Wealth inequality, entrepreneurship and industrialization
The paper shows that in a two-good economy with a basic and a luxury good sector inequality is indeed a hindrance to provide sufficient incentive for entrepreneurship to low-wealth economic agents. In contrast to the literature it uses both demand and supply-side explanations for the analysis. An entrepreneurial subsidy policy to encourage entrepreneurship in autarky financed by a lump sum tax on the rich is not very effective in unequal economies since it hardly impacts the welfare. When trade is opened up in the luxury good sector of such an economy the sector might cease to exist. In such a scenario, the rich people being the sole consumers would reap the entire benefits of globalization via low price of the imported luxury good. The paper highlights that the crucial question is: ‘how to globalize’ rather than ‘whether to globalize’ and suggests policy measures to make globalization inclusive. Copyright Springer-Verlag 2013
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.:
- Matsuyama, Kiminori, 1992.
"Agricultural productivity, comparative advantage, and economic growth,"
Journal of Economic Theory,
Elsevier, vol. 58(2), pages 317-334, December.
- Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
- Christiane Clemens & Maik Heinemann, 2005.
"On the Effects of Redistribution on Growth and Entrepreneurial Risk-Taking,"
Working Paper Series in Economics
6, University of Lüneburg, Institute of Economics.
- Christiane Clemens & Maik Heinemann, 2006. "On the Effects of Redistribution on Growth and Entrepreneurial Risk-taking," Journal of Economics, Springer, vol. 88(2), pages 131-158, 08.
- Maik Heinemann & Christiane Clemens, 2005. "On the Effects of Redistribution on Growth and Entrepreneurial Risk-Taking," Computing in Economics and Finance 2005 275, Society for Computational Economics.
- Kiminori Matsuyama, 2002.
"The Rise of Mass Consumption Societies,"
Journal of Political Economy,
University of Chicago Press, vol. 110(5), pages 1035-1070, October.
- Kiminori Matsuyama, 2000. "The Rise of Mass Consumption Societies," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Kiminori Matsuyama, 1999. "The Rise of Mass Consumption Societies," Discussion Papers 1289, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 2000. "The rise of mass consumption societies," LSE Research Online Documents on Economics 6656, London School of Economics and Political Science, LSE Library.
- repec:hoo:wpaper:e-92-3 is not listed on IDEAS
- Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1989.
"Income Distribution, Market Size, and Industrialization,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 104(3), pages 537-564.
- Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1988. "Income Distribution, Market Size, and Industrialization," NBER Working Papers 2709, National Bureau of Economic Research, Inc.
- Galor, Oded & Zeira, Joseph, 1988.
"Income Distribution and Macroeconomics,"
51644, University Library of Munich, Germany, revised 01 Sep 1989.
- Soon Ryoo, 2011. "Banks with market power, sectoral structure and the big push," Journal of Economics, Springer, vol. 103(1), pages 1-38, May.
- Cesaire Meh, 2005. "Entrepreneurship, Wealth Inequality, and Taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 688-719, July.
- Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
- Gene M. Grossman, 1983.
"International Trade, Foreign Investment, and the Formation of the Entrepreneurial Class,"
NBER Working Papers
1174, National Bureau of Economic Research, Inc.
- Grossman, Gene M, 1984. "International Trade, Foreign Investment, and the Formation of the Entrepreneurial Class," American Economic Review, American Economic Association, vol. 74(4), pages 605-14, September.
- Paternostro, Stefano, 1997. "The poverty trap: The dual externality model and its policy implications," World Development, Elsevier, vol. 25(12), pages 2071-2081, December.
- S.M. Shafaeddin, 2005. "Trade Liberalization And Economic Reform In Developing Countries: Structural Change Or De-Industrialization?," UNCTAD Discussion Papers 179, United Nations Conference on Trade and Development.
When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:108:y:2013:i:1:p:81-102. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.