Satiation and Underdevelopment
Abstract
In this article we show, how absolute poverty and per capital growth can be sustained simultaneously in a fully integrated world economy. Poverty persists due to an endogenously sustained bias in the direction of technological change. We show in an example framework, that if free trade is opened up too early between an initially less developed and a more developed country, then part of the population of the initially less advanced country is caught in a poverty trap. If, on the other hand, individuals are restricted to trade within their own economy for a sufficiently long time, no poverty trap arises. The essential assumption is that once a person has satisfied his basic needs, he prefers high-quality commodities to low-quality commodities.Download Info
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Bibliographic Info
Paper provided by DELTA (Ecole normale supérieure) in its series DELTA Working Papers with number 97-24.Length:
Date of creation: 1997
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Handle: RePEc:del:abcdef:97-24
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Keywords:Other versions of this item:
- Funk, Peter, 1998. "Satiation and underdevelopment," Journal of Development Economics, Elsevier, vol. 57(2), pages 319-341.
- Peter Funk, 1994. "Satiation and Underdevelopment," Discussion Paper Serie A 508, University of Bonn, Germany.
- F10 - International Economics - - Trade - - - General
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Choi, Yo Chul & Hummels, David & Xiang, Chong, 2009.
"Explaining import quality: The role of the income distribution,"
Journal of International Economics,
Elsevier, vol. 77(2), pages 265-275, April.
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- Funk, Peter & Vogel, Thorsten, 2004. "Endogenous skill bias," Journal of Economic Dynamics and Control, Elsevier, vol. 28(11), pages 2155-2193, October.
- Peter Funk, 1995. "Endogenous Growth, Temporary Equilibrium, and the Direction of Change," Discussion Paper Serie A 506, University of Bonn, Germany.
- Grüner, Hans Peter, 2008. "Capital Markets, Information Aggregation and Inequality: Theory and Experimental Evidence," CEPR Discussion Papers 6750, C.E.P.R. Discussion Papers.
- Yo Chul Choi & David Hummels & Chong Xiang, 2006. "Explaining Import Variety and Quality: The Role of the Income Distribution," NBER Working Papers 12531, National Bureau of Economic Research, Inc.
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