Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32055
Authors: 
Caspari, Volker
Pertz, Klaus
Year of Publication: 
2008
Series/Report no.: 
Darmstadt Discussion Papers in Economics 193
Abstract: 
The two-sector specific factor model is typically used in the theory of international trade where it helps to clarify the principle of comparative advantage. Instead, we use this model as explicit theoretical framework to explain major trends of long-run economic development. Combined with endogenous technical progress functions which assume that knowledge accumulates as a by-product of agricultural and manufacturing experience, the two-sector specific factors model can explain major historical trends and structural turnarounds. The technical progress functions establish the link between the agricultural and the manufacturing sector through the land-labour ratio, which is determined by the savings propensities of wage-earners, landlords and capitalists. This result is achieved by making use of the traditional investment = savings condition, without reference to complicated micro-based models of human capital accumulation.
Subjects: 
Economic development
growth
Industrial Revolution
income distribution
JEL: 
E13
N1
O4
Document Type: 
Working Paper

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