Reliving the '50s: The Big Push, Poverty Traps, and Takeoffs in Economic Development

37 Pages Posted: 8 May 2007

See all articles by William Easterly

William Easterly

New York University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2005

Abstract

The international effort to meet the Millennium Development Goals by 2015 has given fresh prominence to the idea of poverty traps, a notion that was widely current in the 1950s. This idea, most actively promoted by economist Jeffrey Sachs, director of Columbia University's Earth Institute and Special Advisor to UN Secretary-General Kofi Annan, argues that developing countries are caught in a poverty trap that requires a big push of aid and investment in order to reach a take-off to increased per-capita income and higher standards of living. In this paper, William Easterly, Professor of Economics at NYU and Non-Resident Fellow at CGD, tests various elements of this narrative using growth regressions. He contends that the data do not support the view that poverty traps of zero growth or takeoffs are a widespread occurrence among low-income countries. He argues that the divergence in growth trajectories tends to be associated with the existence of democratic institutions and economic freedom, rather than with disadvantages in initial income. Easterly concludes that more rapid economic growth and poverty reduction will require changes from the bottom up rather than a big push from development planners at the top.

Keywords: economic development, poverty trap, foreign aid

JEL Classification: O1, O4, F33, F34, F35

Suggested Citation

Easterly, William, Reliving the '50s: The Big Push, Poverty Traps, and Takeoffs in Economic Development (August 2005). Available at SSRN: https://ssrn.com/abstract=984254 or http://dx.doi.org/10.2139/ssrn.984254

William Easterly (Contact Author)

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
178
Abstract Views
1,005
rank
47,476
PlumX Metrics