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Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View

  • Glavan, Bogdan

Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5757.

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Date of creation: 14 Nov 2007
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Handle: RePEc:pra:mprapa:5757
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  1. Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
  3. Kiminiori Matsuyama, 1995. "Economic Development as Coordination Problems," Discussion Papers 1123, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series rwp04-047, Harvard University, John F. Kennedy School of Government.
  5. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
  6. repec:tpr:qjecon:v:106:y:1991:i:2:p:617-50 is not listed on IDEAS
  7. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, vol. 40(1-2), pages 1-22, February.
  8. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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