An Unbalanced Multi-Industry Growth Model With Constant Returns: A Turnpike Approach

Recent industry-based empirical studies among countries demonstrate that individual industry's per capita capital stock and output grow at industry's own steady state growth rate. The industry growth rate is highly correlated to industry's technical progress measured by Total Factor Productivity (TFP) of the industry. Let us refer to this phenomenon as "Unbalanced growth among industries." Very little research concerned with this phenomenon has been done yet. Some exceptions are Echevarria (1997), Kongsamut, Rebelo and Xie (2001), and Acemoglu and Guerrieri (2008) among others.