Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View

MPRA Paper from University Library of Munich, Germany

Abstract: Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular.

Keywords: coordination failure; poverty trap; industrial policy; market system (search for similar items in EconPapers)
JEL-codes: F5 O1 P5 (search for similar items in EconPapers)
Date: 2007-11-14
New Economics Papers: this item is included in nep-ent
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