What stunts economic growth and causes the poverty trap?

Mizushima, Atsue (2019): What stunts economic growth and causes the poverty trap?

Abstract

In spite of an identical initial condition, why are some parts of the world so rich and others so poor? To address this question, this paper constructs a simple theoretical model that incorporates human infrastructure and child labor The first part of the paper shows that the condition of bifurcation from an identical initial condition depends on the technology level. We also show that current dynamic trends highly depend on initial endowments and productivity. The second part of the paper examines the effect of development assistance in recipient countries. By analyzing two types of programs; the elimination of child labor and support to strengthen human infrastructure, we show that the former (latter) program is effective for middle- (low-) income countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Child labor, human infrastructure, human capital, divergence, poverty trap, development aid
• Subjects: I - Health, Education, and Welfare > I0 - General > I00 - General; J - Labor and Demographic Economics > J0 - General > J01 - Labor Economics: General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models

References

Agenor, P.-R. (2010):"A theory of infrastructure-led development", Journal of Economic Dynamics and Control, 34(5), 932-950.

Azariadis, C. (1993): Intertemporal Macroeconomics. Wiley-Blackwell.

Bedi, A., and J. Edwards (2002): "The impact of school quality on earnings and educational returns{evidence from a low-income country", Journal of Development Economics, 68(1), 157-185.

Calderon, C., and A. Chong (2004): "Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation", Review of Income and Wealth, 50(1), 87-106.

Clark, G. (2008): A Farewell to Alms: A Brief Economic History of the World. Princeton Press.

Easterly, W., and S. Rebelo (1993): "Fiscal policy and economic growth: An empirical investigation", Journal of Monetary Economics, 32(3), 417-458.

Esfahani, H., and M. Ramirez-Giraldo (2003): "Institutions, infrastructure, and economic growth", Journal of Development Economics, 70(2), 443-477.

Galor, O., and D. N. Weil (1996): "The Gender Gap, Fertility, and Growth," American Economic Review, 86(3), 374-87.

Galor, O., and D. N. Weil (2000): "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond", American Economic Review, 90(4), 806-828.

Garcia-Mila, T., T. J. McGuire, and R. Porter (1996): "The Effect of Public Capital in State-Level Production Functions Reconsidered", The Review of Economics and Statistics, 78(1), 177-80.

Gramlich, E. M. (1994): "Infrastructure Investment: A Review Essay", Journal of Economic Literature, 32(3), 1176-96.

Hazan, M., and B. Berdugo (2002): "Child Labour, Fertility, and Economic Growth", Economic Journal, 112(482), 810-828.

Holtz-Eakin, D., M. E. Lovely, and M. S. Tosun (2004): "Generational conict, fiscal policy, and economic growth", Journal of Macroeconomics, 26(1), 1-23.

ILO (2017): Global estimate of child labour: Results and trends, 2012-2016. International Labour Organization.

Jimenez, E. (1995): Human and physical infrastructure: Public investment and pricing policies in developing countries, vol. 3 of Handbook of Development Economics, Elsevier.

OECD (2003): Combating Child Labour: A Review of Policies. Organization for Economic Co-operation and Development.

Ortiz-Ospina, E., and M. Roser (2018): "Child Labor", OurWorldInData.org, Available from https://ourworldindata.org/child-labor.

The World Bank (1994): World Develop;ment Report 1994: Infrastructure for Development. Oxford University Press.

The World Bank (2009): Country Assistence Strategies: Retrospective and Future Directions. Operations Policy and Country Services, World Bank.

The World Bank (2018): Children in employment, totl (ages 7- 14). The World Bank Microdata Library, Available from: https://data.worldbank.org/indicator/SL.TLF.0714.ZS?end=1995&start=1994.