Abstract: One of the main subjects in the theory of economic growth is to explain regional differences among rates of growth. In this paper, we address this issue through the notion of the underdevelopment trap. Such a trap may be the result of strategic complementarities between investment decisions which generate multiple equilibria. The latter may be Pareto inefficient because of technological externalities. We test our model on international pooled data on the period 1970-90. The econometric analysis shows that economic growth rates depend on regional investment decisions. Moreover, it appears that such regional spillovers are channeled mainly through the physical rather than through the human capital stock.
Publication Year: 1999
Publication Date: 1999-01-01
Language: en
Type: preprint
Access and Citation
Cited By Count: 1
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot