Discussion Paper Details

Please find the details for DP10869 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Endogenous Sector-Biased Technological Change and Industrial Policy

Author(s): Berthold Herrendorf and Akos Valentinyi

Publication Date: October 2015

Keyword(s): endogenous sector-biased technological change, horizontal innovation, industrial policy and structural transformation

Programme Area(s): Macroeconomics and Growth

Abstract: We build a model of structural transformation with endogenous sector-biased technological change. We show that if the return to specialisation is larger in the goods sector than in the service sector, then the equilibrium has the following properties: aggregate growth is balanced; structural transformation takes place from goods to services; the service sector receives more innovation but the goods sector has more productivity growth. We show that compared to the efficient allocation the laissez-faire equilibrium has too much labor in the goods sector. This suggests that optimal industrial policy should aim to increase the pace of structural transformation.

For full details and related downloads, please visit:

Bibliographic Reference

Herrendorf, B and Valentinyi, A. 2015. 'Endogenous Sector-Biased Technological Change and Industrial Policy'. London, Centre for Economic Policy Research.