Abstract
A poverty trap is a self-perpetuating condition, in which an economy suffers from persistent underdevelopment, vicious circle of poverty, created by circular causation due to the presence of some external economies and/or strategic complementarities. We discuss the concept in a dynamic setting, and review some models of poverty traps in the literature. The policy prescriptions of such models should be treated with caution, since each model identifies one cause; but as many causes are likely to coexist, attempts to pull an economy out of one trap may push it into another.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Acemoglu, D., and F. Zilibotti. 1997. Was Prometheus unbounded by chance?: Risk, diversification and growth. Journal of Political Economy 105: 709–751.
Azariadis, C., and A. Drazen. 1990. Thresholds externalities in economic development. Quarterly Journal of Economics 105: 501–526.
Azariadis, C., and J. Stachurski. 2005. Poverty traps. In Handbook of economic growth, ed. P. Aghion and S. Durlauf, vol. 1. Amsterdam: North-Holland.
Basu, K. 1999. Child labor: causes, consequences and cures, with remarks on international labor standards. Journal of Economic Literature 37: 1083–1119.
Banerjee, A., and A. Newman. 1993. Occupational choices and process of development. Journal of Political Economy 101: 274–298.
Becker, G., K. Murphy, and R. Tamura. 1990. Human capital, fertility, and economic growth. Journal of Political Economy 98: S12–S37.
Bernanke, B., and M. Gertler. 1989. Agency costs, net worth, and business fluctuations. American Economic Review 79: 14–31.
Brezis, E., P. Krugman, and D. Tsiddon. 1993. Leapfrogging in international competition: a theory of cycles in national technology leadership. American Economic Review 83: 1211–1219.
Ciccone, A., and K. Matsuyama. 1996. Start-up costs and pecuniary externalities in economic development. Journal of Development Economics 49: 33–57.
Corden, W. Max. 1977. Trade policy and economic welfare. Oxford: Clarendon Press.
Diamond, P. 1982. Aggregate demand management in search equilibrium. Journal of Political Economy 90: 881–894.
Doepke, M., and F. Zilibotti. 2005. The macroeconomics of child labor regulation. American Economic Review 95: 1492–1524.
Lucas, R. Jr. 1988. On the mechanics of economic development. Journal of Monetary Economics 22: 3–42.
Matsui, A., and K. Matsuyama. 1995. An approach to equilibrium selection. Journal of Economic Theory 65: 415–434.
Matsuyama, K. 1991. Increasing returns, industrialization, and indeterminacy of equilibrium. Quarterly Journal of Economics 106: 617–650.
Matsuyama, K. 1996. Economic development as coordination problems. In The role of government in East Asian development: Comparative Institutional Analysis, ed. M. Aoki, H. Kim, and M. Okuno-Fujiwara. New York: Oxford University Press.
Matsuyama, K. 1997. The 1996 Nakahara Lecture: complementarity, instability and multiplicity. Japanese Economic Review 48: 240–266.
Matsuyama, K. 2000. Economic development with endogenous retirement. CMS-EMS Discussion Paper No. 1237R. Northwestern University.
Matsuyama, K. 2002. The rise of mass consumption societies. Journal of Political Economy 110: 1035–1070.
Matsuyama, K. 2004. Financial market globalization, symmetry-breaking, and endogenous inequality of nations. Econometrica 72: 853–884.
Matsuyama, K. 2007. Credit traps and credit cycles. American Economic Review 97: 503–516.
Murphy, K., A. Shleifer, and R. Vishny. 1989. Industrialization and the big push. Journal of Political Economy 97: 1003–1026.
Nelson, R. 1956. A theory of the low level equilibrium trap in underdeveloped economies. American Economic Review 46: 894–908.
Romer, P. 1987. Growth based on increasing returns due to specialization. American Economic Review 77: 56–62.
Sachs, J., et al. 2004. Ending Africa’s poverty trap. Brookings Papers on Economic Activity 1(2004): 117–240.
Saint-Paul, G. 1992. Technology choice, financial markets and economic development. European Economic Review 36: 763–781.
Stokey, N. 1988. Learning-By-Doing and the introduction of new goods. Journal of Political Economy 96: 701–717.
Tirole, J. 1996. A theory of collection reputations (with applications to the persistence of corruption and to firm quality). Review of Economic Studies 63: 1–22.
Young, A. 1928. Increasing returns and economic progress. Economic Journal 38: 527–542.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Matsuyama, K. (2018). Poverty Traps. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2700
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2700
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences