An R&D-based Model of Multi-sector Growth∗

We develop a multi-sector general equilibrium model in which productivity growth is driven by the production of knowledge. In the baseline model, we find that long run differences in total factor productivity growth across sectors are independent of most industry parameters except for those affecting in-tertemporal knowledge spillovers. While differences in R&D intensity depend on a broader set of parameters, they are independent of demand side factors in equilibrium. These findings are robust to allowing for intersectoral knowledge spillovers, exogenous scientific progress, and variation in input shares, except that the parameters that govern cross-sectoral linkages may also play a role