Accession Number : AD0248547

Title :   ON A TWO-SECTOR MODEL OF ECONOMIC GROWTH

Corporate Author : STANFORD UNIV CA APPLIED MATHEMATICS AND STATISTICS LABS

Personal Author(s) : UZAWA, HIROFUMI

Report Date : 28 NOV 1960

Pagination or Media Count : 1

Abstract : The growth process in a two-sector model of capital accumulation and the stability problem of balanced growth equilibria under the neoclassical hypotheses was investigated. The competitive model of economic growth is formulated in terms of the aggregate production function which specifies the relationship between output and factors of production. Output is assumed to be composed of homogeneous quantities identical with capital, or at least price ratios between output and capital are assumed constant. The economy consists of two (over) types of goods, investment-goods and consumptiongoods, to be produced by two factors of production, capital and labor; prices of investment- goods and consumption-goods are determined so as to satisfy the demand requirement. It is assumed that capital never depreciates, the rate of growth in labor is constant and exogenously determined, capitalists' income is solely spent on investment-goods, that of laborers on consumptiongoods, and production is subject to the neoclassical conditions. Then a state of steady growth uniquely exists and the growth process, starting at an arbitrary capital and labor composition, approaches the steady growth, provided the consumption-goods sector is more capital-intensive than the investment-goods sector. An example of the two-sector growth model in which the steady growth process is not stable is presented. (Author)

Descriptors :   *ECONOMICS, GROWTH(PHYSIOLOGY), MATHEMATICAL ANALYSIS.

Distribution Statement : APPROVED FOR PUBLIC RELEASE