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Advent of Industrial Mass Production: Three Stages of Economic Development
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Rudrani Bhattacharya
Published/Copyright:
September 8, 2008
This paper develops a human-capital-based endogenous growth scenario in which an economy initially produces the agricultural good, characterized by diminishing returns to scale, then produces `traditional manufacturing' under constant-returns and finally produces `modern manufacturing' under increasing-returns. Transition dates are endogenous and depend on the non-essentiality of the industrial goods in preferences and fixed costs in the technology of the modern manufacturing. Each transition is followed by a jump in the long-run growth rate of real income. The theoretical model is calibrated to U.S. historical data. It `predicts' the first transition to occur around 1820s and the second transition to happen around 1900.
Published Online: 2008-9-8
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Topics Article
- The Importance of Industrial Policy in Quality-Ladder Growth Models
- The Evolution of International Output Differences (1970-2000): From Factors to Productivity
- Non-Linearities and Unit Roots in G7 Macroeconomic Variables
- Mitigating the Growth-Effects of Inflation through Financial Development
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- Inequality, Volatility and Labour Market Efficiency
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- The Japanese Depression in the Interwar Period: A General Equilibrium Analysis
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