Economic Growth in subsistence Economy: An alternative view

Course ID
Ethiopian Economics Association (EEA)
Bichaka Fayissa


In conventional growth models, deferring current consumption and saving part of current income plays an important role in explaining the process of economic growth. In the case of subsistence economies, however, taking such economic action is hardly possible, (Myrdal, 1971). This leads, based on the models, one to conclude the impossibility of endogenously driven growth in these economies, which amounts to the notion that the poor tend to remain poor unless their economies are stimulated exogenously. After discussing this problem in detail, this paper attempts to develop a framework that relies, on one of its sides, on effects of factors of market failure and proposes the possibility of growth in subsistence economies as far as they have the capacity to manage and exploit factors of market failures. Empirical evidence obtained from panel data analysis supports this argument.

Corporate Author: Alemayehu Seyoum(Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
Primary Descriptors:

Subsistence economy, Market failure

Secondary Descriptor:

Economic growth, Savings, Panel data

Cataloge Date: 02/27/2013
Broad Subject heading: GROWTH AND DEVELOPMENT
Call Number: 330.963 PRO 2004
Serial Key Title: Proceedings of the First International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: I
Publication date: 2013-05-27 00:00:00
Forum or Discussion date: 2013-02-27 00:00:00
PDF file: Bichaka F. and Paulos G _ Economic Growth in subsistence Economy.pdf
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Bichaka Fayissa and Paulos Gutema