Geography, Structural Change and Economic Development
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Geography, Structural Change and Economic Development

Theory and Empirics

Edited by Neri Salvadori, Pasquale Commendatore and Massimo Tamberi

The authors in this book regard the process of economic expansion as a non-homogeneous and multifaceted phenomenon which has deeply affected human welfare, and cultural, social and political change. The book is a bridge between the theorists (Rosenstein-Rodan, Lewis, Myrdal, and Hirschmann) who in the post-war period analyzed regional inequalities, structural change and dualism, and the modern literature on economic growth. The latter has emphasized the existence of multiple equilibria, bifurcations and various types of dynamic complexity, and clarified the conditions for the emergence of phenomena such as cumulative causation, path dependence and hysteresis. These are the typical ingredients of structural change, economic development or underdevelopment.
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Chapter 10: Dualism and the Big Push

Giovanni Valensisi


Giovanni Valensisi 10.1. INTRODUCTION The concept of the poverty trap has been used fruitfully since the very dawn of development economics, and can implicitly be traced back even to Adam Smith’s ‘Early draft of part of the Wealth of Nations’.1 Beginning with the seminal paper of Rosenstein Rodan (1943), the idea that underdevelopment could constitute a state of equilibrium thrived with Nurkse’s vicious circle of poverty (1953) and Nelson’s low-level equilibrium trap (1956). Several mechanisms, essentially concerning increasing returns coupled with pecuniary externalities or demographic traps, were from time to time held responsible for creating a multiplicity of equilibria, and possibly preventing the spontaneous development of certain economies.2 Despite the deep interest enjoyed by the so-called ‘high development theory’ in the 1950s, its predominantly discursive argumentation together with the difficulty reconciling increasing returns with competitive market structures3 contributed to its decline in favour of the more analytically rigorous paradigm described by Solow (1956) and Swan (1956). Notwithstanding many important contributions on the role of increasing returns and learning by doing, during the 1960s the mainstream approach to growth became that of the neoclassical convex economy converging to a stable and unique steady state. Additionally, attention shifted from the ‘developmental perspective’ – emphasizing the role of ‘sectoral balances’, as well as the dualistic nature of developing countries’ economies – to an aggregate growth perspective – focusing more on reproducible factors accumulation, and on the determinants of the steady state. It is worth noting here that the choice of an aggregate model rejects by definition...

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