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Industrialization and the Big Push

Kevin Murphy, Andrei Shleifer and Robert W. Vishny

Scholarly Articles from Harvard University Department of Economics

Abstract: This paper explores Rosenstein-Rodan's idea that simultaneous industrialization of many sectors of the economy can be profitable for them all even when no sector can break even industrializing alone. We analyze this idea in the context of an imperfectly competitive economy with aggregate demand spillovers and interpret the big push into industrialization as a move from a bad to a good equilibrium. We present three mechanisms for generating a big push and discuss their relevance for less developed countries.

Date: 1989
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Published in Journal of Political Economy -Chicago-

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