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|
|Contact details of provider:|| Postal: PAC 123, 238 Church Street, Middletown, CT 06459-0007|
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 Chaman Saxena, 2007.
"Growth dynamics: the myth of economic recovery,"
BIS Working Papers
226, Bank for International Settlements.
- Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306.
- Daniel Lederman & William F. Maloney, 2007.
"Natural Resources : Neither Curse nor Destiny,"
World Bank Publications,
The World Bank, number 7183.
- Anthony J. Venables & William Maloney & Ari Kokko & Claudio Bravo Ortega & Daniel Lederman & Roberto Rigobón & José De Gregorio & Jesse Czelusta & Shamila A. Jayasuriya & Magnus Blomström & L. Colin X, 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 59538 edited by William Maloney & Daniel Lederman.
- Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
- 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.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988.
"Industrialization and the Big Push,"
NBER Working Papers
2708, National Bureau of Economic Research, Inc.
- Jeffrey D. Sachs & Wing Thye Woo, 1997.
"Understanding China's Economic Performance,"
NBER Working Papers
5935, National Bureau of Economic Research, Inc.
- 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, "undated". "Understanding China'S Economic Performance," Department of Economics 97-04, California Davis - Department of Economics.
- Kraay, Aart & Raddatz, Claudio, 2007.
"Poverty traps, aid, and growth,"
Journal of Development Economics,
Elsevier, vol. 82(2), pages 315-347, March.
- Ricardo Hausmann & Francisco Rodríguez & Rodrigo Wagner, 2006.
Wesleyan Economics Working Papers
2006-024, Wesleyan University, Department of Economics.
- Sanjay G. Reddy & Camelia Minoiu, 2006.
"Real Income Stagnation of Countries, 1960-2001,"
28, United Nations, Department of Economics and Social Affairs.
- Kiminori Matsuyama, 1991.
"Increasing Returns, Industrialization, and Indeterminacy of Equilibrium,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(2), pages 617-650.
- Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- John Laitner, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 545-561.
- 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
- 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.
- 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 1045-1055, 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.
- Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. "Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-378, December.
- Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
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.