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Knowledge, Capabilities and the Poverty Trap: The Complex Interplay Between Technological, Social and Geographical Factors

  • Jan Fagerberg

    ()

  • Martin Srholec

This paper explores the possibility that technological capabilities, to lead to development, need to be accompanied by a broader set of “social capabilities”, reflecting not only the quality of governance but also the spread of values, beliefs and institutions that encourage members of society to actively contribute to the development process. To investigate this issue, a set of empirical indicators, reflecting the capabilities that have been emphazised in the literature as being important for development, was identified. We also take into account the possibility that these capabilities (and their impact) may be conditioned by historically given factors (related to, for example, geography, demography and history). The paper uses factor analysis to analyse the question of how these indicators interrelate and explores their relationship with economic development. We find that technological and social capabilities are indeed strongly related and, moreover, strongly correlated with economic development. The same does not apply for the second factor suggested by the analysis, which mainly reflects the character of countries’ political systems. Thus it is more important economically what countries do than how they decide on it. A strong negative relationship with development was found for the third factor, reflecting the combined effect of high fertility rates, low education and high frequency of serious disease. Arguably, this contributes to a “vicious circle” that makes it difficult for some very poor countries, especially in the tropics, to escape from poverty.

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File URL: http://servizi.sme.unito.it/icer_repec/RePEc/icr/wp2009/ICERwp24-09.pdf
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Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 24-2009.

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Length: 24 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:icr:wpicer:24-2009
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  1. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
  2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal Of Fortune: Geography And Institutions In The Making Of The Modern World Income Distribution," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1231-1294, November.
  3. Jan Fagerberg, 1987. "A technology gap approach to why growth rates differ," Working Papers Archives 1987002, Centre for Technology, Innovation and Culture, University of Oslo.
  4. Jan Fagerberg & Martin Srholec, 2007. "Catching Up: What are the critical factors for success?," Globelics Working Paper Series 2007-07, Globelics - Global Network for Economics of Learning, Innovation, and Competence Building Systems, Aalborg University, Department of Business and Management.
  5. Jan Fagerberg & Martin Srholec, 2008. "Technology and development: Unpacking the relationship(s)," Working Papers on Innovation Studies 20080623, Centre for Technology, Innovation and Culture, University of Oslo.
  6. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  7. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  8. Fearon, James D, 2003. " Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
  9. Dahlman, Carl J. & Ross-Larson, Bruce & Westphal, Larry E., 1987. "Managing technological development: Lessons from the newly industrializing countries," World Development, Elsevier, vol. 15(6), pages 759-775, June.
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