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Declining Predation during Development: a Feedback Process


  • Bethencourt, Carlos
  • Perera-Tallo, Fernando


Empirical evidence suggests that poorer countries have larger portions of predation. We formulate a neoclassical growth model in which agents devote time either to produce or predate. When the elasticity of substitution between labor and capital is lower than one, the labor share rises with capital, reducing the incentive to predate and increasing the incentive to produce throughout the transition. Consequently, a feedback process between capital accumulation and predation arises which ampli¯es income di®erences generated by di®erences in productivity. Thus, this paper helps understand why di®erences among countries have remained stable and the key role that institutions play in development.

Suggested Citation

  • Bethencourt, Carlos & Perera-Tallo, Fernando, 2012. "Declining Predation during Development: a Feedback Process," MPRA Paper 41918, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41918

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    References listed on IDEAS

    1. Dutta, Prajit K & Mitra, Tapan, 1989. "On Continuity of the Utility Function in Intertemporal Allocation Models: An Example," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(3), pages 527-536, August.
    2. McKenzie, Lionel W., 2005. "Optimal economic growth, turnpike theorems and comparative dynamics," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 2, volume 3, chapter 26, pages 1281-1355 Elsevier.
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    1. The richer we are, the less crime there is
      by Economic Logician in Economic Logic on 2012-11-12 21:23:00

    More about this item


    Predation; Labor share; Development;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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