Risk, Shocks and Development

Jan Willem Gunning

Revue d’économie du développement, 2014, vol. 22, issue HS01, 35-49

Abstract: In many developing economies, notably in Africa, both governments and private agents live in a high risk environment but have only poor risk coping mechanisms at their disposal. Nevertheless development is typically analyzed as if it occurs in a world without risk. This may be because the effect of risk and shocks on growth is poorly understood. The ex post effects are often implicitly assumed to cancel out in expectation while in the analysis of the ex ante effects it is often assumed that agents have access to perfect assets. This paper argues that the peripheral position of risk in the development literature is a dangerous mistake: risk and shocks should be a central concern for development economists. JEL Classification: D91, C51, O12, O11.

Keywords: risk and growth; insurance; precautionary savings; trade shocks (search for similar items in EconPapers)
JEL-codes: C51 D91 O11 O12 (search for similar items in EconPapers)
Date: 2014
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