Structural Change and the Kaldor Facts of Economic Growth

Abstract

We present a model in which two of the most important features of the long-run growthprocess are reconciled: the massive changes in the structure of production and employment;and the Kaldor facts of economic growth. We assume that households expand theirconsumption along a hierarchy of needs and firms introduce continuously new products. Inequilibrium industries with an expanding and those with a declining employment share co-exist,and each such industry goes (or has already gone) through a cycle of take-off, maturity,and stagnation. Nonetheless macroeconomic aggregates grow pari passu at a constant rate.

Keywords: innovation, structural change, balanced growth, Kaldor facts, hierarchic

JEL Classification: O40, O11, O31, L16, D91