Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
965817 | Journal of Macroeconomics | 2013 | 17 Pages |
Abstract
We develop a political economy model of growth to examine economic development led by the interactions between an economic decision concerning a firm's production technology (CRS vs. IRS technology) and a political decision concerning public infrastructure. We show that multiple equilibrium growth paths occur due to differences in expectations regarding the quality of public infrastructure. These multiple paths illustrate why economies with poor initial conditions can catch up to and, furthermore, overtake economies with better initial conditions. Our result could explain the experiences of some East Asian countries where the co-evolution of public infrastructure and industrial transformation spurred economic development.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Kohei Daido, Ken Tabata,