The Wealth of Nations: Fundamental Forces Versus Poverty Traps / David E. Bloom, David Canning, Jaypee Sevilla.

By:

Bloom, David E

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w8714.Publication details: Cambridge, Mass. National Bureau of Economic Research 2002.Description: 1 online resource: illustrations (black and white)Subject(s):

O1 - Economic Development

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Abstract: We test the view the large differences in income levels we see across the world are due to differences in underlying characteristics, i.e. fundamental forces, against the alternative that there are poverty traps. Taking geographical variables as fundamental characteristics, we find that we can reject fundamental forces in favor of a poverty trap model with high and low level equilibria. The high level equilibrium state is found to be the same for all countries while income in the low level equilibrium, and the probability of being in the high level equilibrium, are greater in cool, coastal countries with high, year- round, rainfall.

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Previous	nber w8711 Private Benefits of Control: An International Comparison /	nber w8712 The Variety and Quality of a Nation's Trade /	nber w8713 Technological Diffusion, Conditional Convergence, and Economic Growth /	nber w8714 The Wealth of Nations: Fundamental Forces Versus Poverty Traps /	nber w8715 A Reconsideration of Hedonic Price Indices with an Application to PC's /	nber w8716 Crises Now and Then: What Lessons from the Last Era of Financial Globalization /	nber w8717 Charles Goodhart's Contributions to the History of Monetary Institutions /	Next

January 2002.

We test the view the large differences in income levels we see across the world are due to differences in underlying characteristics, i.e. fundamental forces, against the alternative that there are poverty traps. Taking geographical variables as fundamental characteristics, we find that we can reject fundamental forces in favor of a poverty trap model with high and low level equilibria. The high level equilibrium state is found to be the same for all countries while income in the low level equilibrium, and the probability of being in the high level equilibrium, are greater in cool, coastal countries with high, year- round, rainfall.