Arbeitspapier

Industrialisation and the big push in a global economy

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.

Language
Englisch

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

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

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

Handle
URN
urn:nbn:de:bsz:14-qucosa-224689
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Kreickemeier, Udo
  • Wrona, Jens
  • Technische Universität Dresden, Center of Public and International Economics (CEPIE)

Time of origin

  • 2017

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