Balanced and Unbalanced Growth Paths in a Decomposable Economy: Contributions to the Theory of Multiple Turnpikes

Abstract

Possible growth paths in a closed decomposable dynamic input–output model are investigated. It is suggested that a developing economy, which will typically undergo structural change, or a developed economy, which will make decisions on technological specializations, may be fruitfully studied as several (in)dependent subeconomies each with its own balanced growth path. However, the optimal growth paths of all the subeconomies do not necessarily approach each of their respective balanced growth paths. This might therefore justify a development strategy of deliberate ‘unbalanced growth’ implemented by a planning authority.