A gold rush theory of economic development

Ralph Ossa

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
Pages: 29 pages
Date: 2006-03
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http://eprints.lse.ac.uk/19866/ Open access version. (application/pdf)

Related works:
Journal Article: A gold rush theory of economic development (2013)
Working Paper: A Gold Rush Theory of Economic Development (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:19866

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