Middle-Income Growth Traps
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 "a...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/09/16769897/middle-income-growth-traps http://hdl.handle.net/10986/12004 |
| Summary: | 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. |
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