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Declining Predation during Development: a Feedback Process

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  • Bethencourt, Carlos
  • Perera-Tallo, Fernando

Abstract

Empirical evidence suggests that poorer countries have larger portions of predation. We formulate a neoclassical growth model in which agents devote time either to produce or predate. When the elasticity of substitution between labor and capital is lower than one, the labor share rises with capital, reducing the incentive to predate and increasing the incentive to produce throughout the transition. Consequently, a feedback process between capital accumulation and predation arises which ampli¯es income di®erences generated by di®erences in productivity. Thus, this paper helps understand why di®erences among countries have remained stable and the key role that institutions play in development.

Suggested Citation

  • Bethencourt, Carlos & Perera-Tallo, Fernando, 2012. "Declining Predation during Development: a Feedback Process," MPRA Paper 41918, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41918
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    1. The richer we are, the less crime there is
      by Economic Logician in Economic Logic on 2012-11-12 21:23:00

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    Cited by:

    1. Fernando del Río, 2021. "The impact of rent seeking on social infrastructure and productivity," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1741-1760, August.
    2. Bethencourt, Carlos & Perera-Tallo, Fernando, 2024. "The role of institutions in shaping the growth-aid relationship," Journal of Macroeconomics, Elsevier, vol. 80(C).
    3. del Río, Fernando, 2018. "Governance, social infrastructure and productivity," MPRA Paper 86245, University Library of Munich, Germany, revised 16 Apr 2018.
    4. Carlos Bethencourt & Fernando Perera‐Tallo, 2020. "On the relationship between sectorial and institutional structural changes," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 533-565, July.

    More about this item

    Keywords

    Predation; Labor share; Development;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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