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Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View

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  • Glavan, Bogdan

Abstract

Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular.

Suggested Citation

  • Glavan, Bogdan, 2007. "Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View," MPRA Paper 5757, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5757
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    File URL: https://mpra.ub.uni-muenchen.de/5757/1/MPRA_paper_5757.pdf
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    References listed on IDEAS

    as
    1. Kiminori Matsuyama, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 617-650.
    2. Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
    3. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
    4. Andrés Rodríguez-Clare, 2005. "Coordination Failures, Clusters, and Microeconomic Interventions," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2005), pages 1-41, March.
    5. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-1026, October.
    6. Kiminiori Matsuyama, 1995. "Economic Development as Coordination Problems," Discussion Papers 1123, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    7. Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
    8. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, vol. 40(1-2), pages 1-22, February.
    9. Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.
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    Citations

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    Cited by:

    1. Driouchi, Ahmed, 2009. "Failure of Participation & “Missing Women” in South Mediterranean Economies," MPRA Paper 21541, University Library of Munich, Germany, revised 22 Mar 2010.
    2. Abubakar S. Garba, 2012. "Entrepreneurship, Public Policy and Poverty Reduction in Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 2(2), pages 158-169, April.
    3. Abubakar S. Garba, 2012. "Entrepreneurship, Public Policy and Poverty Reduction in Nigeria," International Journal of Business and Social Research, LAR Center Press, vol. 2(2), pages 158-169, April.

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    More about this item

    Keywords

    coordination failure; poverty trap; industrial policy; market system;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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