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Optimal Development Strategies in a Labor-Surplus Economy with Increasing Returns: Is Industrialization Desirable at All?

Author

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  • T Miyao

    (Department of Economics, University of Southern California, Los Angeles, CA 90089)

  • K Nishimura

    (Department of Economics, Tokyo Metropolitan University, Meguro-ku, Tokyo, Japan)

Abstract

The authors analyze the problem of optimal development strategies in a labor-surplus economy, where manufacturing production is subject to a convex-concave production function. Our contribution is to provide a rigorous proof of the existence of a critical value of capital such that industrialization is optimal if the initial stock of capital is above the critical value, whereas nonindustrialization is optimal if the initial capital stock is below the critical value.

Suggested Citation

  • T Miyao & K Nishimura, 1983. "Optimal Development Strategies in a Labor-Surplus Economy with Increasing Returns: Is Industrialization Desirable at All?," Environment and Planning A, , vol. 15(9), pages 1151-1159, September.
    • Handle: RePEc:sae:envira:v:15:y:1983:i:9:p:1151-1159
    DOI: 10.1068/a151151
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    References listed on IDEAS

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    1. Majumdar, Mukul & Mitra, Tapan, 1982. "Intertemporal allocation with a non-convex technology: The aggregative framework," Journal of Economic Theory, Elsevier, vol. 27(1), pages 101-136, June.
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