Innovation, Specialization and Growth in a Model of Structural Change
Quaderni - Working Paper DSE N° 718
41 Pages Posted: 3 Dec 2010 Last revised: 5 May 2020
Date Written: November 30, 2010
Abstract
The aim of this paper is to investigate the nexus between demand patterns and innovation as it stems from research efforts and the extent of specialization. In the proposed model an innovation race conducted by entrants investing in research and development against established incumbents raises productivity at the industry level and leads to a shift in the aggregate demand pattern and consequently to a redistribution of the profit fund among industries and a restructuring of the production process in each industry. The paper argues that the degree of development as reflected in a demand share distribution is characterized by a corresponding distribution of specialized sectors that becomes more even across industries as the development process proceeds and investigates the consequences in terms of economic growth.
Keywords: Innovation, development, structural change
JEL Classification: O10, O30, O40
Suggested Citation: Suggested Citation
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