Structural Reforms, Innovation and Economic Growth
AbstractThis paper constructs a growth model of the distance from the world technology frontier to argue
that incentives to innovate and the government’s decision on implementing reforms can be mutually reinforcing. This complementarity may, however, result in a country falling into a self- perpetuating low productivity trap. Certain types of structural change, initiated either by the private sector or by the government, can help the country to escape from this trap.