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The Wealth of Nations: Fundamental Forces Versus Poverty Traps

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  • David E. Bloom
  • David Canning
  • Jaypee Sevilla

Abstract

We test the view the large differences in income levels we see across the world are due to differences in underlying characteristics, i.e. fundamental forces, against the alternative that there are poverty traps. Taking geographical variables as fundamental characteristics, we find that we can reject fundamental forces in favor of a poverty trap model with high and low level equilibria. The high level equilibrium state is found to be the same for all countries while income in the low level equilibrium, and the probability of being in the high level equilibrium, are greater in cool, coastal countries with high, year- round, rainfall.

Suggested Citation

  • David E. Bloom & David Canning & Jaypee Sevilla, 2002. "The Wealth of Nations: Fundamental Forces Versus Poverty Traps," NBER Working Papers 8714, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8714
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    References listed on IDEAS

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    Cited by:

    1. Eris, Mehmet, 2010. "Population heterogeneity and growth," Economic Modelling, Elsevier, vol. 27(5), pages 1211-1222, September.
    2. Bryan Graham & Jonathan Temple, 2006. "Rich Nations, Poor Nations: How Much Can Multiple Equilibria Explain?," Journal of Economic Growth, Springer, vol. 11(1), pages 5-41, March.
    3. Richard Grabowski, 2003. "Promoting industrialization: the role of the traditional sector and the state in East Asia," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(5), pages 587-605.

    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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