Choice of Techniques in Non‐proportionally Growing Economies: a Note on Pasinetti's Analysis

This paper discusses which technology is efficient for non‐ proportionally growing economies. Pasinetti (1988) claims that if each vertically hyper‐integrated sector uses such a set of techniques that the economy chooses if the profit rate equals the growth rate of the sector, the chosen set of techniques is the most efficient for the non‐proportionally growing consumption demand. This paper demonstrates that there may exist a more efficient choice of techniques than Pasinetti mentions. This result also implies that if more efficient techniques are invented, economies may have to change techniques gradually rather than immediately.