Structural change, sectoral specialisation and growth rate differences in an evolutionary growth model with demand shocks

The paper develops a multi-sectoral growth model that links a Post-Keynesian macro-framework to an evolutionary modelling of technical change and industrial dynamics. Following Pasinetti 1981 and Verspagen 1993, we assume that sectors are integrated such that the dynamics of each sectors? demand are interdependent, and co-evolving. Technical change mechanisms are directly inspired by evolutionary models of growth and industrial dynamics. Lorentz 2007 shows that the structure of the demand characteristics shape the structure of the economies influencing directly specialization patterns and growth rates differences among economies. The aim of this paper is to show that the introduction of satiation levels à la Pasinetti limits this effect. Hence both sectorial specialization and growth rates differences tend to disappear when the satiation levels are reached. In other words, these macro-patterns appear to be highly dependent on the persistence of structural change. JEL Codes: O41, O33, E11, F43