Generalized barriers to entry and economic development

In their catching-up processes, less developed countries face inter-country barriers which hamper their efforts to imitate the technologies of advanced countries. These international barriers to entry can be traced back to differences in the institutions supporting technological advancement and to the physical and intangible resources necessary for the creation of new competences. In less developed countries, these international barriers aggravate the barriers to entry at the sectoral level and, together, they constitute the generalized barriers to entry. In our paper, we extend a model of economic growth by the entry of new sectors by including these international barriers and show how widening development gaps describing the differences in general income and employment trends can emerge in an auto-catalytic process.