Development of domestic markets and poverty reduction for poor developing economies

Yih-Luan Chyi and Chun-Sin Hwang

Economic Modelling, 2011, vol. 28, issue 1-2, 374-381

Abstract: Constructing a model of structural change with household production, this paper finds two equilibrium paths: one path leads to a low-income steady state and the other to a high-income steady state. This paper shows that as long as the relative marginal productivity of manufactured goods in household production is high enough, a poor country may transform from a home-producing economy to a firm-producing one and eventually reaches a high standard of living. Is it empirically acceptable for us to claim that when a country starts with poorer pro-market infrastructures and institutions, she will be less likely to escape from poverty later on? This paper provides an empirical evidence of positive relationship between pro-market infrastructures and poverty reduction for poor developing countries.

Keywords: Household; production; Pro-market; infrastructures; Generalized; balanced; growth; Cross-country; analysis (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:374-381

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