Industrialisation and the big push in a global economy

Arbeitspapier

In their famous paper on the "Big Push", Murphy, Shleifer, and Vishny (1989) show how the combination of increasing returns to scale at the firm level and pecuniary externalities can give rise to a poverty trap, thereby formalising an old idea due to Rosenstein-Rodan (1943). We develop in this paper an oligopoly model of the Big Push that is very close in spirit to the Murphy-Shleifer-Vishny (MSV) model, but in contrast to the MSV model it is easily extended to the case of an economy that is open to international trade. Having a workable open-economy framework allows us to address the question whether globalisation makes it easier or harder for a country to escape from a poverty trap. Our model gives a definite answer to this question: Globalisation makes it harder to escape from a poverty trap since the adoption of the modern technology at the firm level is impeded by tougher competition in the open economy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CEPIE Working Paper ; No. 06/17

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Industrialization; Manufacturing and Service Industries; Choice of Technology ; Economic Growth of Open Economies
• Subject: Poverty Traps ; Multiple Equilibria ; International Trade ; Technology Upgrading ; General Oligopolistic Equilibrium

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kreickemeier, Udo ; Wrona, Jens
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Center of Public and International Economics (CEPIE)
• (where): Dresden
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/162551
• URN: urn:nbn:de:bsz:14-qucosa-224689
• Last update: 10.03.2025, 11:44 AM CET