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A gold rush theory of economic development

Ossa, Ralph (2006) A gold rush theory of economic development. CEPDP, 719. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753019450

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Identification Number: 719

Abstract

This paper presents a model of social learning about the suitability of local conditions for new business ventures and explores its implications for the microeconomic patterns of economic development. I show that: i) firms tend to ‘rush’ into business ventures with which other firms have had surprising success thus causing development to be ‘lumpy’; ii) sufficient business confidence is crucial for fostering economic growth; iii) development may involve wave-like patterns of growth where successive business ventures are first pursued and then given up; iv) there is, nevertheless, no guarantee that firms pursue the best venture even in the long-run.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2006 Ralph Ossa
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Date Deposited: 23 Jul 2008 11:33
Last Modified: 01 Oct 2010 09:13
URI: http://eprints.lse.ac.uk/id/eprint/19866

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