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October 1, 2001Oxford Economic Papers199 citations

Must the growth rate decline? Baumol's unbalanced growth revisited

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NONicholas Oulton

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Abstract

According to Baumol's model of unbalanced growth, if resources are shifting towards industries where productivity is growing relatively slowly, the aggregate productivity growth rate will slow down. This conclusion is often applied to the advanced economies, where resources are indeed shifting towards the relatively stagnant service industries. But Baumol's conclusion only follows logically if the stagnant industries produce final products. If instead they produce intermediate products, the aggregate productivity growth rate may rise rather than fall. This is empirically relevant since the most rapidly expanding service industries, e.g. business services, are producing mainly for intermediate use.

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Nicholas Oulton (2001) studied this question.

synapsesocial.com/papers/6a01a6ac6f2c4fd2e25c9bf7https://doi.org/10.1093/oep/53.4.605
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Also Consider

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  1. 1MACROECONOMICS OF UNBALANCED GROWTH: THE ANATOMY OF THE URBAN CRISES1967 · 1,975 citations
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  3. 3Britain's productivity performance 1950-1996 : an international perspective1999 · 120 citations
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  5. 5Productivity and U. S. Economic Growth1989 · 685 citations