Poverty Traps and the Robust Political Economy of Development Assistance

Robust political economy emphasizes the lack of benevolence and omniscience of would be reformers. In addition, we consider the effects of biased decision-making for the robustness of the policy implications. This paper examines the robustness of the policy implications of models based on coordination failures and poverty traps. In particular, we address the revival in ‘big push’ type models and its policy implications. We argue that attempts to promote economic development through ‘big push’ models lack robustness.

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