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Working Paper
Sectoral Development Multipliers
How should industrial policies be directed to reduce distortions and foster economic development? We study this question in a multi-sector model with technology adoption, where the production of goods and modern technologies features rich network structures. We provide simple formulas for the sectoral policy multipliers, and provide insights regarding the power of alternative policy instruments. We devise a simple procedure to estimate the model parameters and the distribution of technologies across sectors, which we apply to Indian data. We find that technology adoption greatly amplifies the ...
Briefing
Sectoral Multipliers and Technology Adoption as Insight Into Growth
In a multisector model with technology adoption and rich network structures, what policy instruments best reduce distortions and promote economic development? This article discusses a framework showing that technology adoption has important effects on both the magnitude and relative effectiveness of sectoral industrial policies. After applying the framework to data on the Indian economy, adoption subsidies prove the most cost-effective instrument with high sectoral multipliers and relatively lower fiscal costs of implementation. Particularly promising sectors emerge that stand to foster the ...