The Wealth of Nations: Fundamental Forces Versus Poverty Traps

36 Pages Posted: 17 Jan 2002 Last revised: 26 Oct 2022

See all articles by David E. Bloom

David E. Bloom

Harvard University - T.H. Chan School of Public Health; National Bureau of Economic Research (NBER)

David Canning

Queen's University Belfast

Jaypee Sevilla

Harvard University - T.H. Chan School of Public Health

Date Written: January 2002

Abstract

We test the view the large differences in income levels we see across the world are due to differences in underlying characteristics, i.e. fundamental forces, against the alternative that there are poverty traps. Taking geographical variables as fundamental characteristics, we find that we can reject fundamental forces in favor of a poverty trap model with high and low level equilibria. The high level equilibrium state is found to be the same for all countries while income in the low level equilibrium, and the probability of being in the high level equilibrium, are greater in cool, coastal countries with high, year- round, rainfall.

Suggested Citation

Bloom, David E. and Canning, Dave and Sevilla, Jaypee, The Wealth of Nations: Fundamental Forces Versus Poverty Traps (January 2002). NBER Working Paper No. w8714, Available at SSRN: https://ssrn.com/abstract=297340

David E. Bloom (Contact Author)

Harvard University - T.H. Chan School of Public Health ( email )

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National Bureau of Economic Research (NBER)

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Dave Canning

Queen's University Belfast ( email )

Department of Economics
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Northern Ireland
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Jaypee Sevilla

Harvard University - T.H. Chan School of Public Health ( email )

677 Huntington Avenue
Boston, MA MA 02115
United States
617-432-4054 (Phone)

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