2003/05 LEM Working Paper Series

Cumulative Causation and Evolutionary Micro-Founded Technical Change: A Growth Model with Integrated Economies  

Patrick Llerena and Andre' Lorentz 
Cumulative Growth, Technical Change, International Trade

  JEL Classifications
O41, O30, F43

We propose to develop in this paper an alternative approach to the New Growth Theory to analyse growth rate divergence among integrated economies. The model presented here considers economic growth as a disequilibrium process. It introduces in a cumulative causation framework, micro-founded process of technical change taking into account elements rooted in evolutionary and Neo-Austrian literature. We then attempt to open the "Kaldor-Verdoorn law black-box" using a micro-level modelling of industrial dynamics. We use this framework to study the nature and sources of growth rate divergence, focusing on the eect of some macro-economic parameters (income elasticities) and of some technological parameters (technological opportunities and absorptive capacities). If the results remain broadly in Kaldorian lines, this framework allows for more subtle considerations of growth rate divergence.

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