IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

A Class of Poverty Traps: A Theory and Empirical Tests

  • Alan Martina

    ()

Registered author(s):

    Comparatively low levels of health and economic institutions are present in certain countries and not in others. Implications drawn from this observation are used to modify the Solow-Swan economic growth model. Conjectures are derived from the resulting model concerning what circumstances are likely to generate a health-only poverty trap and a health-cum-institutions poverty trap. These conjectures are tested through the use of quasi-controlled experimental evidence and econometric tests based on cross-country data sets. These tests support the conjecture that this class of poverty traps exists. Certain implications follow regarding the broad design of development policy.

    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.

    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp482.pdf
    Download Restriction: no

    Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2007-482.

    as
    in new window

    Length: 125 pages
    Date of creation: Jul 2007
    Date of revision:
    Handle: RePEc:acb:cbeeco:2007-482
    Contact details of provider: Postal:
    Canberra, ACT 2601

    Phone: +61 2 6125 3807
    Fax: +61 2 6125 0744
    Web page: http://rse.anu.edu.au/
    Email:


    More information through EDIRC

    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.:

    as in new window
    1. Durlauf, S.N. & Johnson, P.A., 1994. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419, Wisconsin Madison - Social Systems.
    2. Scott McDonald & Jennifer Roberts, 2004. "Aids and Economic Growth: A Human Capital Approach," Working Papers 2004008, The University of Sheffield, Department of Economics, revised Aug 2004.
    3. Chih Ming Tan, 2005. "No One True Path: Uncovering the Interplay between Geography, Institutions, and Fractionalization in Economic Development," Discussion Papers Series, Department of Economics, Tufts University 0512, Department of Economics, Tufts University.
    4. repec:rus:hseeco:70719 is not listed on IDEAS
    5. Hoyt Bleakley, 2007. "Disease and Development: Evidence from Hookworm Eradication in the American South," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 73-117.
    6. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
    7. Bianchi, Marco, 1997. "Testing for Convergence: Evidence from Non-parametric Multimodality Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 393-409, July-Aug..
    8. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
    9. Kevin D. Hoover & Stephen J. Perez, . "Truth and Robustness in Cross-country Growth Regressions," Department of Economics 01-01, California Davis - Department of Economics.
    10. Dani Rodrick, 2003. "Growth Strategies," Economics working papers 2003-17, Department of Economics, Johannes Kepler University Linz, Austria.
    11. Daniel Cohen & Marcelo Soto, 2001. "Growth and Human Capital: Good Data, Good Results," OECD Development Centre Working Papers 179, OECD Publishing.
    12. Cutler, David & Lleras-Muney, Adriana & Deaton, Angus, 2006. "The Determinants of Mortality," Scholarly Articles 2640588, Harvard University Department of Economics.
    13. Gustav Ranis & Frances Stewart, 2001. "Growth and Human Development: Comparative Latin American Experience," Working Papers 826, Economic Growth Center, Yale University.
    14. Christopher J. Coyne & Steve Davies, 2007. "Empire: Public Goods and Bads," Econ Journal Watch, Econ Journal Watch, vol. 4(1), pages 3-45, January.
    15. Galor, Oded, 2004. "The Demographic Transition and the Emergence of Sustained Economic Growth," CEPR Discussion Papers 4714, C.E.P.R. Discussion Papers.
    16. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5 Elsevier.
    17. Oded Galor & David Mayer-Foulkes, 2004. "Food for Thought: Basic Needs and Persistent Educational Inequality," GE, Growth, Math methods 0410002, EconWPA.
    18. Alesina, Alberto & Devleeschauwer, Arnaud & Wacziarg, Romain & Kurlat, Sergio & Easterly, William, 2003. "Fractionalization," Scholarly Articles 4553003, Harvard University Department of Economics.
    19. Graham, Bryan S. & Jonathan Temple, 2002. "Rich Nations, Poor Nations: How much can multiple equilibria explain?," Royal Economic Society Annual Conference 2002 91, Royal Economic Society.
    20. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
    21. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293 Elsevier.
    22. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," Development and Comp Systems 0210003, EconWPA.
    23. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    24. James G. MacKinnon & Halbert White, 1983. "Some Heteroskedasticity Consistent Covariance Matrix Estimators with Improved Finite Sample Properties," Working Papers 537, Queen's University, Department of Economics.
    25. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    26. Edward Glaeser & Giacomo Ponzetto & Andrei Shleifer, 2006. "Why Does Democracy Need Education?," NBER Working Papers 12128, National Bureau of Economic Research, Inc.
    27. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. "Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
    28. Peter Lorentzen & John McMillan & Romain Wacziarg, 2008. "Death and development," Journal of Economic Growth, Springer, vol. 13(2), pages 81-124, June.
    29. Carstensen, Kai & Gundlach, Erich, 2006. "The primacy of institutions reconsidered: Direct income effects of malaria prevalence," Munich Reprints in Economics 19929, University of Munich, Department of Economics.
    30. Quah, Danny T, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
    31. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    32. Galor, Oded, 1996. "Convergence? Inferences from Theoretical Models," Economic Journal, Royal Economic Society, vol. 106(437), pages 1056-69, July.
    33. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
    34. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
    35. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
    36. David F. Hendry & Hans-Martin Krolzig, 2005. "The Properties of Automatic "GETS" Modelling," Economic Journal, Royal Economic Society, vol. 115(502), pages C32-C61, 03.
    37. repec:pri:cheawb:malaria is not listed on IDEAS
    38. Ranis, G. & Ramirez, A. & Stewart, F., 1997. "Economic Growth and Human Development," Papers 787, Yale - Economic Growth Center.
    39. Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677 Elsevier.
    40. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
    41. Abhijit V. Banerjee & Esther Duflo, 2000. "Inequality and Growth: What Can the Data Say?," NBER Working Papers 7793, National Bureau of Economic Research, Inc.
    42. Grier, Kevin & Grier, Robin, 2007. "Only income diverges: A neoclassical anomaly," Journal of Development Economics, Elsevier, vol. 84(1), pages 25-45, September.
    43. David F. Hendry & Hans-Martin Krolzig, 2004. "We Ran One Regression," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(5), pages 799-810, December.
    44. Bourguignon, Francois & Verdier, Thierry, 2000. "Oligarchy, democracy, inequality and growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 285-313, August.
    45. Ross Levine, 2005. "Law, Endowments, and Property Rights," NBER Working Papers 11502, National Bureau of Economic Research, Inc.
    46. William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc.
    47. Rodrigo R. Soares, 2003. "Mortality Reductions, Educational Attainment, and Fertility Choice," Development and Comp Systems 0312006, EconWPA.
    48. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    49. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
    50. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    51. Carsten A. Holz, 2006. "CHINA's REFORM PERIOD ECONOMIC GROWTH: HOW RELIABLE ARE ANGUS MADDISON's ESTIMATES?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 85-119, 03.
    52. Matthias Doepke, 2002. "Child Mortality and Fertility Decline: Does the Barro-Becker Model Fit the Facts?," UCLA Economics Working Papers 824, UCLA Department of Economics.
    53. Amar Hamoudi & Jeffrey D. Sachs, 1999. "The Changing Global Distribution of Malaria: A Review," CID Working Papers 2, Center for International Development at Harvard University.
    54. Edward, Peter, 2006. "Examining Inequality: Who Really Benefits from Global Growth?," World Development, Elsevier, vol. 34(10), pages 1667-1695, October.
    55. Kenny, Charles, 2005. "Why Are We Worried About Income? Nearly Everything that Matters is Converging," World Development, Elsevier, vol. 33(1), pages 1-19, January.
    56. Andrea F. Presbitero, 2006. "Institutions and geography as sources of economic development," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(3), pages 351-378.
    57. Angus Maddison, 2006. "DO OFFICIAL STATISTICS EXAGGERATE CHINA's GDP GROWTH? A REPLY TO CARSTEN HOLZ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 121-126, 03.
    58. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," NBER Working Papers 7750, National Bureau of Economic Research, Inc.
    59. Moav, Omer, 2001. "Cheap Children and the Persistence of Poverty," CEPR Discussion Papers 3059, C.E.P.R. Discussion Papers.
    60. Winford H. Masanjala & Chris Papageorgiou, 2008. "Rough and lonely road to prosperity: a reexamination of the sources of growth in Africa using Bayesian model averaging," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 671-682.
    61. Bleaney, Michael & Nishiyama, Akira, 2002. "Explaining Growth: A Contest between Models," Journal of Economic Growth, Springer, vol. 7(1), pages 43-56, March.
    62. Glaeser, Edward L. & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2004. "Do Institutions Cause Growth?," Scholarly Articles 27867242, Harvard University Department of Economics.
    63. Gersovitz, Mark, 1983. "Savings and Nutrition at Low Incomes," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 841-55, October.
    64. Kraay, Aart & Raddatz, Claudio, 2005. "Poverty traps, aid, and growth," Policy Research Working Paper Series 3631, The World Bank.
    65. Gustav Ranis, 2004. "Human Development and Economic Growth," Working Papers 887, Economic Growth Center, Yale University.
    66. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," Harvard Institute of Economic Research Working Papers 1856, Harvard - Institute of Economic Research.
    67. David M. Cutler & Grant Miller, 2004. "The Role of Public Health Improvements in Health Advances: The 20th Century United States," NBER Working Papers 10511, National Bureau of Economic Research, Inc.
    68. Sebnem Kalemli-Ozcan, 2002. "A Stochastic Model of Mortality, Fertility, and Human Capital Investment," Macroeconomics 0212009, EconWPA.
    69. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
    70. Temple, Jonathan, 2000. "Growth Regressions and What the Textbooks Don't Tell You," Bulletin of Economic Research, Wiley Blackwell, vol. 52(3), pages 181-205, July.
    71. Paapaa, Richard & van Dijk, Herman K., 1998. "Distribution and mobility of wealth of nations," European Economic Review, Elsevier, vol. 42(7), pages 1269-1293, July.
    72. Shankha Chakraborty & Chris Papageorgiou & Fidel Pérez Sebastián, 2006. "Diseases and Development," DEGIT Conference Papers c011_044, DEGIT, Dynamics, Economic Growth, and International Trade.
    73. Carsten A. Holz, 2006. "China'S Reform Period Economic Growth: How Reliable Are Angus Maddison'S Estimates? Response To Angus Maddison'S Reply," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(3), pages 471-475, 09.
    74. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    75. Filmer, Deon & Hammer, Jeffrey S & Pritchett, Lant H, 2000. "Weak Links in the Chain: A Diagnosis of Health Policy in Poor Countries," World Bank Research Observer, World Bank Group, vol. 15(2), pages 199-224, August.
    76. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," NBER Working Papers 6849, National Bureau of Economic Research, Inc.
    77. Durlauf,S.N., 2003. "The convergence hypothesis after 10 years," Working papers 6, Wisconsin Madison - Social Systems.
    78. Mitchener, Kris James & Weidenmier, Marc, 2005. "Empire, Public Goods, and the Roosevelt Corollary," The Journal of Economic History, Cambridge University Press, vol. 65(03), pages 658-692, September.
    79. Francisco Rodríguez, 2006. "Cleaning Up the Kitchen Sink: On the Consequences of the Linearity Assumption for Cross-Country Growth Empirics," IDB Publications (Working Papers) 47218, Inter-American Development Bank.
    80. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
    81. Francisco Rodríguez, 2006. "Cleaning Up the Kitchen Sink: Growth Empirics When the World Is Not Simple," Wesleyan Economics Working Papers 2006-004, Wesleyan University, Department of Economics, revised 17 May 2007.
    82. repec:rus:hseeco:71105 is not listed on IDEAS
    83. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:acb:cbeeco:2007-482. 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: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.