Agénor, Pierre-RichardDinh, Hinh T.2014-02-122014-02-122013-05https://hdl.handle.net/10986/17024What role does public policy play in helping countries accelerate the industrialization process? This note aims to answer this question by applying a framework to analyze the process of transitioning from imitation to innovation. Based on a dynamic model of growth, simulations suggest that learning through imitation may enable firms to improve productivity significantly in a first stage, and that this may eventually benefit innovation activity as well. The model also shows how failure to switch from imitation as the main source of productivity growth to broad-based, homegrown innovation could lead to the 'middle-income trap' that has befallen some countries.en-USCC BY 3.0 IGOADVERSE EFFECTAGRICULTUREBENCHMARKBUSINESS CYCLECAPABILITIESCOLLATERALCOMMERCECOMMODITYCOMMODITY PRICESCOMPETITIVENESSCONSUMPTION EXPENDITUREDEADWEIGHTDEADWEIGHT LOSSDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDIMINISHING RETURNSDISCOUNTED VALUEECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC HISTORYECONOMIES OF SCALEELECTRICITYEMPLOYMENTEMPLOYMENT OPPORTUNITIESENTERPRISE SURVEYENTRY COSTEXPORT MARKETEXPORT OPPORTUNITIESEXPORTSEXTERNALITIESEXTERNALITYFIRM PERFORMANCEFOREIGN INVESTMENTFREE PRESSGDPGLOBALIZATIONGOVERNMENT INTERVENTIONSGOVERNMENT POLICIESGROSS DOMESTIC PRODUCTGROWTH RATEGROWTH STRATEGYHUMAN CAPITALINCOMEINCOME GROWTHINCREASING RETURNSINCREASING RETURNS TO SCALEINDUSTRIAL DEVELOPMENTINDUSTRIAL REVOLUTIONINDUSTRIAL STRUCTUREINDUSTRIALIZATIONINEXPERIENCED WORKERSINFORMATION TECHNOLOGIESINNOVATIONINNOVATIONSINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY RIGHTSINTERNATIONAL ECONOMICSJOBSKNOWLEDGE BASELABOR COSTLABOR COST ADVANTAGELABOR DEMANDLABOR FORCELABOR MARKETSLABOR PRODUCTIVITYLABOR SUPPLYLABOURLEVIESLICENSELICENSE FEELIVING STANDARDSLOCAL FIRMSMACROECONOMICSMANUFACTURINGMANUFACTURING INDUSTRIESMARGINAL PRODUCTMARGINAL REVENUEMARKETINGNATURAL RESOURCESNETWORKSOPPORTUNITY COSTOUTPUTSPATENTSPIRACYPOLITICAL ECONOMYPRIVATE CAPITALPRIVATE CAPITAL STOCKPRIVATE INVESTMENTPRODUCTION COSTSPRODUCTION PROCESSPRODUCTIVITYPRODUCTIVITY GAINSPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC INVESTMENTRENTSRESULTRESULTSRETURNRURAL WORKERSSEARCHSKILL REQUIREMENTSSKILLED LABORSKILLED WORKFORCESTOCKSSTRUCTURAL CHANGETAXTECHNOLOGICAL INNOVATIONTELECOMMUNICATIONSTOTAL FACTOR PRODUCTIVITYTRAINING COSTTRAINING COSTSTRAINING PERIODUNSKILLED LABORUNSKILLED WORKERSVOCATIONAL TRAININGVOCATIONAL TRAINING PROGRAMSWAGES10.1596/17024