This paper analyzes the change in focus of growth policy driven by technological progress in manufacturing sector and the rise of demand for complex consumption goods. Satiable wants are ranked by the complexity of consumption goods, where basic wants are first satisfied with simple goods, and more advanced wants are satisfied with more complex goods. With productivity growth or knowledge expansion in the manufacturing sector, wage goes up, as well as the demand for complex goods, and structural change is implied. At first, GDP and welfare and bounded by learning in manufacturing sector, but when domestic demand for complex goods arises, knowledge over the technology to produce complex services becomes binding. By then the focus of the economy should change from learning in man...[ Read more ]

This paper analyzes the change in focus of growth policy driven by technological progress in manufacturing sector and the rise of demand for complex consumption goods. Satiable wants are ranked by the complexity of consumption goods, where basic wants are first satisfied with simple goods, and more advanced wants are satisfied with more complex goods. With productivity growth or knowledge expansion in the manufacturing sector, wage goes up, as well as the demand for complex goods, and structural change is implied. At first, GDP and welfare and bounded by learning in manufacturing sector, but when domestic demand for complex goods arises, knowledge over the technology to produce complex services becomes binding. By then the focus of the economy should change from learning in manufacturing sector to innovation in service sector, and change in focus should take place for further growth and structural transformation.