Beyond Rosenstein-Rodan : The Modern Theory of Underdevelopment Traps

  title={Beyond Rosenstein-Rodan : The Modern Theory of Underdevelopment Traps},
  author={Karla Hoff},
The theme of this article is the importance – and the many causes – of lowlevel equilibrium “traps.” Rosenstein-Rodan pointed out that spillovers may cause the return to an activity to increase with the number of others who undertake that activity. If spillovers are strong enough, both lowand high-level equilibria are possible, with no tendency of market forces to lead from the worse to the better state of affairs. This article shows how modern economic theory broadened our view of the sources… CONTINUE READING
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