Debt, Corruption, R&D and Growth in Developing Countries
This paper analyzes optimal paths in a one-sector growth model when the technology is not convex. In such a case, we prove that optimal paths converge to the upper steady state iff the initial wealth is above a critical level. Then we first show that thanks to debt and/or R&D the poverty trap may be avoided. Second, we introduce a distorsion : corruption which mostly has dramatic consequences on growth. These results may explain why empirical works lead to the conclusion of non convergence in large cross-country samples.
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|Date of creation:||1999|
|Date of revision:|
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