Technological Choice In Two-Sector Growth Model

In this paper, I argue that there are differences in production between developing countries that adopt improper technologies and developed countries. According to the comparative-advantage following strategy, developing countries should aim at increasing in facts endowments by upgrade in industries and technology. I extend the neoclassical growth model with the parameterized technique choice that governments make, and set CES production function with weak marginal rate of technology substitution. Different development strategies are represented by different technique choices. Economies adopt comparative-advantage following strategy result in optimal economic growth. However, economies that adopt comparative-advantage following strategy will low its output, and temper accumulation in human capital.