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Published byDominic Lee Modified over 8 years ago
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Structural Dynamics
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Stylized Facts Persistence of large Inequalities in the world economy ▫Episodes of convergence associated with labor reallocation from low to high productivity sectors subject to IRS. ▫High concentration of technology, world finance and MNCs
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Growth of Per capita GDP
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Growth Comes in Spurts ▫Balloon dynamics vs. Structural dynamics ▫Balloon dynamics-sectoral composition changes are result of GDP/capita dynamics ▫Structural Dynamics—innovation-new sectors—structural changes
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Frequency of Sustained Growth and Collapses
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Development Cycle
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Elastic Factor Supplies for dynamic sectors ▫FDI ▫Labor (Lewis Model) ▫Growth—interplay of labor mobility and IRS.
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Path Dependence ▫Dismantling production structures have long term implications—IS and Dutch Disease ▫Macroeconomic shocks (debt Crisis)
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Real Interest Rate Shock
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Terms of Trade Shocks
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Economic policy ▫Macro policy and structural reforms ▫High Inflation ▫Relative prices (real r and E) may hurt investment and LR growth ▫Trade policy—connection between liberalization and growth and exports growth murky.
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Dynamics of Production Structures Dynamics of Production Structure arte at Root of economic growth: Innovations Networks, Linkages,…including Elastic Factor Supplies
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In Industrial countries, innovations driven by super profits Developing countries super profits=0 Innovations thus entail spreading of technologies already established in Industrial Countries Transfer of sectors from the industrial world
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Innovations require high investment Learning—Evolutionary theories of technical change ▫Technology is incompletely available and imperfectly tradable ▫Learning by doing ▫Private/Public Good attribute (third Italy)
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Networks Demand effects; Keynesian Multiplier Supply Effects-Economies of Agglomeration and Specialization Provision of Essential Non-Tradables ▫Production od specialized inputs ▫Specialized financial services ▫Infrastructure
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Elastic Factor Supplies (K and L) Essential for innovation and growth How can we increase K: ▫Existence of unemployed or underemployed recourses ▫Endogenous financing of capital through redistribution of income towards profits ▫Social organization that guarantees higher LF participation especially women ▫Interregional and International factor mobility ▫Technical change that breaks factor supplies constraints (land productivity, capital intensive)
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L? Dual Structure International labor migration The dynamism generated by innovative activities lead to Kaldorian growth productivity links
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Interplay of innovations, networks and elastic labor supplies Innovation + strong networks----absorption of increasing number of workers into dynamic activities Alternatively, destructive forces---slowdown in productivity, decline in I, increased dualism as surplus labor absorbed into low productive activities and a loss of production experience that widens the technology gap with industrialized countries.
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Complem entarities StrongWeak Learning process StrongDeep Short Breath WeakLabor Absorbin g (labor- intensive exports) Shallow (export enclaves)
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