A BEJM Topics article.

Abstract

This paper develops a human-capital-based endogenous growth scenario in which an economy initially produces the agricultural good, characterized by diminishing returns to scale, then produces `traditional manufacturing' under constant-returns and finally produces `modern manufacturing' under increasing-returns. Transition dates are endogenous and depend on the non-essentiality of the industrial goods in preferences and fixed costs in the technology of the modern manufacturing. Each transition is followed by a jump in the long-run growth rate of real income. The theoretical model is calibrated to U.S. historical data. It `predicts' the first transition to occur around 1820s and the second transition to happen around 1900.

Submitted: September 14, 2007 · Accepted: September 1, 2008 · Published: September 8, 2008

Recommended Citation

Bhattacharya, Rudrani and Das, Satya P. (2008) "Advent of Industrial Mass Production: Three Stages of Economic Development," The B.E. Journal of Macroeconomics: Vol. 8 : Iss. 1 (Topics), Article 24.
Available at: http://www.bepress.com/bejm/vol8/iss1/art24