Development of domestic markets and poverty reduction for poor developing economies

Yih Luan Chyi, Chun Sin Hwang

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

Constructing a model of structural change with household production, this paper finds two equilibrium paths: one path leads to a low-income steady state and the other to a high-income steady state. This paper shows that as long as the relative marginal productivity of manufactured goods in household production is high enough, a poor country may transform from a home-producing economy to a firm-producing one and eventually reaches a high standard of living. Is it empirically acceptable for us to claim that when a country starts with poorer pro-market infrastructures and institutions, she will be less likely to escape from poverty later on? This paper provides an empirical evidence of positive relationship between pro-market infrastructures and poverty reduction for poor developing countries.

Original languageEnglish
Pages (from-to)374-381
Number of pages8
JournalEconomic Modelling
Volume28
Issue number1-2
DOIs
StatePublished - Jan 2011

Keywords

  • Cross-country analysis
  • Generalized balanced growth
  • Household production
  • Pro-market infrastructures

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