DP2094 | The Weightless Economy in Economic Development


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Can the increasing significance of knowledge-products in national income---the growing weightless economy---influence economic development? Those technologies reduce ``distance'' between consumers and knowledge production. This paper analyzes a model embodying such a reduction. The model shows how demand-side attributes---consumer attitudes on complex goods; training, education, and skills for consumption (rather than production)---can importantly affect patterns of economic growth and development. Evidence from the failed Industrial Revolution in 14th-century China illustrates the empirical relevance of the analysis.