Publication: Middle-Income Growth Traps
Date
2012-09
ISSN
Published
2012-09
Author(s)
Abstract
This paper studies the existence of
middle-income growth traps in a two-period overlapping
generations model of economic growth with two types of labor
and endogenous occupational choices. It also distinguishes
between "basic" and "advanced"
infrastructure, with the latter promoting design activities,
and accounts for a knowledge network externality associated
with product diversification. Multiple steady-state
equilibria may emerge, one of them taking the form of a
low-growth trap characterized by low productivity growth and
a misallocation of talent -- defined as a relatively low
share of high-ability workers in design activities. Improved
access to advanced infrastructure may help escape from that
trap. The implications of other public policies, including
the protection of property rights and labor market reforms,
are also discussed.
Citation
“Agénor, Pierre-Richard; Canuto, Otaviano. 2012. Middle-Income Growth Traps. Policy Research working paper;no. 6210. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/1aa6d904-f3dc-5c85-9713-a207998c7e27 License: CC BY 3.0 IGO.”
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