for Akos Valentinyi: This research received financial support from the Hungarian Scientific Research Fund.Disclosure Statement for Berthold Herrendorf: This research received financial support from the Spanish Ministry for Education.
Publisher Copyright:
© 2022 The Authors
PY - 2022/8
Y1 - 2022/8
N2 - We build a model of structural transformation with endogenous sector–biased technological change. We show that if the return to specialization is larger in the goods sector than in the service sector, then the equilibrium has the following properties: aggregate growth is balanced; the service sector receives more innovation but the goods sector experiences more productivity growth; structural transformation takes place from goods to services. Compared to the efficient allocation the laissez–faire equilibrium has too much labor in the goods sector, implying that optimal industrial policy should aim to increase, not decrease, the pace of structural transformation.
AB - We build a model of structural transformation with endogenous sector–biased technological change. We show that if the return to specialization is larger in the goods sector than in the service sector, then the equilibrium has the following properties: aggregate growth is balanced; the service sector receives more innovation but the goods sector experiences more productivity growth; structural transformation takes place from goods to services. Compared to the efficient allocation the laissez–faire equilibrium has too much labor in the goods sector, implying that optimal industrial policy should aim to increase, not decrease, the pace of structural transformation.
KW - Horizontal innovation
KW - Industrial policy
KW - Structural transformation
KW - endogenous Sector–biased technological change
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U2 - 10.1016/j.econmod.2022.105875
DO - 10.1016/j.econmod.2022.105875
M3 - Article
AN - SCOPUS:85131439839
SN - 0264-9993
VL - 113
JO - Economic Modelling
JF - Economic Modelling
M1 - 105875
ER -