A development model of developing economies with capital and knowledge accumulation

This study suggests a model of economic development which treats knowledge accumulation as an endogenous variable. It examines possible dynamic processes in an economic system which accumulates knowledge from developed nations. We describe the dynamics of the system by the interactions of three variables—economic conditions, level of knowledge, and openness. The introduction of openness as an important endogenous variable is due to the fact that the development model considered here is primarily concerned with the economic dynamics of the People's Republic of China. We are especially interested in nonlinear phenomena such as catastrophes and limit cycles. We show that small shifts in political policies may result in great social structural changes.The author is very grateful to two anonymous referees for important comments and to an anonymous referee for linguistic help.