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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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
Uncontrolled Keywords:	Economic Development; Social Learning; Lumpiness
Library of Congress subject classification:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System:	O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O10 - General
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP) Departments > Economics
Rights:	http://www.lse.ac.uk/library/rights/LSERO.htm
Identification Number:	719
URL:	http://eprints.lse.ac.uk/19866/

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