Understanding the “Problem of Economic Development”: The Role of Factor Mobility and International Taxation

Assaf Razin and Chi-Wa Yuen

Journal of Applied Economics, 1999, vol. 2, issue 1, 131-167

Abstract: The “problem of economic development”, as Lucas (1988) states it, is the problem of accounting for the observed diversity in levels and rates of growth of per capita income across countries and across time. We study conditions under which capital mobility and labor mobility (two seemingly income-equalizing forces) may interact with cross-country differences in income tax rates and income tax principles (two seemingly income-diverging forces) to generate such diversity. As a corollary, we also examine when countries with different initial endowments may finally converge in their income levels.

Date: 1999
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Journal Article: Understanding the "Problem of Economic Development": The Role of Factor Mobility and International Taxation (1999)
Working Paper: Understanding the "Problem of Economic Development": The Role of Factor Mobility and International Taxation (1999)
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DOI: 10.1080/15140326.1999.12040534

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