Asymmetric Growth and Institutions in an Interdependent World
We present a model of technologically interconnected countries that benefit and potentially contribute to advances in the world technology frontier. Greater inequality between successful and unsuccessful entrepreneurs increases entrepreneurial effort and a country’s contribution to that frontier. Un...
| Main Authors: | , , |
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| Format: | Article |
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University of Chicago Press
2018
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| Online Access: | http://hdl.handle.net/1721.1/118645 https://orcid.org/0000-0003-0908-7491 |
| Summary: | We present a model of technologically interconnected countries that benefit and potentially contribute to advances in the world technology frontier. Greater inequality between successful and unsuccessful entrepreneurs increases entrepreneurial effort and a country’s contribution to that frontier. Under plausible assumptions, the world equilibrium is asymmetric, involving different economic institutions and technology levels for different countries. Some countries become technology leaders and opt for a type of “cutthroat” capitalism with greater inequality and innovations, while others free ride on the cutthroat incentives of the leaders and choose a more “cuddly” form of capitalism with greater social insurance for entrepreneurs. |
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