A model of development with structural and technological change

The paper proposes a new model of development to describe a process of structural change of a dual economy. By introducing a novel sectoral division of the economic system into a low and a high-tech sector, the model builds on previous formulations and formalizes both a structure and a process of development which encompassing simultaneously the four main constraints to development found in the literature: structural heterogeneity, low capacity to investment and to innovate, balance of payments constraints, and income inequality. In doing so, the construction integrates different strands of the economic literature concerned with development and growth.