An Empirical Test of the Poverty Traps Hypothesis
This paper presents an empirical test of a subclass of poverty traps hypotheses. The test is based on the observation that the nonconvexities in the production function necessary to generate multiple equilibria need only be present in the region between the equilibria. Increasing returns should therefore be strongest when the economy is transitioning between steady states than when it is at or near one of those steady states. I implement this idea by estimating the degree of increasing returns during growth accelerations and growth collapses for a panel of developing and developed economies using UNIDO's Database of Industrial Statistics. I find no evidence of systematic differences in economies of scale between transition and non-transition episodes, shedding doubt on the idea that increasing returns in manufacturing generate poverty traps.
|Date of creation:||Jul 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.wesleyan.edu/econ/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Valerie Cerra & Sweta C. Saxena, 2005.
"Growth Dynamics: The Myth of Economic Recovery,"
- Sweta Chaman Saxena & Valerie Cerra, 2005. "Growth Dynamics; The Myth of Economic Recovery," IMF Working Papers 05/147, International Monetary Fund.
- Valerie Cerra & Sweta Chaman Saxena, 2007. "Growth dynamics: the myth of economic recovery," BIS Working Papers 226, Bank for International Settlements.
- Sanjay G. Reddy & Camelia Minoiu, 2005.
"Real Income Stagnation of Countries, 1960-2001,"
Development and Comp Systems
- Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
- Jeffrey D. Sachs & Wing Thye Woo, 1997.
"Understanding China's Economic Performance,"
Harvard Institute of Economic Research Working Papers
1793, Harvard - Institute of Economic Research.
- Jeffrey D. Sachs & Wing Thye Woo, . "Understanding China'S Economic Performance," Department of Economics 97-04, California Davis - Department of Economics.
- Jeffrey D. Sachs & Wing Thye Woo, 1997. "Understanding China's Economic Performance," NBER Working Papers 5935, National Bureau of Economic Research, Inc.
- William Easterly, 2006. "Reliving the 1950s: the big push, poverty traps, and takeoffs in economic development," Journal of Economic Growth, Springer, vol. 11(4), pages 289-318, December.
- Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
- Azariadis, Costas & Stachurski, John, 2005.
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5
- Matsuyama, Kiminori, 1991.
"Increasing Returns, Industrialization, and Indeterminacy of Equilibrium,"
The Quarterly Journal of Economics,
MIT Press, vol. 106(2), pages 617-50, May.
- Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
- Kraay, Aart & Raddatz, Claudio, 2007.
"Poverty traps, aid, and growth,"
Journal of Development Economics,
Elsevier, vol. 82(2), pages 315-347, March.
- Reinhart, Carmen & Vegh, Carlos & Velasco, Andres, 2008.
"Money, Crises, and Transition Essays in Honor of Guillermo A. Calvo: An Introduction,"
13232, University Library of Munich, Germany.
- Carmen M. Reinhart & Carlos A. Végh & Andrés Velasco (ed.), 2008. "Money, Crises, and Transition: Essays in Honor of Guillermo A. Calvo," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182661, June.
- Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, June.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989.
"Industrialization and the Big Push,"
Journal of Political Economy,
University of Chicago Press, vol. 97(5), pages 1003-26, October.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
- Quah, Danny, 1996.
"Twin Peaks: Growth and Convergence in Models of Distribution Dynamics,"
CEPR Discussion Papers
1355, C.E.P.R. Discussion Papers.
- Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-55, July.
- Hausmann, Ricardo & Rodriguez, Francisco & Wagner, Rodrigo, 2006.
Working Paper Series
rwp06-046, Harvard University, John F. Kennedy School of Government.
- Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 545-61, July.
- Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.
When requesting a correction, please mention this item's handle: RePEc:wes:weswpa:2008-005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manolis Kaparakis)
If references are entirely missing, you can add them using this form.