Productivity and technology Human and physical capital Source: Authors.
and subnational regions. Representative producers each have a unique production technology determining their linkages to other sectors. The production functions combine the factors of production (for example, land, labor, and capital), and this generates incomes for factors and households. As with producers, the model dif- ferentiates among household groups, and the distribution of factor incomes depends on households’ unique factor endowments. Households consume commodities based on their set of preferences and utility functions. This general equilibrium structure allows us to trace the contribution of sectoral production to national eco- nomic growth and to household incomes and expenditures via product and factor markets.
The model also covers the public sector. The government levies direct and
indirect taxes. It uses these revenues to pay for recurrent consumption spending, which in turn generates demand for producers’ goods and services. The government also pays for social grants and makes capital investments. The government may receive fi nancial assistance from abroad through borrowing or foreign aid. Foreign markets are also a source of export demand and a supplier of imports. The size of growth multiplier effects is determined by the combined export-intensity and import-penetration ratios of individual sectors. A country with high export intensity