Endogenous growth and global divergence in a multi-country agent - based model
Abstract
In this paper we present a multi-country, multi-industry agent-based model investigating the different growth
patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous
technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National
growth trajectories are driven by firms’ accumulation of technological knowledge, which in turn also leads
to emergent specialization patterns in different industries. Interactions among economies occur via trade
flows, stemming from the competition of firms in international markets. Simulation results show the
emergence of persistent income divergence among countries leading to polarization and club formation.
Moreover, each country experiences a structural transformation of its productive structure during the
development process. Such dynamics results from firm-level virtuous (or vicious) cycles between
knowledge accumulation, trade performances, and growth dynamics. The model accounts for a rich
ensemble of empirical regularities at macro, meso and micro levels of aggregation.
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