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Appropriate Economic Policies at Different Stages of Development

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  • Polterovich, Victor
  • Popov, Vladimir

Abstract

This paper summarizes theoretical arguments and provides empirical evidence to support the statement that rational economic policies depend qualitatively on two factors – technological and institutional level of development of a country. We concentrate on the impact of three policies to promote the catch up development – import tariffs, increase of government revenues/spending, and the speed of foreign exchange reserves accumulation ("exchange rate protectionism"). It is shown that the impact of these policies may be positive or negative dependening on a stage of development; in each case we find threshold levels or critical combinations of GDP per capita and/or an institutional quality indicator. A theoretical model demonstrates how tariff protection and accumulation of reserves can boost long term growth in the presence of externalities.

Suggested Citation

  • Polterovich, Victor & Popov, Vladimir, 2005. "Appropriate Economic Policies at Different Stages of Development," MPRA Paper 20066, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:20066
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    File URL: https://mpra.ub.uni-muenchen.de/20066/1/MPRA_paper_20066.pdf
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    References listed on IDEAS

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    1. Jeffrey G. Williamson, 2002. "Winners and Losers Over Two Centuries of Globalization," NBER Working Papers 9161, National Bureau of Economic Research, Inc.
    2. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    3. Douglas A. Irwin, 2002. "Did Import Substitution Promote Growth in the Late Nineteenth Century?," NBER Working Papers 8751, National Bureau of Economic Research, Inc.
    4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    5. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 42(1), pages 1-57, April.
    6. Laffont, Jean-Jacques, 1996. "Industrial policy and politics," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 1-27.
    7. Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper 20595, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. Vladimir Popov, 2010. "Development theories and development experience: half a century journey," Working Papers w0153, Center for Economic and Financial Research (CEFIR).
    2. Vladimir Popov, 2009. "Why the West Became Rich before China and Why China Has Been Catching Up with the West since 1949: nother Explanation of the “Great Divergence” and “Great Convergence” Stories," Working Papers w0132, Center for Economic and Financial Research (CEFIR).
    3. Popov, Vladimir & Chowdhury, Anis, 2015. "What Uzbekistan tells us about industrial policy that we did not know?," MPRA Paper 67013, University Library of Munich, Germany.
    4. Popov, Vladimir, 2015. "Catching Up: Developing Countries in Pursuit of Growth," MPRA Paper 65878, University Library of Munich, Germany.
    5. Polterovich, Victor & Popov, Vladimir, 2006. "Stages of Development, Economic Policies and a New World Economic Order," MPRA Paper 20055, University Library of Munich, Germany.
    6. Vladimir Popov, 2006. "Shock Therapy Versus Gradualism Reconsidered: Lessons From Transition Economies After 15 Years Of Reforms," Working Papers w0068, Center for Economic and Financial Research (CEFIR).
    7. Polterovich, Victor & Tonis, Alexander, 2014. "Absorptive Capacity and Innovative Capability: An Approach to Estimation," MPRA Paper 56855, University Library of Munich, Germany.
    8. Popov, Vladimir, 2015. "Разрыв Между Югом И Западом По Уровню Экономического Развития Сокращается?
      [Catching up: Developing countries in pursuit of growth]
      ," MPRA Paper 65893, University Library of Munich, Germany.
    9. Popov, Vladimir, 2016. "Is Globalization Coming to an End Due to Rise of Income Inequalities?," MPRA Paper 73094, University Library of Munich, Germany.
    10. Popov, Vladimir, 2013. "Economic Miracle of Post-Soviet Space: Why Uzbekistan Managed to Achieve What No Other Post-Soviet State Achieved," MPRA Paper 48723, University Library of Munich, Germany.
    11. Popov, V., 2011. "Do We Need to Protect Intellectual Property Rights?," Journal of the New Economic Association, New Economic Association, issue 11, pages 107-126.
    12. Popov, Vladimir, 2009. "Lessons from the Transition Economies: Putting the Success Stories of the Postcommunist World into a Broader Perspective," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    13. Wlasiuk, Juan Marcos, 2013. "The Mechanics of Real Undervaluation and Growth," MPRA Paper 56628, University Library of Munich, Germany.
    14. Polterovich, Victor & Popov, Vladimir, 2003. "Accumulation of Foreign Exchange Reserves and Long Term Growth," MPRA Paper 20069, University Library of Munich, Germany.

    More about this item

    Keywords

    development stages; economic growth;

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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