On demographic transition,structural change,and economic growth and stagnation |
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Authors: | Holger Strulik |
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Institution: | Department of Applied Economics , University of Cambridge , Cambridge, CB3 9DE E-mail: hs244@econ.cam.ac.uk |
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Abstract: | The paper analyzes an economy with an agrarian and an industrial sector. Demand is determined by Engel's Law. Population growth follows a non‐linear income dependent path according to the theory of demographic transition. In case of decreasing returns to scale in the agrarian sector the existence of a stable low‐income equilibrium with high population growth can be shown. If this equilibrium is globally unstable, the system evolves towards a steady‐state of perpetual economic growth and low population growth. The path of demographic transition coincides with a path of structural change from an economy specialized in agriculture to a fully industrialized economy. The introduction of an income dependent savings rate allows the interpretation of the low‐income equilibrium as a limit cycle and, therefore, the explanation of high fluctuations in population growth and per capita income in least developed economies. |
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Keywords: | Demographic transition Economic growth Structural change Limit cycles |
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