DP15281 Key Sectors in Endogeneous Growth

Author(s): Jingong Huang, Yves Zenou
Publication Date: September 2020
Keyword(s): Endogenous Growth, innovation networks, Key players
JEL(s): D85, E2, O4
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15281

This paper develops a multi-sector endogenous growth model that includes an innovation network, which captures intrasectoral as well as heterogeneous intersectoral knowledge flows. We analyze the importance of sectors (nodes) and directed knowledge linkages (edges) in the innovation network by their contribution to the growth of knowledge in this economy. We show that the growth rate of knowledge is equal to the spectral radius of the innovation network. We also demonstrate that a sector's importance to growth (``key sectors'') is related to its positions in both the downstream and upstream technology network. Finally, the importance of a knowledge linkage is characterized by both the upstream centrality of its source sector, the downstream centrality of its target sector and the strength of knowledge flows from the source sector to the target sector.