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THE ROAD NOT TAKEN: WHAT IS THE “APPROPRIATE” PATH TO DEVELOPMENT WHEN GROWTH IS UNBALANCED?

Published online by Cambridge University Press:  07 March 2013

Ahmed S. Rahman
Ahmed S. Rahman*
Affiliation:
United States Naval Academy
*
Address correspondence to: Ahmed S. Rahman, Department of Economics, U.S. Naval Academy, Annapolis, MD 21402, USA; e-mail: [email protected].
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Abstract

This paper develops a model that endogenizes both directed technologies and demography. Potential innovators decide which technologies to develop after considering available factors of production, and individuals decide the quality and quantity of their children after considering available technologies. This interaction allows us to evaluate potentially divergent development paths. We find that unskilled labor–biased technological growth can induce higher fertility and lower education, exerting downward pressure on growth in per-person income. Despite this, for most plausible developing-country scenarios, unskilled intensive growth produces more per-person income than skill-intensive growth. This result is robust to a variety of growth modeling assumptions.

Keywords

Directed Technical ChangeDemographyHuman CapitalFertility
Type
Articles
Information
Macroeconomic Dynamics , Volume 17 , Issue 4 , June 2013 , pp. 747 - 778
Copyright
Copyright © Cambridge University Press 2013 

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