The evolution of productivity gaps and specialization patterns

The literature on catching-up based growth has developed mainly in isolation of other theories on technology and economic growth. This paper presents an industry-level technology gap model in which evolving specialization patterns are the endogenous result of innovation, international technology diffusion, learning-by-doing and balance-of-payments restricted growth. Differences between sectors with regard to their share in consumption are shown to reinforce or mitigate the effects of specialization on aggregate productivity convergence patterns, depending on the parameters. The implications of the model are studied by means of simulation analyses for a wide range of parameters.