Understanding the "Problem of Economic Development": The Role of Factor Mobility and International Taxation

Posted: 10 Jun 2004

See all articles by Assaf Razin

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance

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Abstract

The problem of economic development, as Lucas (1988) states it, is the problem of accounting for the observed diversity in levels and rates of growth of per capita income across countries and across time. We study conditions under which capital mobility and labor mobility (two seemingly income-equalizing forces) may interact with cross-country differences in income tax rates and income tax principles (two seemingly income-diverging forces) to generate such diversity. As a corollary, we also examine when countries with different initial endowments may finally converge in their income levels.

Suggested Citation

Razin, Assaf and Yuen, Chi-Wa, Understanding the "Problem of Economic Development": The Role of Factor Mobility and International Taxation. Journal of Applied Economics, Vol. II, No. 1, pp. 131-167, May 1999. Available at SSRN: https://ssrn.com/abstract=555849

Assaf Razin (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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Chi-Wa Yuen

The University of Hong Kong - School of Economics and Finance ( email )

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23 Belcher's Street
Kennedy Town
Hong Kong
+8 52 2859 1051 (Phone)
+8 52 7548 1152 (Fax)

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