Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View
AbstractPoverty 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5757.
Date of creation: 14 Nov 2007
Date of revision:
coordination failure; poverty trap; industrial policy; market system;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- P5 - Economic Systems - - Comparative Economic Systems
- F5 - International Economics - - International Relations, National Security, and International Political Economy
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