A multi-sector growth model with technology diffusion and networks

Abstract

This paper adds the standard input–output linkages into a multi-sector endogenous growth model to study the interaction effects between linkages and technology adoption for aggregate productivity and for income per capita. We show that the greater the intensity with which a good is used as input by other sectors, the smaller are the technology adoption lags and the greater is the technology adoption intensity, and thus the greater are the increases of the Total Factor Productivity and of economic growth. Therefore, distinct input–output relationships between sectors explain inter-country income differences. By using OECD data, we then estimate the model for nine developed countries and ten technologies, and confirm our theoretical findings.