A Rostovian Model of Endogenous Growth and Underdevelopment Traps

Fabrizio Zilibotti

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The paper presents a model which combines self-sustained growth and 'underdevelopment traps' into a common analytical framework. The objective is to given an analytical interpretations to Rostow's observation that there is a 'decisive interval in the history of a society when growth becomes its normal condition' and to the empirical evidence that some countries seem not to have achieved this stage yet. The model exhibits aggregate non-convexities and thresholds which separate a region where growth is 'Solow-type', with convergence to a stationary steady-state from region where growth is 'Romer-type' , with endogenous self-sustained growth. In some critical stages of development multiple equilibrium trajectory may exist, consistent with alternative sets of self-fulfilling beliefs.

Date: 1993-08
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Journal Article: A Rostovian model of endogenous growth and underdevelopment traps (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0166

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