Quarterly Journal of Economics Vol. 106 No. 2 1991
Increasing Returns, Industrialization, and Indeterminacy of Equilibrium
Abstract
This paper asks whether adjustment processes over real time help to "select" the long-run outcome in a model of industrialization, where multiple stationary states exist because of increasing returns in the manufacturing sector. "History" alone cannot in general determine where the economy will end up. Self-fulfilling expectations often make the escape from the state of preindustrialization (the takeoff) possible. The global bifurcation technique is used to determine when an underdevelopment trap exists and when a takeoff path exists. The role of government policy and agricultural productivity in industrialization are then considered.
- DOI
- 10.2307/2937949
- Volume
- 106
- Issue
- 2
- Pages
- 617
- Sources
- crossref openalex