Public Infrastructures, Production Organizations, and Economic Development

Kohei Daido and Ken Tabata

No 93, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We develop a political economy model of growth to examine economic development led by the interactions between an economic decision concerning a firm’s production technology (CRS vs IRS technology) and a political decision concerning public infrastructures. We show that multiple equilibrium growth paths occur due to differences in expectations regarding the quality of public infrastructures. These multiple paths illustrate why economies with poor initial conditions can catch up to and, furthermore, overtake economies with better initial conditions. Our result could explain the experiences of some East Asian countries where co-evolutions of public infrastructures and industrial transformations spurred economic development.

Keywords: Public Infrastructure; Political Economy; Production Organization; Overlapping Generations Model (search for similar items in EconPapers)
JEL-codes: H5 O1 O4 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-08, Revised 2012-08
New Economics Papers: this item is included in nep-cwa, nep-dge, nep-pol and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Public infrastructure, production organization, and economic development (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:93

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