This paper analyses optimal paths in a one-sector growth model when the technology is not convex. In such a case, we prove that optimal paths converge to the upper steady state iff the initial wealth is above a critical level. Then we first show that thanks to debt and/or R&D the poverty trap may be avoided. Second, we introduce a distortion: corruption which mostly has dramatic consequences on growth. These results may explain why empirical works lead to the conclusion of non convergence in large cross-country samples.
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Find related papers by JEL classification: C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Investment, or Financing
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