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Development of domestic markets and poverty reduction for poor developing economies

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  • Chyi, Yih-Luan
  • Hwang, Chun-Sin
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    Abstract

    Constructing a model of structural change with household production, this paper finds two equilibrium paths: one path leads to a low-income steady state and the other to a high-income steady state. This paper shows that as long as the relative marginal productivity of manufactured goods in household production is high enough, a poor country may transform from a home-producing economy to a firm-producing one and eventually reaches a high standard of living. Is it empirically acceptable for us to claim that when a country starts with poorer pro-market infrastructures and institutions, she will be less likely to escape from poverty later on? This paper provides an empirical evidence of positive relationship between pro-market infrastructures and poverty reduction for poor developing countries.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 28 (2011)
    Issue (Month): 1-2 (January)
    Pages: 374-381

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    Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:374-381

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    Web page: http://www.elsevier.com/locate/inca/30411

    Related research

    Keywords: Household production Pro-market infrastructures Generalized balanced growth Cross-country analysis;

    References

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    1. Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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    14. Marvin Goodfriend & John McDermott, 1994. "Early development," Working Paper 94-02, Federal Reserve Bank of Richmond.
    15. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 545-61, July.
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    18. World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921, August.
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