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Barriers and the transition to modern growth

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  • L. Rachel Ngai
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    Abstract

    This paper studies how differences in the size of barriers to capital accumulation can account for differences in long run economic development paths. In this model barriers affect both the beginning date and the pace of the modern economic growth. A fundamental property of the model is that cross-country income differences matches the inverted U-shape pattern over time as observed in the data, hence implies a substantial fraction of existing income differences is really a transitional phenomeno n. Relative to papers that model this as steady state phenomenon, my model requires a smaller size of barriers to account for current disparities. Another important finding is that this transitional effect increases significantly when I include the fact that today's low-income countries have had higher population growth rates during their early development stage than did the currently rich countries. In a quantitative exercise I find that given the beginning dates of modern growth, the model accounts for a significant portion of current income differences.

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    File URL: http://eprints.lse.ac.uk/3530/
    File Function: Open access version.
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    Bibliographic Info

    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3530.

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    Length: 46 pages
    Date of creation: Jan 2003
    Date of revision:
    Handle: RePEc:ehl:lserod:3530

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    Related research

    Keywords: Industrialization; income disparity; distortion;

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    1. Pritchett, Lant, 1995. "Divergence, big time," Policy Research Working Paper Series 1522, The World Bank.
    2. Yamamura, Kozo, 1977. "Success Illgotten? The Role of Meiji Militarism in Japan's Technological Progress," The Journal of Economic History, Cambridge University Press, vol. 37(01), pages 113-135, March.
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