Stages of Growth in Economic Development

CERGE-EI Working Paper Series No. 138

35 Pages Posted: 22 Jan 2010

See all articles by Michal Kejak

Michal Kejak

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Date Written: December 1, 1998

Abstract

The paper analyses a two-sector model of endogenous growth with two common features of economic development: stages of sustained growth and underdevelopment traps. The model also demonstrates the transitional issues of a temporary underdevelopment trap, seemingly sustainable growth, and a slowdown in productivity growth. The temporary underdevelopment trap occurs when the economy exhibits a regime of extensive growth (i.e. slowly declining growth in physical capital with no growth in human capital) but then starts a transition to a sustained growth. The seemingly sustainable growth occurs when the economy exhibits a regime of intensive growth (i.e. both capitals are growing) but the growth of human capital ceases and the economy eventually finishes in a zero growth trap. The slowdown in productivity growth occurs when the transition from low growth stage to high growth stage is not monotonic.

Keywords: Two-Sector Growth Models, Economic Growth and Aggregate Productivity, Macroeconomic Analysis of Economic Development, Human Resources, Human Capital Formation

JEL Classification: O41, O40, O11, O15, J24

Suggested Citation

Kejak, Michal, Stages of Growth in Economic Development (December 1, 1998). CERGE-EI Working Paper Series No. 138, Available at SSRN: https://ssrn.com/abstract=1537050 or http://dx.doi.org/10.2139/ssrn.1537050

Michal Kejak (Contact Author)

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

Politickych veznu 7
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

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