Wealth Distribution and the Big Push

Zoubir Benhamouche ()
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Zoubir Benhamouche: EPEE, Université d'Evry Val d'Essonne

No 00-01, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: This paper reexamines the Rosenstein-Rodan idea of the Big Push but from the supply side view. We incorporate education in a model of the Big Push where industrialization requires skilled labor. We show that initially unequal distribution of wealth can prevent the economy from taking a sustainable industrialization path. Moreover, financial imperfections, by affecting the elasticity of skill supply, imposes a constraint on the set of technologies that can be adopted. In particular, credit imperfections can support selffulfiling beliefs that can either put the economy on a high productivity equilibrium or a low productivity equilibrium. Finally, in this context, it is shown that the new organizational innovations in the North may widen the productivity gap between North and South.

Keywords: Income Distribution; Credit Constraints; Human Capital; Productivity Differences (search for similar items in EconPapers)
JEL-codes: D31 I22 O14 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:00-01

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