Asymmetric Growth and Institutions in an Interdependent World

Journal article: 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.

Author(s)

Daron Acemoglu, James A. Robinson, Thierry Verdier

Journal
  • Journal of Political Economy
Date of publication
  • 2017
Pages
  • 1245 – 1305
Version
  • 1
Volume
  • 125