Asymmetric Growth and Institutions in an Interdependent World

Daron Acemoglu, James A. Robinson and Thierry Verdier

Journal of Political Economy, 2017, vol. 125, issue 5, 1245 - 1305

Abstract: We present a model of technologically interconnected countries that benefit and potentially contribute to advances in the world technology frontier. Greater inequality between successful and unsuccessful entrepreneurs increases entrepreneurial effort and a country's contribution to that frontier. Under plausible assumptions, the world equilibrium is asymmetric, involving different economic institutions and technology levels for different countries. Some countries become technology leaders and opt for a type of "cutthroat" capitalism with greater inequality and innovations, while others free ride on the cutthroat incentives of the leaders and choose a more "cuddly" form of capitalism with greater social insurance for entrepreneurs.

Date: 2017
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Working Paper: Asymmetric Growth and Institutions in an Interdependent World (2017)
Working Paper: Asymmetric Growth and Institutions in an Interdependent World (2017)
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