Learning to Learn : Experimentation, Entrepreneurial Capital, and Development
This paper models an entrepreneur’s choice between investing in a safe activity or experimenting with a new risky one, and how much to invest in the “entrepreneurial capital” that would permit more effective use of the arriving information on the l...
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| Format: | Working Paper |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/382521640023800097/Learning-to-Learn-Experimentation-Entrepreneurial-Capital-and-Development http://hdl.handle.net/10986/36782 |
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okr-10986-367822021-12-24T05:10:41Z Learning to Learn : Experimentation, Entrepreneurial Capital, and Development Maloney, William F. Zambrano, Andres ENTREPRENEURSHIP EDUCATION ENTREPRENEURIAL CAPTIAL LEARNING DEVELOPMENT EXPERIMENTATION This paper models an entrepreneur’s choice between investing in a safe activity or experimenting with a new risky one, and how much to invest in the “entrepreneurial capital” that would permit more effective use of the arriving information on the latter- how much to learn how to learn. Optimal investment in entrepreneurial capital depends the expected return on the risky activity. It can lead to three learning regimes, two of which can generate a development trap where firms and countries are unable to assess the potential of newly arriving technologies and hence grow more slowly. The first arises purely because it is too expensive to learn to learn, the second because the returns to the new activity are so high that they obviate the need to distinguish between activities and hence invest in entrepreneurial capital. The paper draws on historical evidence to show how the model offers insights into three understudied features of the industrialization process in the Western Hemisphere at the beginning of the 20th century: the disproportionate influence of immigrant/foreign entrepreneurs in driving industrialization in Latin America; the emergence of selective exceptions to this pattern, as well as episodes of entrepreneurial retrogression; and the differing effects of similar economic structures across countries that suggest the possibility of a learning-displacing resource curse. The model can simulate the respective decline and boom in the Chilean and US copper industries at the turn of the century, arising either from initially high relative returns or low initial endowments of entrepreneurial capital in the latter. 2021-12-23T15:14:31Z 2021-12-23T15:14:31Z 2021-12 Working Paper http://documents.worldbank.org/curated/undefined/382521640023800097/Learning-to-Learn-Experimentation-Entrepreneurial-Capital-and-Development http://hdl.handle.net/10986/36782 English Policy Research Working Paper;No. 9890 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Latin America |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ENTREPRENEURSHIP EDUCATION ENTREPRENEURIAL CAPTIAL LEARNING DEVELOPMENT EXPERIMENTATION |
| spellingShingle |
ENTREPRENEURSHIP EDUCATION ENTREPRENEURIAL CAPTIAL LEARNING DEVELOPMENT EXPERIMENTATION Maloney, William F. Zambrano, Andres Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| geographic_facet |
Latin America & Caribbean Latin America |
| relation |
Policy Research Working Paper;No. 9890 |
| description |
This paper models an entrepreneur’s
choice between investing in a safe activity or experimenting
with a new risky one, and how much to invest in the
“entrepreneurial capital” that would permit more effective
use of the arriving information on the latter- how much to
learn how to learn. Optimal investment in entrepreneurial
capital depends the expected return on the risky activity.
It can lead to three learning regimes, two of which can
generate a development trap where firms and countries are
unable to assess the potential of newly arriving
technologies and hence grow more slowly. The first arises
purely because it is too expensive to learn to learn, the
second because the returns to the new activity are so high
that they obviate the need to distinguish between activities
and hence invest in entrepreneurial capital. The paper draws
on historical evidence to show how the model offers insights
into three understudied features of the industrialization
process in the Western Hemisphere at the beginning of the
20th century: the disproportionate influence of
immigrant/foreign entrepreneurs in driving industrialization
in Latin America; the emergence of selective exceptions to
this pattern, as well as episodes of entrepreneurial
retrogression; and the differing effects of similar economic
structures across countries that suggest the possibility of
a learning-displacing resource curse. The model can simulate
the respective decline and boom in the Chilean and US copper
industries at the turn of the century, arising either from
initially high relative returns or low initial endowments of
entrepreneurial capital in the latter. |
| format |
Working Paper |
| author |
Maloney, William F. Zambrano, Andres |
| author_facet |
Maloney, William F. Zambrano, Andres |
| author_sort |
Maloney, William F. |
| title |
Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| title_short |
Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| title_full |
Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| title_fullStr |
Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| title_full_unstemmed |
Learning to Learn : Experimentation, Entrepreneurial Capital, and Development |
| title_sort |
learning to learn : experimentation, entrepreneurial capital, and development |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/undefined/382521640023800097/Learning-to-Learn-Experimentation-Entrepreneurial-Capital-and-Development http://hdl.handle.net/10986/36782 |
| _version_ |
1764485884886908928 |