Costly technology adoption, redistribution and growth
We study a political economy model which aims to understand the diversity in the growth and technology-adoption experiences in different economies. In this model the cost of technology adoption is endogenous and varies across heterogeneous agents. Agents in the model vote on the proportion of revenues allocated towards such expenditures. In the early stages of development, the political-economy outcome of the model ensures that a sub-optimal proportion of government revenue is used to finance adoption-cost reducing expenditures. This sub-optimality is due to the presence of inequality; agents at the lower end of the distribution favor a larger amount of revenue allocated towards redistribution in the form of lump-sum transfers. Eventually all individuals make the switch to the better technology and their incomes converge. The outcomes of the model therefore explain why public choice is more likely to be conservative in nature; it represents the majority choice given conflicting preferences among agents. Consequently, the transition path towards growth and technology adoption varies across countries depending on initial levels of inequality.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hongyi Li & Heng-fu Zou, 1998.
"Income Inequality Is Not Harmful for Growth: Theory and Evidence,"
CEMA Working Papers
74, China Economics and Management Academy, Central University of Finance and Economics.
- Li, Hongyi & Zou, Heng-fu, 1998. "Income Inequality Is Not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 318-34, October.
- Bénabou, Roland, 1996.
"Inequality and Growth,"
CEPR Discussion Papers
1450, C.E.P.R. Discussion Papers.
- Josef ZweimÃ¼Ller, 2000.
"Inequality, Redistribution, and Economic Growth,"
Springer, vol. 27(1), pages 1-20, March.
- Krusell, P. & Rios-Rull, J.V., 1993.
"Vested Interests in a Positive Theory of Stagnation and Growth,"
547, Stockholm - International Economic Studies.
- Krusell, Per & Rios-Rull, Jose-Victor, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 301-29, April.
- Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
- Keith Fuglie & David Schimmelpfennig, 2010. "Introduction to the special issue on agricultural productivity growth: a closer look at large, developing countries," Journal of Productivity Analysis, Springer, vol. 33(3), pages 169-172, June.
- James A. Robinson & Daron Acemoglu, 2000. "Political Losers as a Barrier to Economic Development," American Economic Review, American Economic Association, vol. 90(2), pages 126-130, May.
- Alesina, Alberto F & Rodrik, Dani, 1991.
"Distributive Politics and Economic Growth,"
CEPR Discussion Papers
565, C.E.P.R. Discussion Papers.
- Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
- Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
- Perotti, Roberto, 1992. "Income Distribution, Politics, and Growth," American Economic Review, American Economic Association, vol. 82(2), pages 311-16, May.
- Fan, Shenggen, 2002. "Agricultural research and urban poverty in India:," EPTD discussion papers 94, International Food Policy Research Institute (IFPRI).
- Robert E Lucas, 1999.
"Making a Miracle,"
Levine's Working Paper Archive
2101, David K. Levine.
- Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
- Besley, Timothy & Coate, Stephen, 2003. " On the Public Choice Critique of Welfare Economics," Public Choice, Springer, vol. 114(3-4), pages 253-73, March.
- Lindert, Peter H., 1996. "What Limits Social Spending?," Explorations in Economic History, Elsevier, vol. 33(1), pages 1-34, January.
- Nancy L. Stokey & Sergio Rebelo, 1993.
"Growth Effects of Flat-Rate Taxes,"
NBER Working Papers
4426, National Bureau of Economic Research, Inc.
- Radhika Lahiri & Elisabetta Magnani, 2008. "On inequality and the allocation of public spending," Economics Bulletin, AccessEcon, vol. 5(9), pages 1-8.
- Radhika Lahiri & Shyama Ratnasiri, 2012. "Growth Patterns and Inequality in the Presence of Costly Technology Adoption," Southern Economic Journal, Southern Economic Association, vol. 79(1), pages 203-223, July.
- Alesina, Alberto & Perotti, Roberto, 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature," World Bank Economic Review, World Bank Group, vol. 8(3), pages 351-71, September.
- Mukherjee, Anit & Zhang, Xiaobo, 2007. "Rural Industrialization in China and India: Role of Policies and Institutions," World Development, Elsevier, vol. 35(10), pages 1621-1634, October.
- Greg Huffman, 2007.
"Endogenous Growth Through Investment-Specific Technological Change,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 615-645, October.
- Gregory W. Huffman, 2002. "Endogenous Growth Through Investment-Specific Technological Change," Vanderbilt University Department of Economics Working Papers 0218, Vanderbilt University Department of Economics, revised Nov 2002.
- Gregory W. Huffman, 2003. "Endogenous Growth Through Investment-Specific Technological Change," Levine's Bibliography 666156000000000268, UCLA Department of Economics.
- Perotti, Roberto, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 755-76, October.
- Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:440-449. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.