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Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View

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  • Glavan, Bogdan

Abstract

Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5757.

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Date of creation: 14 Nov 2007
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Handle: RePEc:pra:mprapa:5757

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Keywords: coordination failure; poverty trap; industrial policy; market system;

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  1. Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
  2. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
  3. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, vol. 40(1-2), pages 1-22, February.
  4. Andrés Rodríguez-Clare, 2005. "Coordination Failure, Clusters, and Microeconomic Interventions," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  5. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-26, October.
  6. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Kiminiori Matsuyama, 1995. "Economic Development as Coordination Problems," Discussion Papers 1123, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Driouchi, Ahmed, 2009. "Failure of Participation & “Missing Women” in South Mediterranean Economies," MPRA Paper 21541, University Library of Munich, Germany, revised 22 Mar 2010.

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