Middle-Income Traps and Complexity in Economic Development

Takao Asano (), Akihisa Shibata and Masanori Yokoo ()
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Takao Asano: Okayama University
Masanori Yokoo: Okayama University

No 1049, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: In this paper, we develop a simple growth model that exhibits a wide variety of economic development patterns. In particular, our numerical simulations demonstrate that for a given set of parameter values, various types of development patterns such as the middle-income trap, the poverty trap, periodic or chaotic fluctuations, and high-income paths, can coexist, and which pattern is realized depends only on the initial value of capital. For another set of parameter values, we show that due to the pinball effect, an economy starting at a middle-income level can take off to the high-income state or get caught in the poverty trap in a seemingly random way after undergoing transient chaotic motions. Our results can explain observed complicated patterns of economic development in a unified manner.

Keywords: Middle-income traps; Poverty traps; Complex dynamics; Technology choice; CES production function (search for similar items in EconPapers)
Pages: 26pages
Date: 2020-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Middle-income traps and complexity in economic development (2023)
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