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What stunts economic growth and causes the poverty trap?

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  • Mizushima, Atsue

Abstract

In spite of an identical initial condition, why are some parts of the world so rich and others so poor? To address this question, this paper constructs a simple theoretical model that incorporates human infrastructure and child labor The first part of the paper shows that the condition of bifurcation from an identical initial condition depends on the technology level. We also show that current dynamic trends highly depend on initial endowments and productivity. The second part of the paper examines the effect of development assistance in recipient countries. By analyzing two types of programs; the elimination of child labor and support to strengthen human infrastructure, we show that the former (latter) program is effective for middle- (low-) income countries.

Suggested Citation

  • Mizushima, Atsue, 2019. "What stunts economic growth and causes the poverty trap?," MPRA Paper 92238, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92238
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    File URL: https://mpra.ub.uni-muenchen.de/92238/1/MPRA_paper_92238.pdf
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    References listed on IDEAS

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    1. César Calderón & Alberto Chong, 2004. "Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 87-106, March.
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    6. Garcia-Mila, Teresa & McGuire, Therese J & Porter, Robert H, 1996. "The Effect of Public Capital in State-Level Production Functions Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 177-180, February.
    7. Bedi, Arjun Singh & Edwards, John H. Y., 2002. "The impact of school quality on earnings and educational returns--evidence from a low-income country," Journal of Development Economics, Elsevier, vol. 68(1), pages 157-185, June.
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    More about this item

    Keywords

    Child labor; human infrastructure; human capital; divergence; poverty trap; development aid;
    All these keywords.

    JEL classification:

    • I00 - Health, Education, and Welfare - - General - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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