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Learning to learn: Experimentation, entrepreneurial capital, and development

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  • William F. Maloney
  • Andrés Zambrano

Abstract

This paper models an entrepreneur's choice between investing in a safe activity or experimenting with a new risky one, and how much to invest in entrepreneurial capital" that permits more effective use of arriving information on the latter- how much to learn how to learn. Optimal investment depends on the cost, the distance from the entrepreneurial frontier, and non-monotonically, on the expected return on the risky activity, leading to three learning regimes including a potential resource curse. The model is supported by historical evidence from Latin America and simulations of the relative decline of the Chilean versus US copper industries

Suggested Citation

  • William F. Maloney & Andrés Zambrano, 2022. "Learning to learn: Experimentation, entrepreneurial capital, and development," Documentos CEDE 19940, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:019940
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    More about this item

    Keywords

    Learning; Experimentation; Entrepreneurial capital; Development; Resource curse;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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