Abstract Purpose The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and know-how) and productive inefficiencies. Design/methodology/approach This study’s methodology consists of the combination of the economic growth model, à la Solow–Swan, with a sigmoidal production function (in capital), which may explain growth, poverty traps or fluctuations depending on the relative levels of inefficiencies, productive capacities or lack of know-how. Findings The authors show that economies may experience economic growth, poverty traps and/or fluctuations (i.e. cycles). Economic growth is reached when an economy experiences both a low level of inefficiencies and a high level of productive capacities while an economy falls into a poverty trap when there is a high level of inefficiencies in production. Instead, the economy gets in cycles when there is a large level of the lack of know-how and low levels of productive capacity. Originality/value The authors conclude that more capital per capita (greater savings and investment) and greater productive capacity (with less lack of know-how) are the economic policy keys for an economy being on the path of sustained economic growth.

Economic growth, poverty traps and cycles: productive capacities versus inefficiencies / Giombini, Germana; Grassetti Francesca; Sanchez Carrera, Edgar. - In: JOURNAL OF ECONOMIC STUDIES. - ISSN 0144-3585. - STAMPA. - 50:(2023), pp. 1375-1398. [10.1108/JES-06-2022-0365]

Economic growth, poverty traps and cycles: productive capacities versus inefficiencies

Sanchez Carrera, Edgar
2023

Abstract

Abstract Purpose The authors analyse a growth model to explain how economic fluctuations are primarily driven by productive capacities (i.e. capacity utilization driven by innovations and know-how) and productive inefficiencies. Design/methodology/approach This study’s methodology consists of the combination of the economic growth model, à la Solow–Swan, with a sigmoidal production function (in capital), which may explain growth, poverty traps or fluctuations depending on the relative levels of inefficiencies, productive capacities or lack of know-how. Findings The authors show that economies may experience economic growth, poverty traps and/or fluctuations (i.e. cycles). Economic growth is reached when an economy experiences both a low level of inefficiencies and a high level of productive capacities while an economy falls into a poverty trap when there is a high level of inefficiencies in production. Instead, the economy gets in cycles when there is a large level of the lack of know-how and low levels of productive capacity. Originality/value The authors conclude that more capital per capita (greater savings and investment) and greater productive capacity (with less lack of know-how) are the economic policy keys for an economy being on the path of sustained economic growth.
2023
50
1375
1398
Giombini, Germana; Grassetti Francesca; Sanchez Carrera, Edgar
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Utilizza questo identificatore per citare o creare un link a questa risorsa: https://hdl.handle.net/2158/1384303
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