CHANGES IN SECTORAL COMPOSITION ASSOCIATED WITH ECONOMIC-GROWTH

In this paper I use dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth. I show tha t growth is affected by sectoral composition, and vice versa. The mode l is basically a Solow model of sustained growth with multiple consump tion goods and nonhomothetic preferences. Each consumption good is pro duced using different factor intensities. The rate of exogenous techno logical change is different in each sector. Nonhomotheticity of prefer ences drives the result that sectoral composition affects growth rates .