Industrialization and skill acquisition in an evolutionary model of coordination failures

This paper presents an evolutionary model of coordination problems in economic development that examines technology adoption jointly with skill acquisition. The model allows for multiple channels of interdependence across firms and for employment creation to be determined by technological and institutional factors. We show that industrial policies are key to ensuring the effectiveness of educational policies, and that robust employment creation is key to ensuring the effectiveness of both industrial and educational policies. These results speak to recent concerns about insufficient employment creation in high-productivity activities and suggest the need to include employment promotion as an objective of development policy.