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Economic Development as Self-Discovery / Ricardo Hausmann, Dani Rodrik.
- Format:
- Book
- Author/Creator:
- Hausmann, Ricardo.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w8952.
- NBER working paper series no. w8952
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2002.
- Summary:
- In the presence of uncertainty about what a country can be good at producing, there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated. We develop a general-equilibrium framework for a small open economy to clarify the analytical and normative issues. We highlight two failures of the laissez-faire outcome: there is too little investment and entrepreneurship ex ante, and too much production diversification ex post. Optimal policy consists of counteracting these distortions: to encourage investments in the modern sector ex ante, but to rationalize production ex post. We provide some informal evidence on the building blocks of our model.
- Notes:
- Print version record
- May 2002.
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