We develop a multi-sector endogenous growth model in which the direc- tion of innovation across sectors is endogenous. The model provides a the- oretical general equilibrium framework for studying the classical demand- pull and technology-push drivers of innovation. A robust prediction is that the rate of growth innovation growth is asymptotically higher in more income-elastic sectors. We test this prediction using the universe of U.S. patents and firm R&D investments for the period 1976-2007. The analysis lends empirical support for the main predictions of the model.
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Comín et al. (2025) studied this question.
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