Raddatz, ClaudioKraay, Aart2012-06-152012-06-152005-06https://hdl.handle.net/10986/8220The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of development. They then use these models to assess the empirical relevance of poverty traps and their consequences for policy. The authors find little evidence of the existence of poverty traps based on these two broad mechanisms. When put to the task of explaining the persistence of low income in African countries, the models require either unreasonable values for key parameters, or else generate counterfactual predictions regarding the relations between key variables. These results call into question the view that a large scaling-up of aid to the poorest countries is a necessary condition for sharp and sustained increases in growth.CC BY 3.0 IGOABSOLUTE TERMSADVERSE SHOCKSAGGREGATE LEVELAGRICULTURAL SECTORAGRICULTUREAVAILABLE DATAAVERAGE CONSUMPTIONAVERAGE GROWTHAVERAGE GROWTH RATEBENCHMARKCAPITAL ACCUMULATIONCAPITAL MARKETSCAPITAL STOCKCONSTANT RATECONSTANT RETURNSCONSUMPTIONCONSUMPTION GROWTHCONSUMPTION LEVELSCOUNTRY SPECIFICDATA REQUIREMENTSDEBTDEBT RELIEFDEVELOPED COUNTRIESDEVELOPMENT GOALSDEVELOPMENT PROCESSDIMINISHING RETURNSDISCOUNT RATEDOMESTIC SAVINGECONOMISTSELASTICITYELASTICITY OF SUBSTITUTIONEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL STUDIESEQUILIBRIUMEXPENDITURESEXTERNALITIESFIXED COSTSFUNCTIONAL FORMSGDPGEOGRAPHIC CHARACTERISTICSGEOGRAPHIC POVERTY TRAPSGROWTHGROWTH ACCELERATIONSGROWTH LITERATUREGROWTH MODELGROWTH MODELSGROWTH PERFORMANCEGROWTH RATEGROWTH RATESHEALTH CAREHOUSEHOLD INCOMEHOUSEHOLD LEVELHUMAN CAPITALINCOMEINCOME DISTRIBUTIONINCOME LEVELSINCREASING RETURNSLABOR MARKETLEVEL OF CAPITALLEVEL OF TECHNOLOGYLEVELS OF CAPITALLOCAL CURRENCYLOCAL LEVELLONG RUNLONG-RUN INCOMEMACRO DATAMACROECONOMIC MODELSMARKET IMPERFECTIONSMIDDLE INCOME COUNTRIESOUTPUT PER CAPITAOUTPUT RATIOPER CAPITA INCOMEPERSISTENT POVERTYPOLICY INTERVENTIONPOLICY INTERVENTIONSPOLICY RESEARCHPOOR COUNTRIESPOOR HOUSEHOLDSPOOR PEOPLEPOPULATION GROWTHPOVERTY TRAPPOVERTY TRAPSPRODUCTION FUNCTIONPRODUCTION FUNCTIONSPRODUCTION TECHNOLOGYPRODUCTIVE SECTORSPRODUCTIVITYPUBLIC HEALTH CARERICH COUNTRIESSAVING FUNCTIONSAVING RATESAVINGSTECHNICAL PROGRESSTECHNOLOGY ADOPTIONTFPTRANSITION ECONOMIESUTILITY FUNCTIONWEALTHWORLD INCOME DISTRIBUTIONWorld Bank10.1596/1813-9450-3631