By Dr. Thorsten Wichmann (auth.)
A two-sector version of a constructing state which include agriculture and is gifted. progress and structural swap are mentioned in editions with exogenous in addition to endogenous technical development, algebraically and via numerical simulations. effects from considering peculiarities of meals construction and intake are analyzed. those comprise know-how adoption in agriculture, Engel's legislations and a dating among the extent of foodstuff and productivity.
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Extra info for Agricultural Technical Progress and the Development of a Dual Economy
However, while the producer of the traditional good has a lower innovation rate, the welfare consequences of integration into the world economy are less clear: consumers in this country might still gain from trade due to the usual static gains and due to a larger variety of goods. The specialization might cause a long-run world welfare loss, though, due to the decreasing research efforts in the poor country. A similar argument like that from innovation and trade models is presented from the learning by doing literature.
Following this argument J(jm and Mohtadi (1992) construct a model of endogenous growth where growth is only driven by the division of labor. Naturally there exist limits to this division of labor, and in underdeveloped countries these limits might be especially tight. B~cker and Murphy (1992), for example, point out that the division oflabor is limited by costs of coordinating the divided activities. These costs might be especially large in poor countries if coordination requires a sophisticated infrastructure.
Note, that this does not even require strong assumptions. Even with similar rates of technical progress in both sectors, per capita consumption of widgets grows faster than per-capita consumption of food, and thus the share of manufactured goods will increase since a < 1 and A. > O. 3 and in footnote 1 above which, at the individual level, is also known as Engel's law. 13 However, it is not exactly the same since we have not derived a relative price between both goods and therefore total income is not defined in this model.
Agricultural Technical Progress and the Development of a Dual Economy by Dr. Thorsten Wichmann (auth.)