Factor Accumulation and Growth Miracles in a Two-Sector Neoclassical Growth Model

18 Pages Posted: 27 Apr 2009

See all articles by John Landon-Lane

John Landon-Lane

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics

Peter E. Robertson

The University of Western Australia

Abstract

Countries that experience 'growth miracles' often exhibit rising investment rates and large intersectoral resource transfers. But how important are these factors to this process? We consider this question using a two-sector growth model with a segmented labour market. Numerical simulations show that a doubling of the investment rate can generate a significant intersectoral re-allocation of labour and can have a large impact on aggregate output per worker. Under our baseline parameter values, the effect of the investment rate on per capita incomes is amplified by 25-50 per cent, relative to a standard one-sector growth model.

Suggested Citation

Landon-Lane, John and Robertson, Peter E., Factor Accumulation and Growth Miracles in a Two-Sector Neoclassical Growth Model. The Manchester School, Vol. 77, Issue 2, pp. 153-170, March 2009, Available at SSRN: https://ssrn.com/abstract=1395097 or http://dx.doi.org/10.1111/j.1467-9957.2008.02092.x

John Landon-Lane (Contact Author)

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

Peter E. Robertson

The University of Western Australia ( email )

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