Journal of Political Economy Vol. 125 No. 5 2017
Asymmetric Growth and Institutions in an Interdependent World
Abstract
We present a model of technologically interconnected countries that benefit and potentially contribute to advances in the world technology frontier. Greater inequality between successful and unsuccessful entrepreneurs increases entrepreneurial effort and a country’s contribution to that frontier. Under plausible assumptions, the world equilibrium is asymmetric, involving different economic institutions and technology levels for different countries. Some countries become technology leaders and opt for a type of “cutthroat” capitalism with greater inequality and innovations, while others free ride on the cutthroat incentives of the leaders and choose a more “cuddly” form of capitalism with greater social insurance for entrepreneurs.
- DOI
- 10.1086/693038
- Volume
- 125
- Issue
- 5
- Pages
- 1245-1305
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref