A Two-Sector Growth Model: Economic Development, Demographics, and Renewable Resources

Model Description

This is a two-sector growth model that couples the dynamics of human demographics and a renewable resource base. The two sectors are agricultural and manufacturing sectors. To capture both the positive (Malthusian) and negative (modern growth) type relationships between population growth and output, it is important to model the shifting composition of output from agricultural to manufacturing as growth occurs. Thus, the model is a two sector (productions and consumptions in agricultural sector and manufacturing sector), three factor growth model with a renewable resource base.The three factors of production are labor, human-made capital, and natural capital. The human population dynamics is influenced by the per capita consumption of goods from each of the two sectors.

The main purpose of this model is to reveal under what conditions, in terms of investment, demographic, and economic parameters, a developing economy become susceptible to population overshoot and resource collapse. In one set of parameter space, any reasonable initial condition with high biophysical capital and low population will evolve to a stable steady state (perhaps through a series of damped oscillations). In the other set, it will converge to a limit cycle.

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This model has eight parameters. You can set their values below.
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