Economic Growth Through the Development Process

Posted: 1 Sep 2008

See all articles by Fabrizio Zilibotti

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Date Written: September 2008

Abstract

In this article, I discuss some recent research in the area of economic growth and development emphasizing the endogenous dynamics of policies and organizational forms in a world characterized by credit-market and labor-market imperfections. I present a simple model of technological convergence featuring an endogenous evolution of contractual arrangements. The key assumption is that economic growth is associated with investments as well as with the adoption and imitation of existing technologies in economies lying far from the technology frontier. In contrast, growth is increasingly driven by innovation as economies approach the technological frontier. The theory predicts that contractual arrangements evolve and adapt spontaneously to the changing needs of technological progress. However, this evolution is neither necessary nor serendipitous. Economies that fail to introduce economic reforms as they advance may become stuck in non-convergence traps. I discuss a number of empirical applications, including the wave of reforms of industrial policy in India in the 1980s and 1990s. (JEL Codes: O31, O33, O38, O40, L16)

Keywords: Competition, convergence, economic development, economic growth, innovation, imitation, India, industrial policy, rigidities, selection, technology adoption, traps

Suggested Citation

Zilibotti, Fabrizio, Economic Growth Through the Development Process (September 2008). CESifo Economic Studies, Vol. 54, No. 3, pp. 325-357, 2008, Available at SSRN: https://ssrn.com/abstract=1260608 or http://dx.doi.org/ifn020

Fabrizio Zilibotti (Contact Author)

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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