A Gold Rush Theory of Economic Development

Ralph Ossa

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper presents a model of social learning about the suitability of local conditions for new business ventures and explores its implications for the microeconomic patterns of economic development. I show that: i) firms tend to 'rush' into business ventures with which other firms have had surprising success thus causing development to be 'lumpy'; ii) sufficient business confidence is crucial for fostering economic growth; iii) development may involve wave-like patterns of growth where successive business ventures are first pursued and then given up; iv) there is, nevertheless, no guarantee that firms pursue the best venture even in the long-run.

Keywords: Economic Development; Social Learning; Lumpiness (search for similar items in EconPapers)
JEL-codes: O10 O12 O14 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-dev, nep-ent and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cep.lse.ac.uk/pubs/download/dp0719.pdf (application/pdf)

Related works:
Journal Article: A gold rush theory of economic development (2013)
Working Paper: A gold rush theory of economic development (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0719

Access Statistics for this paper

More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Bibliographic data for series maintained by ().